Payment by results for MoJ contracts will mean 'dangerous game of roulette' for charities

Will Green is news editor of Supply Management
28 April 2014

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28 April 2014 | Will Green

Smaller suppliers providing offender rehabilitation services to the UK government will be “playing a dangerous game of roulette” if they are paid by results, a think tank has warned.

The Social Market Foundation (SMF), in a report called Breaking Bad Habits, said a system of payment by results (PbR) would cause cash flow problems for small charities and voluntary sector bodies because of the delay between investing in a service and being paid for results.

The SMF also said there was a risk the provider “will underachieve and recoup only part – or potentially none – of the costs already incurred”.

“A principal rationale for the reforms is that expertise from charities and social enterprises can be brought in to help turn around the lives of offenders,” said the report.

“The research shows that smaller providers will be playing a dangerous game of roulette if they are paid by results on the reoffending rate.”

The report said under Ministry of Justice reforms of the probation service around 236,000 low and medium risk offenders will be managed by private, voluntary and community sector providers, with the UK divided into 21 “Contract Package Areas”.

The SMF said there were issues around getting the payment level right (the government should lift the cap on the level of reward providers can receive), ensuring the provider is in control of the factors that affect rehabilitation, and developing a competitive and sustainable market of providers.

“If the government is serious about involving expert charities and promoting a diverse market of providers, then it must be ready to proscribe that prime contractors cannot pay small sub-contractors by results,” said the report.

“In order to help the mutual sector achieve scale, the government should consider underwriting a mutual provider by offering a government guarantee on the finance they need to grow.”

The report said the cost of former offenders committing offences against the person during 2011 was around £2.4 billion and about half of people finishing a prison sentence go on to re-offend.

Approximately 600,000 offences were committed in 2012 by people who had previously committed a crime, equal to around one in six of all recorded crimes.

The government spends more than £3 billion on prisons each year and £1 billion delivering sentences in the community, including £800 million on probation services, said the report.

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