There’s no free lunch. Yet across the country, advocates of Pay for Success (PFS), or Social Impact Bonds (SIBs), serve up this alternative private financing model as a cost-free, risk-free silver bullet to support critical, yet underfunded, public services.
The pilot was widely claimed to have been set up to stimulate innovation, although it was based on a previous model already developed by St Giles trust. Nevertheless, the SIB funding was found to be flexible and allowed staff to use a personalised budget approach to resolve issues for individual service users as well as incentivising engagement.
However, if the offender population in Peterborough is typical of local prisons, these results are promising although they do not reach the 10% target figure which would release the full PbR payment (the number of reconviction events would need to be 148 per 100 offenders rather than the current 155).
Finally, five years since the first impact bond, we have yet to see whether impact bonds will lead to sustained impact on the lives of beneficiaries beyond the impact bond contract duration. The existing literature states that impact bonds could lead to sustained impact by demonstrating to government that a sector or intervention type is worth funding or by improving the quality of programmes by instilling a culture of outcome achievement, monitoring, and evaluation.
Sodexo and NACRO are the new partnership running the South Yorkshire Community Rehabilitation Company and it will be interesting to see whether they can have a positive impact on reducing the reoffending of released prisoners – their results will also be subject to a payment by results contracting approach, this time using both a binary and frequency (but not severity of offence) payment model.
The NAO makes a very strong recommendation not only that all government payment by results schemes should be evaluated but that these evaluations should be shared across government in order to develop a more robust evidence base for PbR; indicating whether and how this commissioning model should be utilised.
The NAO cautions that in designing PbR schemes, commissioners need to get the balance between pure PbR and non PbR payments right. Where a scheme is financed by a Social Impact Bond, it may be possible – and indeed appropriate – to stipulate that 100% income is dependent on achieving the specified outcomes.
Are the NAO’s features a copper-bottomed guarantee of an effective PbR scheme? Or are you more in agreement with me that the attraction of PbR is the chance to move away from the straight-jacket of contemporary procurement and stimulate fresh approaches, under-written by the knowledge that if a provider fails, the commissioner doesn’t have to pay?
PbR schemes are typically targeted at intractable, multi-faceted social problems with the hope that an outcome-focused approach will encourage innovation and more holistic responses. If government departments cannot even co-ordinate their commissioning around PbR, it will be very difficult for providers to design and deliver new solutions.