The 8th Commandment of Payment by Results: Thou shalt share the fruits of thy labours

By focusing on outcomes, commissioners allow providers to design the service in any which way they choose - safe in the knowledge that they will only have to pay out if that service is successful. This "Black Box" approach has become increasingly contentious since the advent of the Work Programme and the introduction of large private companies into the delivery of public services. One of the key reason underlying the choice of the Work Programme contract areas was the desire to introduce direct competition between providers...

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This is the eighth in my series of 10 commandments for payment by results.

Thou shalt share the fruits of thy labours

The 7th Commandment: Thou shalt promote innovation dealt with the fact that one of the principal purposes of payment by results is the stimulation of new ways of tackling entrenched social problems.

By focusing on outcomes, commissioners allow providers to design the service in any which way they choose – safe in the knowledge that they will only have to pay out if that service is successful.

This “Black Box” approach has become increasingly contentious since the advent of the Work Programme and the introduction of large private companies into the delivery of public services.

One of the key reason underlying the choice of the Work Programme contract areas was the desire to introduce direct competition between providers – this was the reason that the London contract area was split into two (East and West).

The theory was that by putting providers into direct competition, performance would be driven up with the provider with the best results in pole position to pick up more contracts in the next round of commissioning.

However, the downside of this approach was that commercial providers in particular wanted to keep the contents of their Black Box secret – preserving their “Intellectual Property” to maximise competitive advantage.

This is in stark contrast to the public and voluntary sector ethos with its emphasis on sharing best practice.

 

fruits of labour

 

Transparent Boxes

While some Work Programme “Primes” have acknowledged this issue and stated that they are happy to share the contents of their Black Box, others have not been so willing.

This is an area where commercial and public interests can be in conflict. One of the principal reasons that the House of Lords recently sent the Offender Rehabilitation Bill back to the Commons was cross-party discontent that the Bill’s Impact Assessment was incomplete.

The probable costs of the new services for short term prisoners were not included in the Assessment because the services will shortly be tendered and the Ministry of Justice did not want to reveal a benchmark price.

My advice to anyone commissioning a payment by results service is two-fold:

  1. Facilitate innovation by not prescribing how a new service is delivered – allow providers their Black Box.
  2. At the same time, stipulate in the contract what monitoring and other information must be published in the broader public interest.

 

The next post will look at the Ninth Commandment of PbR:

“Thou shalt join up commissioning”

 

Browse my comprehensive resource pack on Payment by Results.

Check out my Marmite Infographic for simple explanation of key PbR jargon.

 

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