Payment by results across public services

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Sitra, the housing support training and consultancy organisation, produced a short but interesting report this week which compared payment by results across public services and in housing related support.

Summary of PbR across public services

The report features a helpful summary of the different PbR schemes to which I would add the Youth Justice Board pathfinder pilots (about preventing nights in custody) and the UK Border Agency contract with Capita to find and remove illegal immigrants.

 

Sitra PbR

 

The report goes on to give further details about the 10 PbR pilots in housing support services.

The report’s authors (Adam Knight-Markiegi & Alison Quinn) go on to highlight a number of commonalities across the schemes.

Use of the voluntary sector

They note that most of the PbR initiatives explicitly encourage the involvement of the voluntary sector in service provision.

However, they usefully differentiate those areas where delivery is mainly being done by existing providers (drug treatment, housing support, children’s centres, troubled families) and those where the market is being opened up – rough sleeping and, in particular, re-offending which is seen as an opportunity for large private companies.

Partial PbR is the norm

Most PbR schemes pay a core element of the contract value with only a proportion paid on the success of the intervention – the payment by results component.

Although the Work Programme is moving towards a 100% PbR model, in most other public service areas the typical split is 80/20 with just 20% being the PbR incentive payments.

The purpose of PbR

The report also highlights the range of objectives which appear to be common across these different PbR schemes:

  • Improving services
  • Opening up (“stimulating”) the market
  • Increasing value for money – delivering services cheaper and/or producing cashable savings
  • Stimulating innovation

In my opinion, this is the most challenging aspect of payment by results.

Although all these objectives are appropriate for PbR, as the Audit Commission made very clear in its report last year, we do not have a clear evidence base for payment by results yet.

It is, therefore, a high risk strategy to expect PbR initiatives to meet such a wide range of goals, I would prefer to see government departments prioritise one of these objectives in the initial phase.

In my view, expecting a service to both innovate and save money (on top of the reductions in public spending already announced) is unrealistic.

At the moment, as the Sitra report says, the focus seems to be more on value for money than getting more effective at tackling entrenched social problems.

 

If you have an interest in payment by results, check out my regularly updated PbR resource pack – it’s free to download.

 

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