The recent publication of the Audit Commission report: “Local payment by results” is a key landmark in the development of PbR for the commissioning of public services in the UK.
The great thing about the Audit Commission is that their focus on hard facts and real-life performance combined with their total independence means that whenever they bring their focus to bear on an aspect of public life, they are worth listening to.
There have been a number of landmark reports over the years which have focused attention on the core performance of public services – I have found the ones on youth crime and drug treatment particularly helpful, for identifying shortcomings in the overall approach.
For me, the timing of this report could not be better.
Starting next month, I am going to be running a series of video interviews with key figures within the PbR world.
The interviewees will be answering the same five questions, but from a wide range of different standpoints including providers: (public, private and voluntary); commissioners; financiers (hopefully) and researchers.
But these interviewees will all be giving opinions, so it’s great to set a factual context for PbR first.
Having said that the Audit Commission brings an authoritative, hard-edged perspective to PbR, it is slightly disappointing to report that they have reached the same conclusion as myself, albeit more categorically:
“Our review of UK and international research evidence found few rigorous evaluations of PbR and no complete, systematic analysis of its effectiveness.”
For this reason, the Audit Commission has not been able to pronounce for or against a PbR approach to commissioning public services.
However, the Commission has been more helpful than the stereotypical researcher whose first conclusion is always:
“You need more research.”
It has set out five key principles which it says are critical to the establishment of any PbR initiatives – although it is very careful to state that the observance of these principles does:
“Not guarantee success.”
The five principles
The principles are:
- A clear purpose.
- A full understanding of the risks.
- A well-designed payment and reward structure.
- Sound financing for the whole scheme.
- Effective and robust measurement and evaluation.
- Improving outcomes,
- Reducing costs,
- Transferring financial risk, and
- Stimulating innovation.