Making PbR Work for Charities

peter aldousThis week’s Justice Questions in the House of Commons included a focus on the Government’s recent announcement on ‘Transforming Rehabilitation,’ which aims to open up probation services to providers from the private and voluntary sectors on a Payment by Results (PbR) basis.

Peter Aldous MP, Conservative Member of Parliament for Waveney, asked the Secretary of State for Justice Chris Grayling MP about the action that the Government will be taking to ensure that voluntary and charitable sectors are able to play a full role in the rehabilitation of offenders. He also asked how the Government will ensure that charities are not at a disadvantage when competing for contracts awarded on a PbR basis.

 In response, Mr Grayling told the House that the Government has already announced that it will be providing an extra £500,000 of grant funding to support voluntary sector organisations to compete for contracts. He went on to explain that the cash-flow element would differ from the PbR payments that were made under the Work Programme, which had received criticism for imposing an excessive burden on charities. Mr Grayling also explained that he wants to engage closely with the social investment sector which, he argued, can play an important part in ensuring that voluntary sector organisations can compete and win on a level playing field.

It is pleasing that the Government is looking to modify the way that it implements PbR so that more charities are able to bid effectively against private sector service delivery giants. However, as I have argued elsewhere, there is a real danger that the way that PbR is being enacted means that charities and social enterprises will still find it difficult to bid for contracts, and the benefit of their expertise and innovation will be lost. Many charities work in small communities, are extremely localised, and can offer personalised services in ways that the service giants cannot – they must be given the opportunity to put their skills into practice.

CAF’s ‘Funding Good Outcomes’ report warns that those commissioning PbR services need to think in terms of risk sharing instead of risk transfer, as PbR should not be used as a means to outsource the entire risk of funding public services. Instead, PbR contracts should transfer a proportion of payments up front to cover core costs,. with the remainder being dependent on meeting agreed outcomes. This would create a fairer distribution of risk, and reduce the level of risk that social investors are being asked to take on.

Further, charities need more support to encourage them to bid for contracts. The money that Mr Grayling referred to in Parliament this week has been welcomed by the sector, but given the scale of the transformation seems inadequate, and the Government needs to examine how this can be increased to match the demand created by the increase in PbR contracts. The Government has made some improvements on the way that PbR has been implemented, but much more needs to be done if the benefits of this transformational policy are to be shared by the charitable sector and, equally, for the Government to benefit from the expertise that charities can provide.

Steve Clapperton

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