Earlier this week, the Cabinet Office and Ministry of Justice announced a set of measures which are designed to help the voluntary sector and mutuals compete for contracts to cut reoffending, as offered to bidders under the Government’s changes to rehabilitation policy.
These new measures follow warnings from organisations including the Charities Aid Foundation that previous implementations of Payment-by-Results (PbR) had created conditions which were proving to be overly challenging for charities.
CAF’s recent ‘Funding Good Outcomes’ report argued that commissioners must allow times in contracts for potential investors to perform due diligence, and that commissioners should factor in the costs of up-skilling not-for-profits into their funding.
CAF’s concerns about the implementation of PbR have also been raised by Members of Parliament, with many Parliamentarians asking for assurances from the Government that charities and mutuals will be supported when bidding for contracts under PbR.
It is therefore pleasing to see new support announced that aims to help charities and mutuals as they navigate the PbR process, and the Government will now be providing support to:
- Develop a financial modelling tool to enable voluntary, community and social enterprises (VCSEs) to assess sub-contract offers
- Provide a central legal function to check VCSE organisations’ contractual term and conditions with main providers
- Run a series of workshops to help VCSE organisations understand the reform process and develop the vital skills they will need to complete for and deliver rehabilitation services
- Create a database of VCSEs and mutuals involved in the rehabilitation of offenders to help organisations form partnerships and consortia
Elsewhere, £6 million is being made available to assist VCSEs bid for contracts or secure social investment through the Investment and Contract Readiness Fund.
Whilst this package of measures to support charities is a positive starting point, there are still a number of concerns that the Government needs to address if PbR is going to work effectively for not-for-profits.
At CAF, we believe that PbR contracts need to be more focused on risk sharing as opposed to risk transfer, so that charities and other bidders are not used as a means for the outsourcing of the entire risk of funding public services -a burden that would be particularly onerous for charities. We also think that charities would benefit from contracts including up-front payments to allow them to cover core costs.
That the announcement earlier in the week was made jointly by the Deputy Prime Minister and Prisons and Rehabilitation Minister shows that PbR is becoming an increasingly important matter for the Government. It is pleasing to see that policies are being enacted which aim to make the PbR bidding process and indeed PbR itself work better for not-for-profits, but it is clear that more needs to be done if charities are to benefit from the rehabilitation revolution. We hope that the Government continues to build on this progress to ensure that charities are able to form a critical part of the remodelled probation service.