Concerns over payment-b-results

Concerns over payment-b-results
Civil Society
22.10.12

Payment-by-results (PBR) has been the subject of scrutiny in the charity sector with concerns raised over its implications for charities burdened with workload and no guaranteed payment, the difficulties faced by smaller organisations in obtaining contracts, and the possibility of fixing results, leaving vulnerable beneficiaries neglected.

Dan Corry, chief executive of NPC and former adviser at the Treasury and Downing Street, said:

"One of the strengths of PBR, that the provider will go the extra mile to try and hit the outcome targets desired can also lead to undesirable behaviours. One such behaviour is the temptation to ‘park and cream’. In other words you work hardest with those that you think you can get over the line and so achieve your outcome targets and associated payments.

"If a person is going to reoffend whatever you do then it is pointless putting much effort into them. This is a natural and at times a desirable response to the incentives faced, but it means those who are harder to help get ignored (even with complex incentive payments that are supposed to be weighted by the degree of difficulty of helping that person).

"It also means that prime contractors (often for-profit organisations) will pass the toughest cases on to the charity sub-contractors. In a similar vein, all the effort goes into the specified outcomes – often hard ones with cashable savings attached – and the softer but crucial outcomes like self-esteem and wellbeing become ignored."

Asked whether it is too easy to "fudge results" in the PBR model Grayling said: "In many ways the measurements for payment-by-results in criminal justice are very binary – do you reoffend or don’t you? And we’ve got very simple measures for that. If you’re not back before the courts, if you’re not being charged with an offence, you haven’t reoffended. But if you’re back in court, back in the police cell then it’s not worked, and the providers don’t get paid."

But Corry advises:  "If head office puts too much pressure on the organisation to hit targets, then don’t be surprised if people are tempted to make sure the data says what head office wants to hear, whatever the truth. All those involved in PBR will need to watch very carefully to avoid this – be they the providers (for-profit and not-for-profit), commissioners or indeed public watchdogs. The more that data is open and publicly available the less room for this sort of thing to go on, as people can monitor and pick up on fraud more easily."

The Peterborough pilot was the first social impact bond model introduced in the UK. Since its introduction social impact bond funding has been replicated globally and in the UK to combat other areas such as homelessness. In Peterborough’s social impact bond model if the service delivers a drop in reoffending beyond 7.5 per cent, investors will receive an increasing return capped at a maximum of 13 per cent per year over an eight-year period. But if the 7.5 per cent target is not reached, the investors will get nothing back.