What does “better” look like?

26 January 2012

Reform-HP roundtable seminar introduced by Rt Hon Chris Grayling MP, Minister of State for Employment, on 24 January 2012.

Payment by results is in danger of becoming the Government’s big idea on public service reform. It had a big place in the Open Public Services White Paper and it is being implemented in the areas of welfare to work and offender management and rehabilitation. A working group has just been set up within government to compare experiences between departments and identify new opportunities.

This Reform seminar was the second in a series of events, sponsored by HP, to debate the latest thinking in the public service reform agenda. The first thing to say is that it is very clear that good, innovative providers are seizing payment by results with both hands. They like the idea that they have freedom to run their services as they wish in order to meet the target. One attendee explained that the focus on results (in this case for rehabilitation for prisoners) had led him to create a new working relationship between police, prisons and probation which clearly promised a better service all round.

One emerging problem is that the emerging variety of payment by results programmes are starting to trip over each other. There are already different programmes for unemployed people variously funded by national government, European funds and local government. In the Government’s view, these schemes are separate and mutually reinforcing (in that each seeks to achieve a particular outcome that helps towards the overall objective of getting someone back to work). In some providers’ views, the schemes overlap and result in multiple payments for doing similar things for the same people. It is easy to imagine the complexity getting worse as new programmes come on stream for troubled families and drug rehabilitation. The trade-off is between greater Government control of activity (and lower spending) and greater freedom for providers to decide exactly what will make the difference in a particular situation. Some attendees suggested that the solution might be local commissioning of payment by results programmes rather than a national procurement.

A remaining question is if we are to pay for “results”, who decides what the right “result” is? In the case of schools (say), I am very happy for schools to get paid by results, but I don’t want Michael Gove deciding for me what should be in my child’s curriculum. This suggests that there is a natural limit to payment by results as soon as consumer choice comes into the equation, which certainly includes education and the great majority of healthcare. Ministers cannot just rely on payment by results to reform public services; they will need to develop the other parts of the open public services agenda, specifically choice and competition in schools and the NHS, which so far has been more difficult.




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