Is payment by results the most efficient way to address the challenges faced by the criminal justice sector?
| Published date | 01 December 2012 |
| DOI | 10.1177/0264550512458473 |
| Date | 01 December 2012 |
| Subject Matter | Articles |
Article
Is payment by results
the most efficient
way to address the
challenges faced by
the criminal justice
sector?
Chris Fox
Manchester Metropolitan University
Kevin Albertson
Manchester Metropolitan University
Abstract
In recent years the UK government has emphasized evidence-based policy, as a part
of which the Payment by Results (PbR) approach has increasingly been promoted.
Payment by Results allows the government to pay a provider of services on the basis
of specified outcomes achieved rather than the inputs or outputs delivered. Linked to
PbR is the innovative source of funding social interventions know as Social Impact
Bonds (SIBs). We discuss the potential benefits of PbR and survey its use across the
UK public sector. Then, concentrating in particular on the Criminal Justice System (CJS)
we outline three methodological challenges to the implementation of PbR: gaming,
measuring outcomes and identifying fiscal benefits. We then identify a number of chal-
lenges to the implementation of PbR. We conclude that PbR has a place in commission-
ing services, but that its role in the CJS is likely to be limited and unlikely to succeed as a
socially efficient means of attracting new sources of funding. We finish by considering
two alternatives to PbR: justice reinvestment and personalization.
Corresponding Author:
Professor Chris Fox, Manchester Metropolitan University – Sociology, Geoffrey Manton Building,
Rosamond Street West, Manchester M15 6LL, United Kingdom
Email: c.fox@mmu.ac.uk
Probation Journal
59(4) 355–373
ªThe Author(s) 2012
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DOI: 10.1177/0264550512458473
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The Journal of Community and Criminal Justice
Keywords
criminal justice, payment by results, personal budgets, Social Impact Bonds (SIBs)
Introduction
Payment by Results (PbR) ‘will link payment to the outcomes achieved, rather than
the inputs, outputs or processes of a service’ (Cabinet Office, 2011: 9). The idea of
paying for specified outcomes, which will, it is hoped, reduce government costs, is
particularly attractive at the moment because of the current state of public sector
funding in the UK.
Because payment arises after outcomes are known, which might involve sub-
stantial time delays, a key challenge to the delivery of PbR models of service delivery
is the challenge of raising working capital (Mulgan et al., 2010). A related policy
innovation, Social Impact Bonds (SIBs) will allow the government, in theory, to
privatize the up-front costs of social innovations and the associated risks, thus reduc-
ing taxpayer expenditure in the short-term and eliminating the risk of government
money being spent on interventions which do not deliver the desired outcomes. A
social investor might be, for example, an individual philanthropist or a charitable
trust. Mulgan et al. (2010) suggest that a Philanthropic Social Impact Bond will see
funds raised from philanthropic sources invested through a special purpose ‘vehicle’
(organization) which would sub-contract with non-governmental organizations to
deliver services to achieve the desired outcomes. Thus the SIB arises from the desire
to facilitate the ‘private’ (non-government) sector to become involved in the delivery
of social services.
Notwithstanding their apparent attraction, reality often complicates the simplest
theories and in this article we examine the challenges which might arise in the
implementation of PbR mechanisms in the criminal justice system of England and
Wales. We start by providing a brief outline of the main attractions of PbR and SIBs
to government. We highlight previous and current examples of relevant initiatives in
the UK public sector. Next we provide an overview of some of the main challenges
to PbR, identifying both conceptual difficulties and more practical challenges. To
illustrate these points we use the example of the criminal justice system. We con-
clude by suggesting that PbR has some limitations and note that there are other
innovations in the commissioning of public services which might also address some
of the aims of PbR.
Potential advantages of payment by results
A system focused on the delivery of outcomes might look very different to the current
system of government provision. It is suggested there will be a wider range of ser-
vice providers, more variation in models of service delivery and a much reduced
role for ‘nationalstandards’. Proponents of PbR and SIBs arguethey will drive greater
efficiency, innovation and impactin tackling social problems whilealso reducing risk
for government. We examine each of these suggested advantages in turn.
356 Probation Journal 59(4)
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