Payment by Results: Hopes, Fears and Evidence

AuthorCarol Hedderman
PositionProfessor
Pages43-58
43
PAYMENT BY RESULTS: HOPES, FEARS AND EVIDENCE
Professor Carol Hedderman, Professor of Criminology, Department of Criminology,
University of Leicester
Abstract
The idea that government sho uld move a way from paying for services to be deliv ered to
paying in proportion to the level of reduction in reoffending achieved has obvious
attractions, particularly in the current economic climate. Bu t will adopting such a
'Payment by Resul ts' model actually deliver the benefits cl aimed by its proponents? This
article reviews some of the potential obstacles to succe ss. As Payment by Results is a
relatively untested concept in the field of criminal justice, the articl e draws on the
experience of this approach in employment and in hea lth where it has a longer histo ry.
The results suggest that the chances of Payment by Results leading to a reduction in
reoffending in crime or in costs are sli m. Adopting such an approach may also carry
insidious, as well as obvious, dangers.
Keywords
Payment by Results; re-offending; evidence-based policy; cost effectiveness; Transforming
Rehabilitation
British Journal of Community Justice
©2013 Sheffield Hallam University, Sheffield
ISSN 1475-0279
Vol. 11(2-3): 43-58
Hedderman
44
Introduction
The Ministry of Justice (20 11:2) makes a bold claim in it s response to the Breaking the
Cycle consultation and on its website:
We will change our whole approach to the management of offenders and
their rehabilitation, so we only pay for what works in delivering reduced
levels of crime.3
On the face of it this 'Payment by Results' (PbR) idea is hugely attractive, particularly in the
current economic climate and under a government which is so keen, not on ly to reduce
public expenditure, but also to reduce the scale of the public sector. Why should we pay
for the delivery of a service w hich may or may not bring about the desired change, when it
is possible to transfer the cost of failing onto the supplier. Paying only when the prom ised
change has been achieved, and in proportion to the degree of change affe cted, is
obviously preferable. Mo reover, as Fox and Albertson (2011) explain , there are other
potential benefits to PbR. The sheer possibility of making profits is expected to bring new
providers into the field. This, combined with a financial incentive to achieve outcomes, is
then expected to increase competition, sweep away unnecessary bureaucracy, and
increase the desire to innovate. In turn, these developments should lead to a better
understanding of what is effective. Also, if the anticipated gains in e fficiency and
effectiveness are realised, th is will lead to lower unit costs (even allowing for an element
of profit to be paid). The remaining savings can be plo ughed back to pay for additional
activities in this, or another, area of public policy. Additionally, under the Social Impact
Bond variant, the possibility of making a profit will not only bring in new suppliers but also
financial intermediaries who are expected to finance the servic e provision in advance of
impacts being achieved, in return for a subsequent slice of the profits. This is expected to
facilitate the involvement of smaller providers who may not h ave the financial resources
to sustain a service ov er several years while waiting for their results to be evident and
their payments to be triggered.
The idea of payment by result s is new in the field of criminal justice, so it is important to
consider what evidence there is to support the Mini stry of Justice's (2013a) hope that the
putative benefits of PbR will be realised. In fact, the only empirical evidence which seems
to support this radical policy shift is the positive findings of one small piece of research
(Frontier Economics, 2009). This made some rat her large claims about success from a
weakly designed reconviction ana lysis in which a sample of prisoners serving sentences of
at least one year at one prison, who received additional support in relation to some
resettlements needs, was comp ared with a poorly matched national sample. However,
payment by results has a mu ch longer history in other fi elds such as health, so it is wor th
reflecting on that ex perience too. Unfortunately, a recent Audit Commission (2012a:3 )
review of this sort of material does not inspire confidence as it concluded that:
‘Our review of UK and international research evidence found few rigorous
evaluations of PbR and no complete, systematic analysis of its effectiveness.’
3 See https://www.justice.gov.uk/offenders/ payment-by-results

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