Transforming Rehabilitation? Will proposed payment model deliver improved outcomes?

Ruth Breidenbach-Roe was part of the the Public Services and Partnerships team but has now left NCVO. Her blog posts have been archived here for reference.

The Ministry of Justice have released their ‘Straw man’ payment mechanism which sets out how they plan to pay providers within the new Rehabilitation Programme.

They have invited feedback on this model—a move which is not only a welcome opportunity for potential providers and other stakeholders, but also an essential one for MoJ who will need to use this feedback to inform the improvement of the programme.

NCVO have submitted our response to this which you can read in full. Here, I pick out some of our key concerns.

First, to give an overview of what this payment mechanism looks like, it is comprised of three elements: Fee for Service (FFS); Payment-by-Results (PbR); and performance penalties.

  • The FFS will be paid to providers in 12 equal monthly payments for the delivery of sentences of the court, license conditions, and through the gate services.
  • A proportion of the contract will be paid on a PbR basis, with payments made to providers where reoffending across a cohort of offenders is reduced beyond a target level.
  • Key Performance Indicators will be used to assess the delivery of services under the FFS payment; underperformance will result in financial penalties and Improvement Notices. In addition, failure to achieve certain levels of reoffending rates will result in financial deductions to the provider, and ultimately contract termination.

Improving reoffending outcomes

We question whether this payment model suitability incentivises providers to improve reoffending outcomes.

The providers taking over these large CPAs will be faced with high reconfiguration costs and will be under pressure to deliver the efficiencies they have bid with. Our concern is that, given these pressures and the fact that this is a huge market change, bidders will be motivated to maximise their ‘safe margins’—i.e. to adjust operating costs in order to increase the gains they can make from the FFS payment.

Although they will have to ensure reoffending rates do not increase to a level which would result in penalties or termination—are providers simply going to focus on sustaining current levels of reoffending as opposed to dramatically improving them?

Is the MoJ expecting too much too soon from these reforms? The ‘Straw man’ states that the PbR element of the model will incentivise providers to “reduce re-offending rates significantly beyond historic levels.” Is a more realistic picture that, for the first few years of the contract at least, providers will be struggling to maintain the status quo amid a huge market change?

Potential for parking

We are concerned that several elements of this model will prompt providers to ‘park’ those offenders who are the most expensive to work with—i.e. those that face the most complex journey towards desistance.

For example, although the model includes a frequency measure for reoffending (which accounts for reductions in the number of offences across the cohort), in order to receive any PbR payment it is the binary metric (measuring complete desistance) which providers will need to hit. This focus will result in the ‘parking’ of the most prolific offenders who require sustained and complex interventions throughout their journey towards rehabilitation.

Parking not only means that individuals are not receiving the support they need to rehabilitate, but there will also be a cost to the prison service, courts, and the police, and a cost to victims.

Diversity of provision

We are concerned that the behaviours described above will threaten the sustainability of a diverse rehabilitation market and lock out local and specialised VCSEs.

For example, the potential for parking brought about by ill-designed incentives will result in difficult financial decisions for charities in terms of how they continue to work with their service users. In the Work Programme, VCSE subcontractors have reported dipping into their own reserves in order to avoid parking service users when the cost of the intervention outweighs the payment. This is unsustainable.

MoJ have previously signalled that bids from potential providers will be evaluated not only on price, but also on quality, and that providers will have to demonstrate a diverse and sustainable supply chain. It is essential that MoJ follow through on this commitment.

The VCS has the expertise and ability to deliver outcomes across demographics, and has the specialist staff who are able to build the relationships with offenders that are an essential part of their rehabilitation.  It is in the interests of making real improvements in reducing reoffending that these skills are not under used.



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