How ‘rolling back the state’ enriches and empowers a few big commercial outsourcers

Payment by results is the smart approach to offender management, says the government. Speaking last year at the Capita conference on payment by results in prisons, Prisons Minister Crispin Blunt said the system would reward providers who successfully rehabilitate offenders, ensuring value for money for taxpayers. The government would pay only for genuine success, he said. 'Providers will be held accountable for their performance, and will need to bear the financial risk of failure. The taxpayer will not foot the bill for services that fail.’

But new information has come to me from someone working high up in the system. He explained how the money goes through the national private sector bodies only to find its way back through a convoluted process to the agency that works with offenders and helps them gain education and employment.

I have always thought that the commissioning model is intrinsically bureaucratic, as compared to direct service delivery, but when you add to it a payment by results you have bureaucracy gone mad. So this is the Payment by Results merry-go-round.

Let’s take a look at the 'work programme', now being piloted among ex-offenders, which claims to provide “tailored support for claimants who need more help to undertake active and effective jobseeking”.

The regional/high level contract is with one of the big providers, for example Serco or G4S or A4e who get a lovely dollop of taxpayers’ money, with contracts worth billions. They subcontract to a charity like Nacro for those cases with the highest levels of need, which includes all offenders to develop links to employers. The risk assessments are then provided by probation staff under a mutual information exchange arrangement, for them to try to broker with potential employers. So instead of a direct line of taxpayers’ money going from the ministry to the probation service, the money is laundered through two other bodies before it ends up just where it always used to – except far less of it is left.

As for the ‘Offender Learning and Skills Service’ run by the government’s Skills Funding Agency, its regional/high level contract is with Babcocks. This firm then subcontracts to probation trusts for the provision of Information, Advice and Guidance to offenders – who are already on the probation caseload.

So the big national bodies from the private sector get the overarching contracts and charge for managing the contract when they commission out work that used to be done directly, delivering a profit margin of at least 15 per cent to the private sector (remember it is our money).

The money goes round and round, reducing at every turn, so that the people delivering the frontline services are facing huge budget cuts and are put under increasing pressure to prove that they do what they do. But there are a few people (companies) doing very nicely out it.

It’s a mad, mad world.

A shorter version of this piece first appeared on Frances Crook’s blog at the Howard League.