February 5, 2013

Expanding Payment-by-Results: Strategic choices and recommendations

Prison bosses should be paid bonuses for meeting reoffending targets if the government’s planned ‘rehabilitation revolution’ is to be a success.

Expanding Payment-by-Results argues that Justice Secretary Chris Grayling’s plans to privatise the probation service, underpinned by a ‘payment-by-results’ mechanism, will only work if the prisons system is wrapped into the reforms and prison governors are directly incentivised to cooperate with the new private and voluntary providers who are due to take over probation services.

The report says that Grayling was correct to abandon the Ministry of Justice’s previous payment-by-results pilot programme as the scheme would not have delivered any results until 2017 at the earliest, was reliant on new sources of funding and measured success based on a badly drawn out model which focused almost entirely on working with offenders serving short term prison sentences of under 12 months. Allowing the existing pilot scheme to continue would have jeopardized the entire payment-by-results model.

As the government consults on plans to roll-out payment-by-results across the whole of the criminal  justice system, the report makes key recommendations about reforming both the measure used to determine success in reducing reoffending, and the payment mechanism used to reward providers.

It recommends:

  • The creation of prison league tables so that the public can judge the relative performance of different jails in cutting reoffending.
  • Abandoning the government’s preferred measure of reoffending: The ‘binary measure’ of reoffending, measuring the proportion of offenders in a cohort who reoffend, must be abandoned. It commands almost no sector support and is not the best measure of reoffending in a PbR system for either reducing crime or reducing costs.
  • Introducing a higher tariff for the most hardened criminals: Though there are a range of potential replacement options for the binary measure, the report recommends a simple system of differential pricing whereby providers would be paid a higher tariff for rehabilitating those offenders who are hardest to help. This will both cut crime and costs, and command sector support. It will also alleviate fears about ‘parking’ of hard cases and the ‘creaming’ of those who are easier to help.


recent report on payment by results has some of the most considered and in-depth analysis of the issue that I’ve seen.”
Rt Hon Chris Grayling MP – Secretary of State for Justice

” paper Expanding Payment-by-Results: Strategic choices and recommendations is frankly essential reading for anyone interested in the subject”
Mark Easton – BBC News Home Editor

“Policy Exchange … have made such a significant contribution to the debate on the rehabilitation revolution”
Jeremy Wright MP – Minister for Prisons and Rehabilitation


Max Chambers

Head of Crime & Justice, 2012-14

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