I am indebted to my old friend Tony Clabby for spotting this…
The National Audit Office has just published Outcome-based payment schemes: government’s use of payment by results (June 2015).
The report considers six central government departments known to be using payment by results (PbR), and identifies 52 schemes worth a total of at least £15b in which some element of PbR features.
The report concludes that PbR schemes are poorly co-ordinated, lack an appropriate evidence-base which would enable the effectiveness of the model to be assessed, have heavy unrecognised risks, and in some cases are being used inappropriately by commissioners.
There’s a very thoughtful post considering the report on Russell Webster’s blog, an independent consultant specialising in the fields of substance misuse and crime.
It is interesting to note that we are now seeing contract specifications combining both PbR and social value. Now, they are not the same thing, and shouldn’t be confused, but nonetheless there is a salutary lesson here.
The great advantage of the social value legislation is that it has the potential to help services deliver additional and better outcomes — but that doing this entails no extra cost to the commissioner in terms of incentive payments or contract management and compliance, and it doesn’t need the huge legal, financial and contractual architecture required to make PbR work. In that sense, social value seems to be a commissioning policy tailor-made for our times; PbR, increasingly, doesn’t…
…PbR contracts are hard to get right, which makes them risky and costly for commissioners. If PbR can deliver the benefits its supporters claim – such as innovative solutions to intractable problems – then the increased cost and risk may be justified, but this requires credible evidence. Without such evidence, commissioners may be using PbR in circumstances to which it is ill-suited, with a consequent negative impact on value for money. — Amyas Morse, head of the NAO