Payment by results05 April 2012
There is one area of real excitement in government. Payment by results is in danger of becoming its big idea. It had a key place in the Open Public Services White Paper and is being implemented in the areas of welfare to work and offender management and rehabilitation. A government working group has just been set up to compare experiences between departments and identify new opportunities.
Innovative providers are seizing payment by results with both hands. They like the idea that they have the freedom to run their services as they wish in order to meet targets. The focus on results in rehabilitation for prisoners, for example, is driving new working relationships between police, prisons and probation, which clearly promise a better, more integrated service.
One problem is that the variety of payment by results programmes are starting to trip over each other. There are different programmes for unemployed people variously funded by national government, European funds and local government. In the government’s view, these schemes are separate. In some providers’ views, the schemes overlap and result in multiple payments for doing similar things for the same people. It is easy to imagine the complexity getting worse as new programmes come on stream for troubled families and drug rehabilitation. The trade-off is between greater government control of activity (and lower spending) and greater freedom for providers to decide exactly what will make the difference.
A remaining question is, if we are to pay for results, who should decide what the right result is? In the case of schools, for example, I am very happy for schools to get paid by results, but I don’t want Michael Gove deciding what should be in my child’s curriculum. This suggests that there is a natural limit to payment by results as soon as consumer choice comes into the equation. That certainly includes education and the great majority of healthcare. Ministers cannot just rely on payment by results to reform public services. This is why they have to go back to the Open Public Services agenda, become more confident about consumer choice and push on.