Written evidence from A4e (PB 66)
1. INTRODUCTION
1.1 This formal response is submitted on behalf
of A4e in response to the Justice Select Committee's inquiry into
the role of probation services. A4e is able to provide further
clarification on any aspects of the response and is available
to give oral evidence to the Committee.
1.2 A4e is an international social purpose company
that designs, manages and delivers public services in partnership
with governments, public and private sector organisations and
the voluntary and community sector. This submission draws on our
key areas of expertise through answering relevant, selected questions
posed by the Committee in the call for supplementary evidence.
1.3 A4e currently provides education and training
to over 8,500 prisoners within 28 prisons across the UK. We are
the largest independent sector provider of education and training
in the public prison estate, delivering the Offender Learning
and Skills Service (OLASS) in 21 establishments and CIAS (Careers
Information and Advice Service) in 8 establishments. Since 2005
we have delivered 2.5 million hours of learning and vocational
training to offenders and ex-offenders, working with over 100,000
customers with a conviction.
1.4 A4e is the prime provider of Way4Ward, a
region-wide NOMS/ESF initiative in supporting offenders in the
South West. We work in partnership with the local Probation Trusts,
The Prince's Trust, BME groups, specialist housing providers and
social enterprises to support 3,285 offenders who are leaving
prison or serving a community sentence. In the North East, we
deliver First Steps to Employability working with Northumbria
and Durham Tees Valley Probation Trusts to provide employability-focused
qualifications to offenders carrying out their Unpaid Work orders
in their local communities. The NOCN accredited Steps programme
is also delivered through local community based referral sources.
Since April 2009, First Steps has engaged with over 1,600 individuals
assisting 700 achieve a City and Guilds or NOCN accredited qualification,
helping 92 move into employment and a further 60 access an education
or training option.
2. EXECUTIVE
SUMMARY
2.1 A4e welcomes the Ministry of Justice's intention
to introduce greater competition into the provision of services
and to pay providers from all sectors according to the results
they achieve. A4e has long been an advocate of linking payment
to outcomes and has been a pioneer in the delivery of outcome-based
employability contracts for the Department for Work and Pensions
(DWP) and overseas. In Israel, A4e was involved in a pilot programme
that preceded the development of outcome-based models in the UK
and tested whether and how payment could be linked to success
in reducing the number of claimants in receipt of welfare benefits.
2.2 In the UK, A4e is the largest provider of
Flexible New Deal (FND) and is currently bidding to be a similarly
significant provider under the Work Programme, which will significantly
extend the principle of payment-by-results in the employability
arena.
2.3 Much can be learnt from the experience in
welfare reform when developing payment-by-results. The Ministry
of Justice's payment-by-results model will need careful design
and rigorous testing as there are significant differences between
the established welfare-to-work model and a model to reduce reoffending.
This is especially relevant to the appropriate attribution of
outcomes to providers, the management of external factors and
the extent to which success will lead to an identifiable reduction
in costs. As outlined in our submission, we therefore have clear
views on design and implementation in applying a payment-by-results
model to criminal justice.
3. What can be learnt from the implementation
of payment-by-results models in health and welfare reform?
3.1 There are a number of significant lessons
from the area of welfare reform which can be applied more widely
to the implementation of payment-by-results. To develop the market,
the Ministry of Justice (MoJ) must broaden the base of large providers
with the scale to take on the management of high profile government
contracts, such as the delivery of probation services, and the
financial capacity and appetite for risk needed to deliver contracts
linking payment to results. Providers will need to demonstrate
a wide circle of experience, extending far beyond the range and
type of services hitherto subject to competition (such as private
prisons, electronic monitoring and secure escort services). In
parallel, it is vital to retain and enhance the skills and experience
of the smaller and specialist providers whose expertise and knowledge
are essential to the delivery of successful rehabilitation solutions.
3.2 Both of these objectives can be achieved
through the adoption of a contracting model similar to that used
successfully by the DWP to procure Flexible New Deal, which is
now being used to implement the Work Programme. This model involves
the appointment of a lead "integrator" to manage and
deliver a significant, high-volume public service contract, working
with a network of sub-contracted partners to support the delivery
of multiple, and often complex, interventions. DWP's use of this
"integrator" model has encouraged entry to the market
by a number of new providers whose traditional expertise have
not have been in welfare-to-work, while encouraging innovation
and supporting specialist providers across the public, voluntary
and private sectors.
3.3 For the MoJ, competition opportunities must
be of sufficient scale to attract new providers from comparable
public service markets. This will enable potential bidders to
more easily to justify the investment in systems, personnel and
partnership development that will be needed to submit credible
proposals, deliver statutory services at low risk to the Ministry
of Justice, and create significant gains in efficiency and effectiveness.
3.4 There must be encouragement for the formation
of innovative consortia and partnership for the delivery of services
which make best use of the skills and experience of smaller providers.
3.5 A clear and comprehensive future competition
programme is needed which gives providers sufficient advance visibility
of commissioning appetite and scale to plan for and make the necessary
investment to bid for and competently deliver those services.
3.6 To support providers to access the working
capital needed to make payment-by-results successful and workable,
a phased-approach to risk-transfer and payment-by-results must
be introduced. Few potential providers will be able to bear the
risk and cost of delivery on their own balance sheets and from
the experience of the Work Programme most, if not all, potential
providers would need to raise capital from external investors
in order to fund rehabilitation programmes where all or most of
the payment is based on future outcomes. The social investment
market is not yet mature enough to provide the level of investment
necessary to roll out social impact bond models on any level of
scale to make demonstrable savings to the Ministry of Justice.
Similarly, in the early stages, providers will find it difficult
to attract commercial investors in the absence of a full risk
profile. This "investment hole" will need to be remedied
before the market is viable.
3.7 In the phased payment-by-results commissioning
process, the MoJ can play a useful role in supporting providers
in communicating the principles, objectives and contractual arrangements
of payment-by-results to potential investors. Providers should
engage with investors directly, but the MoJ can support them by,
for example, explaining how the payment regime will work in terms
which will make it easier for them to understand the risks involved.
Secondly, the MoJ should provide reassurance that there is broad
consensus about the direction of travel with regard to the competition
programme, to indemnify as far as possible against contract termination
or significant variation resulting from any change in government.
Investors will be especially concerned about the risk of significant
policy or programme change once investment is committed and it
is here that the department can play a role in providing the necessary
support.
3.8 In designing the programme, it must be easy
for investors to understand and determine whether they can accept
the risks associated with achieving a volume reduction in reoffending.
Clarity and simplicity should therefore be key design principles.
3.9 As in welfare reform, the MoJ should expect
larger, lead contractors to protect the voluntary sector from
risk and from the financial stringency of payment-by-results models.
At A4e, we do this through our Flexible New Deal supply chain
management process by designing service levels with our voluntary
and community sector partners that are achievable and do not pass
on the full outcome-related payment mechanism incurred by A4e
as Prime Contractor.
4. What results should determine payment in
applying such a model to criminal justice?
4.1 In our view there is no perfect measure of
the reduction in reoffending and there will need to be much care
taken in designing the payment by results model to ensure that
any measure reflects the direct impact of intervention by providers
and excludes, so far as possible, the impact of other factors.
However the MoJ has adopted reconviction as the most appropriate
measure of reoffending and there are good arguments for the use
of this measure, especially as opposed to a measure which adopts
a wider definition of reoffending. Any such wider indicator will
be hard to measure accurately, given the risk of offences going
undetected, and will be more susceptible to external factors that
lie outside of the control of providers. An appropriate measure
of reconviction will most directly reflect the cost burden (and
therefore cashable savings) directly attributable to the MoJ rather
than to other departments such as the Home Office.
4.2 There are also arguments in favour of measuring
success in reducing offending at cohort rather than individual
offender level. A4e believes that the larger the group of offenders
to which performance by results is applied, the greater the likelihood
of accurately measuring performance. We therefore recommend that
measurement should be across groups of offenders and that the
size of such groups should be of a scale (of the order of 1,000
offenders as a working minimum) to reduce the likelihood of statistical
abnormality due to external factors or the unpredictable behaviour
of individuals. This principle should apply irrespective of whether
different measures or approaches are applied to specific types
of offender.
4.3 Experience of welfare-to-work programmes
shows that it is particularly important to incentivise providers
to target those individuals with the most intractable barriers
to work. This helps to avoid practices which have become widely
known as "creaming and parking"—focusing on those
easiest to help and avoiding those where the outcomes are harder
to achieve or the costs are higher. For that reason, the MoJ must
include "differentiated payments" which reward providers
for achieving success with those offenders more likely to offend
and/or by increasing rewards aligned to reduced reconvictions.
It is imperative that providers have a positive incentive to target
offenders whose offending is prolific and more severe. In such
cases, there is likely to be a high correlation between the high
cost of offending and the intensity of the support and supervision
required as part of their sentence or rehabilitation. In such
cases, differentiated payments would more fairly recompense providers
for working with a specific cohort of high cost offenders.
5. The Government proposes a lead provider
model and suggests that commissioning for the delivery and enforcement
of sentences and for efforts to reduce re-offending will not be
separated. What is the appropriate role for probation in such
a model?
5.1 Commissioning for the delivery and enforcement
of sentences and for efforts to reduce re-offending should not
be separated. We support the MoJ's Green Paper proposal for probation
providers to be given one payment for delivering the statutory
requirement and ensuring compliance with the sentence and then
receiving a further payment depending on the results the provider
delivers in reducing reoffending. The following diagram describes
how such a contract might operate on a local level:
5.2 Through this approach, probation providers
would be fully recompensed for the costs associated with delivering
the minimum statutory requirements, but will have additional contractual
incentives to invest in non-statutory rehabilitative interventions
(which increase the likelihood of a positive impact on an offender's
reoffending behaviour) due to a bonus payment linked to reduced
reconvictions.
5.3 This model does not require external investment
or significant additional government funding. Probation providers
would have a contractual incentive to collaborate with key local
delivery partners to access rehabilitative interventions (such
as mental health, drug treatment, housing and Work Programme budgets),
leveraging and maximising existing funds wherever possible. In
addition to being paid core budget payments, rehabilitative delivery
partners would be jointly targeted to reduce future conviction
events alongside the probation provider, with both parties rewarded
through savings realised by the MoJ. However, if probation providers
are to be capable of delivering innovative, cost-effective and
truly integrated support around individual offenders to affect
reconviction rates, contracts must be designed to transfer the
appropriate level of risk, autonomy and flexibility.
5.4 This model has the benefit of minimising
the need for additional/external investment to support rehabilitation
by better joining-up existing services around individuals which
are likely to place high demands on the public purse, leading
to a significant improvement in the effective use of public spending.
Providers of probation services are ideally placed to fulfil the
role of strategic integrator, taking on accountability for reducing
reoffending and enabling the MoJ to build up a greater evidence
base of "what works", in order to design future generation
contracting arrangements which move closer to full outcome-based
models pushing greater levels of risk and autonomy onto an increasingly
capable and mature provider base. The MoJ would then be better
able to commission contracts which have challenging but realistic
performance metrics and pricing structures which are attractive
to potential providers, whilst providers will be better able to
attract the necessary external investment by being able to demonstrate
delivery.
January 2011
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