Transforming Rehabilitation Contents

3Structural issues

22.In this Chapter we explore some of the structural issues facing probation following the TR reforms.

CRC Contracts

“Black box” contracts

23.As explained in the previous Chapter the then Government wanted to promote flexibility and innovation for the probation sector following the TR reforms so that providers and frontline staff were able to deliver services in the way they thought most effective. The Ministry’s contracts with Community Rehabilitation Companies were originally set-up as “black box” contracts (see Minister’s quote below for an explanation of the type of contract) and national standards for probation service delivery and training were no longer enforced. As the Minister of State, Rory Stewart OBE MP, explained in oral evidence to us, in practice this meant that:

the contracts were almost entirely oriented around the question of reoffending rates. The black box basically said that the CRCs, provided they achieved those outcomes, could do it in almost any way they wanted.31

24.In its submission to our inquiry HMI Probation raised a concern regarding operating models used by CRCs which had been allowed given the flexibility of the contracts. The Inspectorate highlighted that as a result of such flexibility good probation practice was being inhibited. They explained: “CRC contracts currently allow operating models that we question, in the sense that they have features we think inhibit good probation delivery (supervision by telephone only contact, for example)”.32

25.The Minister made clear that the Government would move away from “black box” contracts as basic standards had not always been provided. He explained that revised contracts with the CRCs would make clear the Government’s minimum expectations about “basic practice”, for example, relating to contact, knowing where offenders were in the probation system and assessments and plans.33 We welcome the Ministry’s move away from black box contracts with Community Rehabilitation Companies (CRCs).

Payment mechanisms in the contract

26.The contracts that the Ministry of Justice have with the Community Rehabilitation Companies include three main types of payment:

27.The contracts were designed on the basis that 20% of CRC costs were fixed, 70% were semi-variable and 10% were variable. In February 2016 the Ministry initiated a Probation Service Review, primarily focussing on the payment mechanism within the contracts. The National Audit Office (NAO) carried out an investigation into the changes announced in July 2017 on the CRC contracts and found that fixed costs for CRCs varied “from 44% to 99.8%”.36

28.In oral evidence, providers highlighted the practical implications of the “volumetric measures” in the contracts. For example, Seetec explained that a very small change in the number of offenders being managed by their CRC had a significant impact on the funding they received (for example, each funding band equated to three service users per an office (14)).37 It should be noted that the then Government stated that it based the TR reforms on the premise that providers would “be capable of bearing financial risk” and this risk being transferred from the Ministry to the providers.38

29.In July 2017, the then Prisons and Probation Minister, Sam Gyimah MP, announced in a Written Ministerial Statement the nature of the changes that had been made to the CRC contracts. These changes included alterations to assumptions in the contracts relating to fixed costs.39 The fixed cost assumption, as reflected in the payment mechanism, was changed to 77%. The NAO estimated that the Summer 2017 changes to the contracts, including the fixed cost assumption, cost the Ministry of Justice £342 million over the lifetime of the contracts. For example, the changes to the ‘Fee for Service’ payment (payment for rehabilitation services) partially illustrated the scale of the changes made: if the terms of the contract had been applied, based on current CRC volumes, the Ministry would have paid £2.1 billion over the lifetime of the contract in ‘Fee for Service’ payments. Following the Summer 2017 changes this increased to £2.5 billion (a 19% increase). Although £2.5 billion was lower than the £3.7 billion envisaged when the contracts were let, the volumes of CRC work have been significantly lower than expected.40

30.The Ministry of Justice’s written submission explained that changes were needed to the contracts as CRC expenditure to deliver services was more than they were receiving in income: “as allocations to CRCs decreased, providers were receiving less in income than it was costing them to deliver services”.41

31.Dame Glenys Stacey, HM Chief Inspector of Probation, told us that there was nothing surprising about the changes which were made to the fixed costs assumptions in the contracts. She explained that one would expect fixed costs to “be about 60% to 80%”, so a move to 77% fixed costs “makes sense”.42 Dame Glenys encouraged a payment mechanism which “truly covered reasonable fixed costs” and advocated that it “should not be so dependent on case types and sentencing, because it [was] so unpredictable and variable”.43

32.Some witnesses questioned whether the contracts had originally been set up on misguided assumptions. For example, Rob Allen, an independent researcher and consultant and co-director of Justice and Prisons, explained that “something seriously [had] gone awry with the contracting process” as volumes of cases going to CRCs had been much lower than expected, and CRCs had too few cases to manage but probation staff had unmanageable caseloads.44 Similarly, the Centre for Social Justice (CfSG), a think tank, questioned whether there were other motives behind the original design of the contracts:

one concern is that the use of such a low fixed cost base might have been a deliberate effort by those behind the original competition design to encourage CRCs to commission and subcontract services in a manner that would only see cost incurred in direct proportion to volumes.45

The CfSG explained that it therefore appeared that the Ministry had expected CRCs to cut fixed costs to a minimum, which in practice, implied that indirectly a “shift in probation supervision away from face-to-face contact towards remote and automated monitoring” and more group probation support, were being promoted.

33.We questioned providers on whether they had underbid for services. Sodexo, a CRC parent company, told us that some aspects of the contract were set prior to the separation of the probation system and “some of the things that were foreseen did not turn out to be the case”(Sodexo did not state what had been foreseen but had not come to fruition).46 Sodexo also explained in oral evidence to us that if they had the information they had now, including on volumes, they would have bid differently.47

34.The Committee of Public Accounts concluded that the Ministry had been overoptimistic about CRCs’ ability to cut costs if volumes decreased. They also concluded that some of the problems that had arisen should have been foreseen earlier on in the contract process:

it should have been well within the Ministry’s capability to recognise that the composition of criminal cases heard by the courts was changing and to monitor and respond to shifting trends in sentencing decisions. The Ministry did not convince us that it was not possible to foresee or model the impact of factors within its purview.48

35.Rory Stewart OBE MP, Minister of State, suggested in his response to us in oral evidence that some bidders were overoptimistic in their bids but conceded that the Government had not questioned that optimism:

they [providers] probably also had unrealistic views about the frequency of reoffending. […] Were they deliberately underbidding because they wanted to get a slice of Government business in the future? […] Some of these companies are major, global multinationals that, you might argue, could afford to take a loss in order to take a market position. […] we [the Government] are often inclined to accept the overoptimistic bid of companies that say they can save us a lot of money.49

36.The Government has had to fundamentally change assumptions in the contracts with CRCs: the fixed-cost assumption in the contracts has been reversed in the changes announced in July 2017. Having to make such a fundamental change to ensure that providers were being paid to meet the basic costs of providing probation services is concerning. It raises serious questions about the Ministry of Justice’s apparent reluctance to challenge overoptimistic bids and its ability to let contracts based on appropriate assumptions. We agree with our colleagues on the Committee of Public Accounts that the Ministry “significantly overestimated the ability of CRCs to reduce their costs to match any fall in income when it agreed the contracts”.

Changes to the contracts

37.Questions have been raised about what the Government got in return for the financial changes to the contracts announced in July 2017. The Committee of Public Accounts published a Report on CRC contracts in March 2018 in which it concluded that the Committee was “disappointed that neither the Ministry nor HMPPS could point to a tangible list of commitments from CRCs as a result of the additional money”.50

38.We asked witnesses (written and oral) about the changes that had come about as a result of the contractual changes. Many providers explained that the changes brought some “stability”, but the contract changes had not “fully resolved” CRCs’ concerns.51 For example, Working Links, a CRC parent company, explained in their submission in November 2017 that the July 2017 changes had been expected to bring a period of stability for the next two years but further issues with different aspects of the payment mechanism had been identified which meant that the period of stability had “decreased to a mere nine months”.52 Sodexo, another CRC parent company, explained that despite the changes they were still receiving less funding to deliver probation services than they had expected when they signed the contract.53 Durham Tees Valley CRC appeared to be more optimistic about the changes and explained in written evidence to us that the changes enabled them to:

retain manageable caseloads (Probation Officers hold on average forty five cases and Probation Service Officers sixty five cases),54 ensure safe service delivery with public protection [is] intact and every offender is seen face to face. The security of payment going forward […] gives us the stability and much needed time to focus upon improving our service delivery and the ability to invest in areas where we need to consider doing things differently in an attempt to further reduce reoffending.55

39.Similarly, HMI Probation explained in its written submission that the changes had helped with the financial stability of providers: “It is likely that for some CRCs, these payments will mean that books will balance in year”. However, the Inspectorate explained that it was “too early to assess the impact on the delivery or quality of probation services”.56 Dame Glenys Stacey called for the payment mechanism to be “fair between providers” and for greater transparency.57

40.The trade unions questioned how the additional money had been spent. Unison, for example, questioned whether the CRCs had used the additional money to cross-subsidise other work carried out by their parent companies.58 Napo also explained that there was a lack of transparency on what had been achieved because of the contract changes, but they could see that the money had been provided “to help[providers] over the hump”.59

41.The Ministry of Justice explained that the purpose of the changes announced in July 2017 was to provide providers with “greater financial certainty and support the delivery of core operational services”, but it was too soon to assess their impact.60

42.Ambiguity remains about the nature of the changes made to the contracts with CRCs and what the Ministry got from the CRCs in return for the increased funding. We are concerned that it has been difficult fully to scrutinise public spending decisions as a result. Commercial confidentiality should not be so readily used as a barrier to openness and transparency. We recommend that any significant changes made by the Ministry of Justice to CRC contracts, including those currently underway, should be publicly disclosed. This disclosure should include information on any significant changes to the payment model and funding for CRCs, as well as information on what the Ministry expects to receive in return for the changes.

43.The Minister, Rory Stewart OBE MP, also confirmed in oral evidence to us that the Ministry were in a further round of contract renegotiations with CRCs.61 In supplementary written evidence the Minister undertook to update the Committee following the renegotiations.62

44.In oral evidence Sodexo called for a period of stability “to be able to demonstrate the way that the contracts were originally intended to operate”.63 This was a view held by some non-CRC organisations too.64

45.Napo, a trade union, explained to us that “there [were] some providers, frankly, who are not fit for purpose and should not be holding a public contract”.65 The Minister made clear in evidence that “terminating the contracts [was] 100% absolutely an option”:

We are in very active negotiations with [CRCs] now, so we are not waiting. We are very clear that companies have failed to meet the frequency targets.66 They are already suffering very significant penalties for failing to meet those targets—so much so that, instead of waiting any longer, we are currently, at this moment, renegotiating those contracts and looking at the possibility of termination.67

On 14 June 2018 The Times reported that “Ministers [were] looking to terminate the contracts [with CRCs] in 2020, two years early, after concluding that they [were] unlikely to work”.68

46.We welcome the Minister of State’s confirmation that terminating the contracts with CRCs before 2022 is “100% an option”, if they do not deliver to the expected standards. We also note that the Ministry of Justice is currently in a further round of renegotiations with the CRCs on the contracts. Constant renegotiations of contracts only provides interim solutions to the issues facing the sector. The Ministry of Justice should move away from a “sticking-plaster” approach of rolling contract negotiations following the current round of renegotiations. If contracts are to be terminated the Ministry of Justice needs to ensure that transition plans are in place which make sure that: offenders receive the support they require to be rehabilitated and their risk of reoffending does not increase. The Ministry should undertake a public consultation on any further changes to ensure a wide range of views on contractual arrangements. This public consultation should consider the number of CRCs and the bodies eligible to bid for CRC contracts.

Financial viability of the contracts

47.HM Chief Inspector of Probation told us that several CRC providers expected to make losses over the lifetime of the contract, despite the changes that had been made to the contracts:

Some of the firms are saying openly that by the time they get to the end of the contract they expect to have lost £30 million or £40 million. Others are less forthcoming. One or two CRCs tell me that they expect ultimately to be in profit.69

The Report by the National Audit Office, published in December 2017 following changes to CRC contracts in the Summer 2017, found that 14 of the 21 CRCs were still forecast to make losses following the contract changes.70 Dame Glenys Stacey explained to us that the contracts could only be sustainable if “sufficient money [was] put in to cover the true costs of delivery”.71 In oral evidence to us CRC providers, Sodexo and Seetec, indicated that given time the contracts could be financially sustainable, although they might operate at a loss across the lifetime of the contract.72

48.In response to a Report from the Committee of Public Accounts the Ministry of Justice noted that it worked with all providers, the Cabinet Office and other Government Departments to monitor the financial stability of providers and had “contingency plans in place should any provider be unable to deliver their contractual requirements”.73

49.We are concerned that most CRCs are still forecast to make a loss over the lifetime of the contracts, despite additional funding from the Government. Provider failure could be a serious problem if the financial positions of any CRC parent company alters. The Ministry of Justice should continue to closely monitor the financial position of all CRCs to ensure that no CRC is suddenly unable to deliver probation services. It should ensure its contingency plans reflect the Principles set by the National Audit Office in its paper on “Managing Provider Failure”.

Contract management

50.HM Prison and Probation Service (HMPPS), an executive agency, sponsored by the Ministry of Justice, is responsible for overseeing probation services. The Directorate of Community Interventions within HMPPS is responsible for managing the 20 CRC contracts in England, and contract management of Wales CRC is the responsibility of HMPPS in Wales. As alluded to throughout this Chapter questions have been raised over the letting of the contracts and to some extent about the oversight of the contracts with CRCs (for example administrative costs of CRC parent companies being borne by the CRC).74 We therefore sought assurances from the Minister about the capabilities of the Ministry in managing contracts. Mr Stewart sought to assure us that the Ministry had learned the lessons of the past and was increasing its contract management capabilities:

The Transforming Contract Management Programme, which commenced in 2016, has made significant steps in strengthening our contract management processes […] and identifying capability gaps across the Department. The Department has invested in the International Association of Accredited Contract and Commercial Management (IACCM) programme, and over half of the CRC contract management team have undertaken or are currently going through the programme. Additionally, the commercial team within the Department has been strengthened with the recruitment of senior commercial professionals.75

51.The size of the contract management team was raised with us by Peter Clarke, HM Chief Inspector of Prisons. He explained that “there [were] significantly more people involved in monitoring and managing CRC contracts than there [were] in inspecting prisons”.76 Mr Clarke explained that he had an annual budget of £3.5 million and HM Inspectorate of Prisons employed between 45 and 50 full-time equivalent (FTE) staff.77 HMI Probation’s budget for 2018–19 was £6.12 million and their FTE was 88 staff plus HM Chief Inspector of Probation.78 By comparison, the Minister confirmed that, the CRC contracting teams in HMPPS England and HMPPS Wales, had an annual collective budget of £5.137 million and employed around 84 full-time equivalent staff.79 We are surprised that it costs HMPPS and HMPPS Wales more staff and money to manage the Ministry’s contracts with the 21 CRCs, than HMI Prisons has to inspect more than a hundred prisons, as well as young offender institutions, secure training centres, immigration removal centres, short-term holding facilities, police custody, military detention and court custody.

52.We heard from providers that they faced numerous inspection and contract demands. For example, Sodexo explained that CRCs were subjected to:

Along with other CRCs, including Reducing Reoffending Partnership, they called for consideration to be given to “reviewing the frequency and timetabling of the inspections and audits”.81 These providers raised concern that across the different audit and inspection work there was “evidence of overlap, duplication, differences in recommendations […] and different auditing bodies auditing at the same time”.82 HMI Probation appeared to have some sympathy with this complaint. In its submission HMI Probation explained that under their new inspection framework (starting from 1 April 2018), which meant that every provider (NPS and CRC) was inspected annually and given an overall rating, they expected HMPPS contract monitoring requirements “to be reduced for those achieving ratings of ‘good’ or ‘outstanding’”.83

53.In March 2018, a Memorandum of Understanding (MoU) between the Ministry of Justice, HMPPS, and HMI Probation was published.84 It sought to set out the roles of each body with respect to conducting the oversight of the NPS and CRCs, following the Inspectorate’s new inspection framework, which was introduced on 1 April 2018. The MoU explained that the oversight arrangements were underpinned by the principles of: transparency; consistency; accountability; proportionately; and targeted. It also explained that there was planned “overlap to ensure there [was] more than one source of intelligence on which to make assessment of delivery and business risk, so that there is no single point of failure in the system and so that major performance issues are not missed”.

54.We questioned the Minister on what steps he might take to reduce the audit and inspection burden on providers if they did not receive a ‘good’ or ‘outstanding rating by HMI Probation. He was not sympathetic to the idea of reducing the regulatory burden on providers and explained that “given the problems we are facing, […] I tend to be on the side of more inspection rather than less”.85

55.We welcome the Minister’s determination and drive to increase CRC performance, even if that means there is an increased inspection and audit burden. It is important that any oversight balances being rigorous and supportive with duplicating oversight and giving conflicting advice to providers. The Ministry should conduct a review after HMI Probation’s new inspection regime has been in place for a year to assess: the number of providers who are rated ‘good’ or ‘outstanding’; the additional burden being placed on providers because of the increased frequency of inspection; and whether there were any elements of the inspection and audit regimes which could be consolidated.

Provider performance

56.HMI Probation explained that performance in the National Probation Service was better than that among the Community Rehabilitation Companies:

The National Probation Service (NPS) is off to a good start overall, albeit there are inconsistencies across and within divisions. We have found good Community Rehabilitation Company (CRC) work in the Kent, Cumbria and South Yorkshire police force areas, but these are exceptions. In most police force areas where we have inspected we have found the CRC not delivering good quality work.86

Similarly, the trade unions were critical of probation performance, especially that of the CRCs. For example, Unison explained that performance issues had been identified with both the NPS and CRCs, but it said that action was not being taken.87

57.Sodexo, a parent company for six CRCs, told us in its written submission that it was performing well: “our high performance is evidenced through our excellent reputation and quality of delivery as demonstrated through the recent external Inspections of some of our CRCs”.88 Sodexo also claimed that the Ministry had moved the goalposts with regard to expectations: “a change in service level performance metrics, […] has resulted in a change in working practices to meet the change in requirements”.89 Another CRC parent company, Working Links, argued that CRCs were performing well against contract measures and anticipated that further improvements in performance would be forthcoming as their planned delivery models were implemented and started to become business-as-usual.90 The National Probation Service’s written evidence also painted a positive picture on its performance and maintained that despite challenges it had still managed to perform well: “The National Probation Service has successfully established itself as a new organisation, and has met the challenge of managing a significantly higher caseload than was originally envisaged”.91

58.In a Westminster Hall debate on 27 February 2018 the Minister of State agreed that CRC performance was “simply not good enough”. He wished “to be judged on driving the CRCs back to the very basics of their task”.92 In oral evidence to us he made similar points and emphasised that “the very basics” were:

having a very clear idea of where those offenders are; secondly, making sure that you have regular face-to-face contact for those offenders; thirdly, making sure that a good assessment process is taking place of the individual needs of the offender; and, finally, making sure that a good plan is put in place that has a logical relationship to that assessment.93

Outcomes v outputs

59.Lorraine Preece, Chief Executive of YSS Ltd, a charity involved in delivering probation services, explained that “the MOJ appear[ed] to be monitoring not outcomes but outputs” (examples of outcomes include finding accommodation for an offender, whereas an output would be sending an e-mail seeking to find accommodation for an offender).94 This was a view shared by a number of other witnesses. For example, the Association of Police and Crime Commissioners explained that “NPS performance data [was] complex and focused on inputs and activities, rather than outcomes”.95 LandWorks, an offender resettlement charity in South Devon, explained that: “The current payment mechanisms largely incentivise[d] completion of administrative tasks (sentence plan or enrolment forms completion for example) rather than the delivery of actual resettlement support”.96

60.Others, including HM Chief Inspector of Probation, the Police and Crime Commissioner for North Yorkshire and Serco, agreed that there were perverse incentives to deliver particular activities just because a payment was attached to them.97 Despite these perverse incentives CRC performance has not been positive compared to expectations. In its Report in December 2017 on changes to CRC contracts, the NAO found that “CRCs had met one-third [eight] of the performance targets set by the Ministry”, although there was notable variance in individual CRC performance, ranging from achieving four to 16 of the 24 targets (one target has two indicators). The NAO explained that the Ministry had expected CRCs to be meeting: “11 of the indicators from the start of the contracts [and] the remaining 14 from the end of February 2017”.98

61.We challenged the Minister on the apparent focus on outputs rather than outcomes. He explained that the TR reforms sought to, “focus more on outcomes than ever before” through introducing a payment related to reducing reoffending, but he acknowledged that practice did vary across providers.99 In response to a Report from the Committee of Public Accounts the Ministry explained that performance measures had been reviewed and revised so that “any potential for perverse incentives” was removed.100

62.The current contracts have too great a focus on outputs and inputs compared to outcomes. A greater emphasis on outcomes would provide greater assurance to Ministers and the public that public money is being well spent and probation is having a positive impact on the life of individuals and society. The Ministry of Justice should review contract performance measures so that they focus on outcomes, especially on housing, employment and drug rehabilitation, rather than inputs or outputs. This review should be completed by 1 February 2019 (four years after probation services were fully divided between the NPS and CRCs).

Reductions in reoffending and Payment by Results

63.A principle behind the Transforming Rehabilitation reforms and the contracts with the Community Rehabilitation Companies was to reduce reoffending.101 The Ministry explained in its January 2018 final and interim proven reoffending statistics bulletin that CRCs and the NPS were assessed against two measures related to reoffending (although the NPS did not have targets in relation to reducing reoffending):

The payment by results element of the CRC contract was linked to “the achievement of statistically significant reductions in reoffending against the baseline year of 2011 as set out in Transforming Rehabilitation contracts with CRCs”.103 The CRC must reduce both the binary and frequency measure to be eligible for payment by results. When the TR reforms were introduced, the Ministry of Justice explained that having both a binary and frequency measure was important as the binary measure aligned “most closely with [the then Government’s overall aim of complete desistance” and the frequency measure ensured that “providers ha[d] an incentive to continue to engage with offenders after they [had] reconvicted and sentenced and then subsequently return to the providers’ caseload”.104

64.The Ministry published data on binary and frequency reoffending of offenders supervised by CRCs.105 The first set of proven reoffending annual data was released in January 2018 for the 2015–16 annual cohort. All bar three of the 21 CRCs achieved a reduction in the binary rate of reoffending. However, performance in terms of the frequency rate was less positive, with only two CRCs reducing the frequency rate. Following these results only two CRCs (who had achieved reductions in both the binary and frequency rates of reoffending) were eligible for a payment by results payment.

65.We heard criticism in the course of our inquiry, mainly from CRCs, on the 2011 baseline against which CRCs were being judged.106 For example, Working Links, a CRC parent company, queried why the baseline for reoffending data was set four years before the TR changes were introduced and explained that they were being “held accountable for a decline that took place prior to [their] involvement in the delivery of the service”.107 The table which follows illustrates that, while the overall frequency rate of reoffending did indeed increase from 2011 to 2015, which may give some justification for claiming that the CRCs were being judged against an unfair baseline, the same is not true with regard to the average binary rate of annual average proven reoffending (see Table 1). It is worth noting that it is the frequency rate of reoffending that most CRCs have struggled to decrease.

Table 1: Reoffending in 2011, 2014 and 2015

Year

Binary rate of reoffending

Frequency rate of reoffending (average number of reoffences)

2011

26.8%

2.89

2014

26%

3.13

2015

25%

3.25

Source: Data taken from Ministry of Justice, Proven reoffending data tool, 27 April 2017

66.Concern was raised with us that the 2011 baseline for reoffending was an unfair measurement in which to compare CRC performance against in terms of reducing reoffending. We have identified that CRCs might be being penalised for increases in the frequency rate of reoffending that took place prior to the TR reforms and them taking over running probation services, however, this does not appear to be the case for the binary rate of reoffending. In response to this Report the Ministry should set out whether the 2011 baseline for reoffending is the correct measure against which CRC performance should be assessed. If the Ministry believes that the 2011 baseline remains the correct measure it should set out its reasons why.

67.There was also criticism of the payment by results (PbR) mechanism. For example, YSS Ltd explained that “the incentives [PbR] for reducing reoffending for the CRCs [were] very few compared with the rest of their contractual requirements, so they are almost de-incentivised to reduce reoffending”.108 Dame Glenys Stacey was also critical of the PbR element of the contract, and explained that it was “only a small proportion” of the contract payment (over the lifetime of the contract it was expected to rise from 6% to 28% of the contract value). Dame Glenys also questioned the evidence base of PbR: “There is mixed evidence to suggest that it stimulates innovation, but there is clear evidence to suggest that it has a mischievous history of inadvertently promoting paradoxical outcomes”.109

68.Conversely, the Minister explained to us that the Ministry had expected the PbR element of the contract to act as an incentive to reduce reoffending:

We hoped that by tying such an enormous amount—nearly 20% of the pay-out—to reoffending, we were giving a huge driver to the CRCs to make sure that they did not go through the motions, tick boxes or do things that they did not think reduced reoffending, because their entire financial viability really depended on reducing reoffending and not going through the motions.110

69.Some witnesses also questioned whether it was fair to assess CRCs on reducing reoffending.111 Users of probation told us in oral evidence that preventing reoffending was not something that was solely in the hands of the probation service.112 Andy Keen-Downs, Chief Executive Officer of Pact, a national charity that supports prisoners and their families to make a fresh start, made a similar point and explained that: “Most of the services that genuinely reduce reoffending and aid rehabilitation are outside the scope and control of TR. They are about housing, mental health, addiction, health”.113 HM Chief Inspectors of Probation and Prisons explained in their Report on Through the Gate resettlement services for short-term prisoners that expectations needed to be “tempered” and “success in individual cases [was] by no means guaranteed even when everything possible [was] done”.114

70.CRC performance in reducing reoffending, particularly the frequency rates, has been disappointing. The payment by results mechanism in the contracts with CRCs is not working as a sufficient incentive to drive improvement. However, we are not convinced that CRCs should carry full responsibility for poor performance in reducing reoffending as many of the factors that impact on reoffending are outside the control of probation services. In response to this Report the Ministry of Justice should review the payment by results mechanism and set out where it should be amended.

71.It was drawn to our attention that CRC providers did not receive information on who was reoffending and how frequently those offenders were reoffending. We were told that due to the lack of this information it was difficult for the providers to know what the CRC could have done differently in supporting that offender and to reduce their risk of reoffending. This makes it hard for CRCs to adjust and improve their practice and does not facilitate achieving a key aim of the TR reforms: to reduce reoffending. We did not explore during our inquiry what information, if any, providers, including CRCs were provided with on those individuals who reoffended. By January 2019, when the next annual cohort data is released on final binary and frequency reoffending performance, the Ministry should ensure that CRCs receive full data relating to which of their offenders reoffended.

Tackling underperformance

72.One means by which CRCs can be penalised for poor performance is through ‘service credits’ (see footnote for explanation).115 The National Audit Office (NAO) found in its December 2017 Report that the Ministry had raised more ‘service credits’ than it had applied (i.e. the MoJ did not impose all the penalties that it had proposed). It found that the Ministry had:

• allowed CRCs to reinvest £3.3 million back into services (42%);

• waived £2.2 million (29%);

• applied £2 million (27%); and

• is negotiating with CRCs for service credits worth £102,000 (1%).116

The Ministry of Justice explained to the NAO its reasoning behind not applying all service credits, including:

that it had waived service credits where it had agreed with CRCs that factors beyond their control have led to under-performance or where updated data show that service credits should not have been raised. It told us that the value of service credits raised are reinvested by CRCs in services where they have made a business case to the Ministry to do so.117

The Minister made similar points to us in evidence and implied that CRCs had made some progress in reducing reoffending (binary but not the frequency measure) so it was not proportionate to impose all penalties. The Minister also told us that the Ministry would terminate contracts if performance did not improve.118 The Minister’s answers suggested that service credits and the threat of contract termination were the only tools being used to address underperformance.

73.HM Chief Inspector of Probation explained that service credits should be used proportionately: service credits “should not be eye wateringly punitive. They are the clawbacks for failing to meet a target”.119

74.We remain unclear as to how the Ministry is tackling underperformance of CRCs on a day-to-day basis if it is not applying service credits. It is concerning that only 27% of service credits raised by the Ministry between July to September 2015 and April to June 2017 were applied. In response to this Report the Government should set out what other steps it is taking to address underperformance of CRCs, including in cases where service credits are not applied.

NPS/CRC split

75.As described in Chapter two, the Transforming Rehabilitation reforms split the delivery of probation services in two, with the National Probation Service (NPS), a public-sector body, managing high-risk offenders, and Community Rehabilitation Companies (CRCs), mainly owned by private companies, managing low or medium-risk offenders. The Diocese of Worcester Criminal Justice Affairs Group raised concern in written evidence about the “arbitrary” nature of the split, and argued that it did not:

recognise that all offenders present a risk of re-offending and some a risk of harm, and that splitting provision based upon arbitrary risk assessments fragments the services received by offenders and jeopardises public protection.120

HM Chief Inspector of Probation was similarly critical of probation services having been split by risk as “risk moves” (i.e. an offender could be initially classified as low or medium risk and thus be allocated to the CRC, but over the course of their sentence could move to be high-risk and therefore should be supervised by the NPS).121 Dame Glenys Stacey argued that what was more important was an “enduring, professional, supportive, challenging relationship that must exist between an individual and his probation worker”, “statutory partnerships locally”, and “the necessary provision of local specialist services”.122

76.We are unconvinced that splitting offenders by risk was the right way to split the probation system. Splitting the system in such a way does not recognise that the risk of harm an individual poses can change over time. Should the Government decide that probation services should continue to be delivered as per the Transforming Rehabilitation reforms, we recommend that the Government should ask HM Inspectorate of Probation to conduct a review of how best offenders should be distributed between the NPS and CRCs, and to investigate the impact of changing offender risk and how the NPS and CRCs manage this matter.

77.Staff had also been split arbitrarily. Napo, the union, explained in oral evidence that initially the NPS:CRC staff split was 30%:70%. However, the unions estimated that the staff split was now 54%:46%.123 While other witnesses did not focus on the specifics of how the staff were split between the NPS and CRCs, many explained that the NPS-CRC split had led to fragmentation in the service and created a “two-tier” system.124 Those who gave evidence to us, including providers, the voluntary sector and some Police and Crime Commissioners, explained that it had created extra levels of “bureaucracy”.125 HM Chief Inspector of Probation agreed with this observation and commented in her Annual Report for 2017 that “there is now a two-tier and fragmented service, with individuals being supervised by the NPS more effectively overall”.126 A few submissions, including those from individuals who were or who had been working in the probation sector, highlighted that risk to public protection had increased following the TR reforms.127 For example, Roger Statham, who has 49-years’ experience in probation, told us that the NPS-CRC split had “created systemic dissonance, and reduced the capacity of the service to work effectively. As a consequence, risk to the community has increased significantly”.128

78.Sonia Crozier, Director, Probation, and Executive Director, Probation and Women, at the NPS, explained that they had sought to put in place national structures “to resolve some of the issues that we know have been getting in the way”.129 Ian Barrow, Probation Divisional Director Wales, NPS, explained that at a local level he did not recognise a “two-tier” system, or a system where one side “felt in charge”. He explained that “service integration meetings [were held] locally with senior managers from the National Probation Service and the CRC and contract management”.130 We heard in oral evidence from CRCs about the collaborative work being undertaken between them and the NPS, but these CRCs in written evidence explained that “critical” problems remained and their relationship with the NPS was a “key area of concern” (mainly relating to the CRCs’ access to sentencers).131 The Ministry explained that challenges remained in the working relationships between the NPS and CRC, but implied that it was hopeful that there would be improvement as the relationships between the two “were still maturing”.132

79.The splitting of probation services between the National Probation Service and Community Rehabilitation Companies has complicated the delivery of probation services and created a “two-tier” system. Although we heard about joint working going on at a local and national level, problems in the relationship remain.

Rate Card

80.One of the ways that CRCs and the NPS are meant to have regular contact is through the ‘Rate Card’. The Rate Card is the list of available specialist services and programmes that CRCs offer (including programmes to address aggression, alcohol and drugs and programmes to help develop skills and build better relationships), which the NPS can purchase from the CRC.

81.HM Chief Inspector of Probation told us that the Rate Card was “symbolic of all the problems with the system”. She went on to explain: “It is carrying a tremendously heavy load. It looks like a cumbersome and overly complex mechanism and it is very difficult to keep it up to date”.133 Clinks, the national infrastructure organisation supporting voluntary sector organisations working in the criminal justice system, explained how problems with the Rate Card “created a barrier between charities and the NPS”.134 Clinks drew the Committee’s attention to a recommendation that it had made in a report, which called for transparency relating to the CRC supply chain (i.e. the organisations involved in delivering services).

82.The NPS’s written submission to the Committee’s inquiry highlighted that there had been problems with the Rate Card since the beginning of the TR changes:

Preparation of the rate cards by some CRCs took longer than expected, but all providers now have cards in place. The NPS perception is that the rate-card relationship works best where there are strong direct links between the NPS Division and the CRC, to reinforce the contract management arrangements.135

Day-to-day problems with the Rate Card had continued. Lynda Marginson, Probation Divisional Director North East, NPS, described the Rate Card system as “quite clunky” and noted that there could be problems going through the processes, including NPS processes, to request the service.136 Some witnesses, including CRC providers such as Working Links, agreed that the Rate Card processes acted as a “disincentive” to NPS staff to use CRC services.137 Nacro noted in its written submission that in some areas it had recently seen an increase in the use of Rate Card services and it thought that this might be due to CRCs providing greater clarity on their services.138

83.Dame Glenys Stacey also explained that there were two cultural issues related to the use of the Rate Card. The first related to the purchasing of services. Dame Glenys confirmed in oral evidence what we had learned from our conversations with those in the probation sector—the costs associated with probation services were a shock to those in the public sector:

I imagine professional staff in probation services looking at that rate card and a description of what is going to be delivered, wondering about the quality of it, and then looking at the price tag and thinking, “You must be joking.”139

The second cultural issue was that the NPS did not have a consistent policy on commissioning services and despite the NPS getting additional funding it had no obligation to spend that on CRC Rate Card services.140

84.Pact recommended that there should be a requirement for the NPS to contract directly with the supply chain to increase the NPS’s buy in and their understanding of the services on offer, rather than to continue using the Rate Card.141

85.Sonia Crozier of the NPS explained that nationally work had been going on to improve the Rate Card. Changes had been agreed, including for the 2018–19 financial year, which meant that the NPS would “have advance purchase orders with the CRCs, particularly around the high-volume elements” the NPS buys so that the CRCs had greater certainty.142 This was a proposal also made by Sodexo, a CRC parent company, in its written submission to the Committee.143

86.The Ministry of Justice explained in its written evidence that it had streamlined the process by which the NPS could purchase resettlement services from CRCs for offenders who were in custody in a different area to their home.144

87.We note that some improvements appear to have been made regarding the Rate Card in recent months and in some areas there has been an increase in the use of Rate Card services. Nonetheless, we are concerned that both the NPS and CRCs have found, and continue to find, the process overly cumbersome. The Ministry of Justice should assess whether it remains appropriate to encourage the NPS to use CRC Rate Card services, or whether the NPS should be liberalised to develop its own supply chain as a matter of course.

Accountability

88.A number of witnesses, including Police and Crime Commissioners, explained that the TR reforms had weakened local partnership working.145 For example, Unison explained in oral evidence that local networks between probation providers and other organisations, including sentencers, had been affected by the Transforming Rehabilitation reforms.146 Napo noted that there had been some improvement recently in local partnership working, for example, the local probation sentencer forums, bringing together sentencers and providers were now meeting again, which was positive.147

89.Napo called for a “locally accountable commissioning body” to be set up. They were also concerned that some Police and Crime Commissioners (PCCs) currently “[knew] nothing about what the providers in their area [were] supposed to be doing”.148 We heard from a number of other witnesses that PCCs should have a role in local accountability of probation.149 David Lloyd, Chair of the Association of Police and Crime Commissioners and PCC for Hertfordshire, explained in evidence to us that “the role of the PCC [was] a local government role. It [was] about leadership in the local area”, and if something went wrong the PCC should be the one “who carrie[d] the can for that”.150 Mr Lloyd envisaged a role for PCCs in commissioning contracts with CRCs, in administering the local criminal justice budget and in holding CRCs to account.151

90.The Transforming Rehabilitation changes have weakened local partnership working and local accountability, meaning there is less joined-up working and collaboration at a local level. We recommend that in response to this Report the Ministry of Justice should set out its vision for future local accountability of probation and the role that Police and Crime Commissioners might play.


32 HM Inspectorate of Probation (TRH0052)

34 In practice this means that CRCs are paid for the volume of support and programmes provided, but the payment for different types of activities varies. For example, completion of offenders’ unpaid work, accredited programmes and rehabilitation activity requirements, are highly weighted.

38 Ministry of Justice, Transforming Rehabilitation: A Strategy for Reform, Cm 8619, May 2013, p17

39 HC Deb, 19 July 2017, cols 54–55WS

41 Ministry of Justice (TRH0032)

44 Mr Rob Allen (TRH0071)

45 Centre for Social Justice (TRH0086)

48 Committee of Public Accounts, Twenty-Seventh Report of Session 2017–19, Government contracts for Community Rehabilitation Companies, HC 897, p5

50 Committee of Public Accounts, Twenty-Seventh Report of Session 2017–19, Government contracts for Community Rehabilitation Companies, HC 897, p7

51 See for example, Durham Tees Valley Community Rehabilitation Company (TRH0051); MTCnovo (TRH0067); Reducing Reoffending Partnership (TRH0037); and PeoplePlus (TRH0046)

52 Working Links (TRH0080)

53 Sodexo Justice (TRH0061)

54 A definition of Probation Officers and Probation Service Officers is provided later in this Chapter.

55 Durham Tees Valley Community Rehabilitation Company (TRH0051)

56 HM Inspectorate of Probation (TRH0052)

60 Ministry of Justice (TRH0032)

61 See for example Q351.

62 Ministry of Justice (TRH0118)

64 See also for example ERSA (TRH0047), Centre for Justice Innovation (TRH0057) and Inspiring intelligence ltd (TRH0089).

66 The frequency rate of reoffending is the number of times an individual offender reoffends.

68Probation firms’ contracts will be ripped up”, The Times, 14 June 2018

73 HM Treasury, Treasury Minutes: Government response to the Committee of Public Accounts on the Twentieth to the Thirtieth reports from Session 2017–19, Cm 9618, May 2018, p33

75 Ministry of Justice (TRH0118)

76 Q299. For illustrative purposes April 2018 prison population statistics from the Ministry of Justice provide data on 118 prisons.

77 Mr Clarke told the Committee that the amount allocated to HMI Prisons from the MoJ was £3.5 million. Mr Clarke was drawing a comparison between the levels of MoJ funding for HMI Prisons and the amount the MoJ spends on management of CRC contracts. HMI Prisons has a total annual budget of approximately £4.5 million.

78 HM Inspectorate of Probation, Corporate Plan 2016–19, August 2016

79 Ministry of Justice (TRH0118)

80 Sodexo Justice (TRH0061)

81 Sodexo Justice (TRH0061)

82 Sodexo Justice (TRH0061); Reducing Reoffending Partnership (TRH0037)

83 HM Inspectorate of Probation (TRH0052)

86 HM Inspectorate of Probation (TRH0052)

87 UNISON (TRH0045)

88 Sodexo Justice (TRH0061)

89 Sodexo Justice (TRH0061)

90 Working Links (TRH0080)

91 National Probation Service (TRH0034)

92 HC Deb, 27 February 2018, col 278WH

93 Q350. See also Mr David Breakspear (TRH0103) for information on face-to-face contact.

95 APCC (TRH0064)

96 LandWorks (TRH0081)

97 See for example: Q301, Police and Crime Commissioner for North Yorkshire (TRH0070) and Serco plc (TRH0077).

100 HM Treasury, Treasury Minutes: Government response to the Committee of Public Accounts on the Twentieth to the Thirtieth reports from Session 2017–19, Cm 9618, May 2018, p36

104 Ministry of Justice, Transforming Rehabilitation: A revolution in the way we manage offenders, Cm 8517, January 2013, p18

106 See for example: YSS ltd (TRH0056); Seetec (TRH0036); Reducing Reoffending Partnership (TRH0037); and MTCnovo (TRH0067)

107 Working Links (TRH0080)

111 See for example Dr Rebecca Marples, Professor Charlie Brooker and Dr Coral Sirdifield (TRH0095).

115 Applying a ‘service credit’ means that the Ministry would deduct a specified amount from its ‘fee for service’ payment to CRCs.

120 Diocese of Worcester Criminal Justice Affairs Group (TRH0019)

121 Q131 and see also Mr Nariman Dubash (TRH0012); Adaptus Consulting LLP (TRH0041); Centre for Justice Innovation (TRH0057); Mr Grant Evans (TRH0098)

124 See for example: UNISON (TRH0045), Dr Lawrence Burke, Dr Matthew Millings and Mr Stuart Taylor (TRH0053), Napo, the Trade Union and Professional Association for Probation and Family Court Staff (TRH0059), Q108 and Q114.

125 See for example: APCC (TRH0064), PCC for Hertfordshire (TRH0065), Q136, Q143, Q146 and Q243.

126 HM Inspectorate of Probation, 2017 Annual Report, 14 December 2017, p6

127 See for example, Diocese of Worcester Criminal Justice Affairs Group (TRH0019), Mr Grant Evans (TRH0098) and A Probation Officer 2 (TRH0099).

128 Roger Statham (TRH0008).

131 See for example Q217, Q225, Seetec (TRH0036) and Sodexo Justice (TRH0061).

132 At present the NPS can re-assess the risk of an offender either for any offenders that it is supervising (deescalating) or at the request of the CRC for offenders they are supervising (escalating). Ministry of Justice (TRH0032).

134 Clinks (TRH0060)

135 National Probation Service (TRH0034)

137 Working Links (TRH0080). See also for example Seetec (TRH0036) and Pact Futures CIC (TRH0050).

138 Nacro (TRH0078)

139 Q323. See also, for example, Pact Futures CIC (TRH0050).

140 HM Inspectorate of Probation, 2017 Annual Report, 14 December 2017, p88

141 Pact Futures CIC (TRH0050). See also, for example, Clinks (TRH0060).

143 Sodexo Justice (TRH0061)

144 Ministry of Justice (TRH0032)

145 Police and Crime Commissioners are elected to make sure that local police meet the needs of the community. They often sit on local boards, such as those relating to health and wellbeing, local strategic partnerships and community safety partnerships, to address issues of local interest.

146 Q102. See also for example, Northamptonshire Police and Crime Commissioner (TRH0010), Office of the Avon & Somerset Police & Crime Commissioner (TRH0043), Clinks (TRH0060), APCC (TRH0064), PCC for Hertfordshire (TRH0065) and Mr Tony Knivett/John Budd (TRH0093).

149 See for example, Northamptonshire Police and Crime Commissioner (TRH0010), Sussex Police and Crime Commissioner (TRH0015), Office of the Avon & Somerset Police & Crime Commissioner (TRH0043), PCC for Hertfordshire (TRH0065), Police and Crime Commissioner for North Yorkshire (TRH0070), Women in Prison (TRH0076), Office of Police and Crime Commissioner Devon and Cornwall (TRH0083), PCC for Cleveland and Crime and Victims’ Commissioner for Durham (TRH0085), Centre for Social Justice (TRH0086) and Mr Tony Knivett/John Budd (TRH0093).




Published: 22 June 2018