Press releases

Payment by Results hampering public service innovation – new report

A key government mechanism to boost innovation in public services could be preventing rather than promoting new ways of working, a report today warns (1).

Payment by Results (PbR), where a contractor is paid for a successful outcome rather than for undertaking specified activity, has been seen as an important tool for public service reform. It is intended to give providers the freedom to decide how to achieve results, rather than requiring them to follow directions from government.

But the National Council for Voluntary Organisations has warned that the instability created for providers by PbR is in danger of making them more risk-averse and less inclined to experiment with new ways to achieve results.

Among the problems with typical PbR models the report identifies:

  • 'binary' payment models, where payment is only made when a target is achieved and no payment at all is made for progress towards the target
  • the potential for failings in related services outside the provider's control to reduce the chances of their targets being achieved and hence their payment
  • insufficient payments to facilitate work with the hardest to help
  • payment arrangements that mean smaller and specialist organisations are excluded because they don't have the reserves to cover the period between starting work and receiving payment.

For charities in particular, the cash flow problems that PbR contracts create can be a major barrier to taking on contracts at all, even in areas where a charity could be very successful.

A previous NCVO report analysing a selection of PbR contracts found that many contained targets that were irrelevant or even detrimental to the desired outcomes (2).

Among the recommendations in today's report:

  • Commissioners should make use of up-front payments to ease cash-flow barriers, and provide payments for intermediate outcomes to facilitate working with service users who are further from achieving end outcomes.
  • Charities should develop an internal check to ensure that contracts they are bidding for and undertaking will allow them to work to their values, and not mean harder to help clients are uneconomic to work with.
  • Government should ensure coordinated evaluation of different PbR models and sharing of good practice.

Sir Stuart Etherington, chief executive of the National Council for Voluntary Organisations, said:

'Charities want to play their part in public service reform and have great potential to develop truly innovative solutions, improving services and reducing costs. But current PbR practice risks excluding the specialist charities we really need to involve in order to develop public services.

'Few people object to the principle of paying for an outcome, but putting it into practice effectively when it comes to complex services for people with multiple needs is challenging. Many of the current models of PbR still need significant development before they are truly fit for purpose.

'Commissioners and providers must take action to improve their PbR arrangements and to learn from best practice. We mustn't let a mechanism designed to drive innovation instead undermine it.'

Ends

(1) 'Payment by results and the voluntary sector' (PDF, 250KB), published today, forms part of NCVO's Future of Public Services series, using learning from NCVO members to review the role of voluntary organisations in public services.

(2) Payment by results implementation 'seriously flawed', 30 October 2013

The past two years have seen a proliferation of PbR contracts across public services, marking a shift towards paying providers for the outcomes they deliver in markets that have traditionally purchased activities. This centrally driven growth of PbR is a cornerstone of the Government's 'Open Public Services' agenda, an agenda which also carries the significant ambition to create 'a truly level playing field between the public, private and voluntary sectors.”

NCVO represents the charity and voluntary sector, with over 10,000 members, from the biggest household name charities to the smallest community groups.

Over £1bn of government income wiped from charities

UK charities lost over £1.3billion in income from government as spending cuts kicked in, new figures published today show.

Read more: Over £1bn of government income wiped from charities

Campaigning, volunteering and public trust among NCVO’s priorities in new five-year strategy

Defending the rights of voluntary organisations to campaign and safeguarding public trust and confidence in charities are among the priorities outlined in NCVO’s new strategic plan, launched today.

The five-year strategy follows a consultation with NCVO members last year, and will take NCVO to its centenary year, 2019.

Read more: Campaigning, volunteering and public trust among NCVO’s priorities in new five-year strategy

Budget 2014: NCVO comments

Karl Wilding, director of public policy at the National Council for Voluntary Organisations, said:

'Our members will be pleased to see that they can look forward to further growth in the economy. For many of them, the public spending environment will continue to be tough for the foreseeable future, with inevitable consequences for the communities they support.

Read more: Budget 2014: NCVO comments

NCVO comment on CLG Committee local procurement report

​Communities and Local Government Committee report calling on all councils to let contracts on the basis of wider social value rather than lowest price is a timely nudge, the National Council for Voluntary Organisations says.

Read more: NCVO comment on CLG Committee local procurement report

Reduce unemployment by helping jobless volunteer – new report

Helping jobless people to volunteer could be the key to reducing unemployment, a new report published today argues.

Volunteering can give people the skills and confidence needed to help them find jobs, according to the charity representative body, the National Council for Voluntary Organisations (NCVO).

Read more: Reduce unemployment by helping jobless volunteer – new report

EU manifesto, Towards a More Open Europe

NCVO has today (7 March) set out its vision for reform and renewal in Europe through its manifesto, Towards a More Open Europe. Elections to the European Parliament will take place on 22 May.

Read more: EU manifesto, Towards a More Open Europe

Welfare cap will drive short-term decision-making and arbitrary benefit cuts, say charities

A group of leading charities have warned the government that the new overall cap on welfare spending – the Annually Managed Expenditure cap – could drive short-term decisions about social security.

Read more: Welfare cap will drive short-term decision-making and arbitrary benefit cuts, say charities

Welfare reform research will inform future changes

NCVO is to undertake a major research project into the effects of recent welfare reforms on charities and their beneficiaries.

The year-long project will consider the effectiveness of recent welfare reforms and identify the impacts they have had. The review will take evidence from charities and is intended to inform thinking on any future changes to welfare policy.

The project launched today with a call for evidence from charities on the impact reforms have had on their beneficiaries and the ways in which charities have changed the support they provide to beneficiaries.

Read more: Welfare reform research will inform future changes

NCVO comment on PAC reports on Charity Commission and Gift Aid

NCVO has commented on the public accounts committee reports on the Charity Commission and Gift Aid.

Read more: NCVO comment on PAC reports on Charity Commission and Gift Aid

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