Practicalities of Payment by Results outweigh potential

The National Audit Office has issued a report ‘Outcome-based payment schemes: government’s use of payment by results‘. The NAO news release introductory paragraphs say:

“The government’s payment by results (PbR) schemes are now estimated by the National Audit Office to account for at least £15 billion of public spending. However, neither the Cabinet Office nor the Treasury currently monitors how PbR is operating across government.


“.. the spending watchdog says that, without a  common source of shared expertise and a strong evidence base, PbR schemes may be poorly designed and implemented, and commissioners are in danger of ‘reinventing the wheel’ for each new scheme.”

The policy director at NCVO, the English umbrella body, has commented:

“Our own research found charities thought payment-by-results contracts were often being used because they were political ‘flavour of the month’ rather than because they were appropriate for the service being delivered.

“Badly designed payment-by-results contracts are commonplace, and can in fact hamper the innovation that they are supposed to promote.

“The principle of payment by results is hard to object to, but the practicalities of getting the mechanism right mean it is often far more effective and efficient to use straightforward contracts and grants.”

The comment item also links through to previous NCVO reports on PbR.

Civil Society News coverage leads with:

Government departments need to understand how charities fit into the delivery of payments-by-results schemes to improve the chances of them succeeding. … charities “tend to have a lower appetite for risk and lower working capital” than larger private providers and “find it harder to sustain themselves financially in the period between intervention and payment”.

 Open Democracy also has a longish piece ‘Exploding the myth of ‘payment by results’ ‘.