Delivering public services: The growing use of Payment by Results

PbR projects fall into two types: those run on the prime provider model (such as the Work Programme) and those using Social Impact Bonds (such as the pilot scheme at Peterborough Prison to finance rehabilitation work with short term prisoners).

The Payment by Results (PbR) approach to delivery of public services is more than a decade old but remains controversial. Advocates of the PbR approach tend to depict its advantages in terms of reforming and improving public services, by delivering more for less and by bringing in a wider range of service providers from the public, private and third sectors. Critics of the PbR approach, though, express concerns about whether it will by its nature tend to favour larger providers, thus squeezing out small and medium-sized providers (such as local charities and third sector organisations) and whether it will induce providers to “cream” the more tractable cases and “park” the less tractable ones. There is debate, too, about what constitutes a “result”, by which service providers will be paid.

This note examines some of the arguments for and against PbR and looks at current and planned projects in rehabilitation, welfare to work, the NHS, children’s social services and with rough sleepers and with vulnerable young people.