The coming probation privatisation disaster

The government's plans for probation privatisation are likely to founder on the rocks of implementation, Richard Garside argues.

Richard Garside
Wednesday, 22 January, 2014

If the government's plans to privatise probation under the 'Transforming Rehabilitation' programme end up being as messy, expensive, counter-productive and damaging as many critics fear, today's report from the House of Commons Justice Committee sheds some light on why.

Across a range of areas - programme design and definition of outcome, programme costings, transition planning and professional buy-in, to name but a few - the Committee's report raises significant concerns and questions, albeit wrapped up in polite parliamentary language.

Programme design

The current probation service is organised at a local level under 35 Probation Trusts, which work in partnership with a range of partners and providers in the public, private and voluntary sector. Risk assessment, case management and delivery is coordinated through the 35 Trusts, which are in turn accountable to the Ministry of Justice centrally.

No system is perfect and it has been tinkered around with over the years. But the current probation service has the virtue of relative simplicity in terms of structure and clear lines of accountability to the centre.

Under the government's plans the 35 Probation Trusts will be replaced by 21 'Community Rehabilitation Companies' (CRCs). The CRCs will be responsible for the supervision of most individuals on community sentences and on release from prison. The contracts to run the CRCs are currently being put out to tender by the Ministry of Justice. The successful bidders are expected to be large private companies mostly, awarded relatively long contracts of between seven and ten years in duration.

Alongside the CRC structure, a new National Probation Service (NPS), responsible for the supervision of so-called 'high risk' individuals, as well as some technical functions such as risk assessment and pre-sentence reports, will be established.

In place of a single probation service, operating locally, there will therefore be:

'two probation services (the new National Probation Service and the contracted provider) in every locality delivering similar services side by side and sometimes via one another. Each will have to form working relationships with other local organisations, bodies and services for the delivery of the joint or complementary services which characterise effective local work with offenders.'

'Ministers should recognise,' the Committee continues, 'that there is a potential risk that this will lead to inefficient use of resources, and confuse accountability at local level.'

Introducing a more complicated structure, with a higher risk of inefficiency and the greater potential for confused accountability, does not sound like a very good basis for effective reform.

So what is the rationale? This brings us on to the proposed financing arrangements: 'payment by results'.

Payment by results

Successful bidders for the CRCs will receive a portion of the total payments based on the impact of their activities: in particular, on the degree to which they are successful in containing, possibly reducing, 'reoffending'.

Tackling 'reoffending' in fact is about preventing people being convicted of new offences and getting a fresh spell in prison and/or under probation supervision. As a result, those running the CRCs are in effect being paid to reduce the size of their 'business' over time, an odd inversion of the usual way business operates.

This tension aside, in order to demonstrate impact the successful bidders will need a large enough sample size to work with. This is one of the reasons why the 35 Probation Trust areas are to be reorganised into the larger 21 CRCs. As the Committee report observes:

'The use of payment by results determines the size of contract package areas, which must be sufficiently large to identify results with confidence.'

The CRCs will receive larger upfront payments at the beginning of the contracts, with a reduction of payments in the latter stages as their experience grows.

The Ministry of Justice plans to use these savings to cover the additional costs of supervising all prisoners subject to short prison sentences. Those receiving a sentence of between 12 and 24 months are currently subject to a post-release supervision period of six months. Those on prison sentences of under 12 months are currently subject to no post-release supervision. Under the government's plans all prisoners serving sentences of up to 24 months will be subject to a 12 month post-release supervision period.

This is a fine balancing act, and one that points to relatively long contracts that enable the successful bidders to bank profits early on to allow for reduced income in the latter stages of the contract. To quote again from the Committee's report:

'It appears to us that the risk of not achieving sufficient savings relates more to the level of savings that providers are able to achieve... than the overall costs of the reforms per se. This, and the proposal to revise the payment mechanism to enable providers to receive more of the fee for service upfront in return for taking more risks later on, also suggests that the length of the contracts is the basis on which the Ministry and Treasury have concluded that the numbers will add up.'

In essence, the replacement of 35 Probation Trusts by 21 CRCs, based on a lengthy contract period, is primarily determined by financial considerations and the commitment to introduce a payment by results model, supposedly to drive down costs. As the Committee notes:

'an unavoidable consequence of the way this programme is designed is that one element of the competition will be about how cheaply providers can deliver the residual service to enable the maximum resource to be unlocked to “reinvest” in rehabilitative provision for short-sentenced prisoners and others in prison and after their release.'

As for whether payment by results will work, the Committee is at best agnostic. The Justice Minister Chris Grayling told them 'in February 2013 that the payment by results approach was "so obviously the right thing to do".' Sincere belief is not, however, a good substitute for evidence. And on the question of evidence the Committee is hardly encouraging:

'Serious question marks hang over the design of the PbR mechanism itself, and the proportion of payment to providers which will depend on the results they achieve. It is likely that any model introduced at the beginning of the new system will need to be modified in the light of experience.'

As well as raising questions over the mechanism the Committee also questions the scope for savings. The Ministry of Justice, the Committee claims, 'has been less than forthcoming' about the costs of the programme and the anticipated savings'. But on the 'limited information' the government supplied the Committee, they concluded that it was not clear to them whether 'sufficient funding' was in place to implement the entire programme. Moreover:

'in the absence of published projections of the likely reductions in reoffending or estimates of how this might impact on the future costs of the system, it is not possible to predict whether savings will be swallowed up by increased demand on the prison system and reduced funding of existing services by statutory partners and other funders.'

The Justice Secretary appears relatively unbothered about the lack of clarity over savings. Indeed, as the report explains, Mr Grayling told the Committee that 'the programme is "not a money saving exercise": rather it is about seeking to change the cost base of the criminal justice system in future'.

It is, though, far from clear whether the balance between delivering short-term savings and charting a long-term structural reform programme has been properly thought through.

Successful implementation

The rights and wrongs of the government's proposed structure and payment model aside, what might mitigate against successful implementation of the government's plans?

One concern relates to the ongoing stability of existing arrangements as the new arrangements come into effect. For example, the Committee highlights 'a risk that the focus of these reforms on reducing reoffending by short-sentenced prisoners will destabilise the progress that has been made with other cohorts of offenders'.

Add to this concerns over the diversity of provision under the new arrangements. The Committee expresses itself as 'extremely concerned if the bidding process for prime providers were to be dominated by the very small number of large businesses which currently hold most of the major outsourcing contracts in the criminal justice system'. Given the risk successful bidders might be expected to shoulder and the size of the final contracts, domination by large businesses seems highly likely.

At the other end of the scale, the Committee notes that of around 1,700 voluntary and community organisations currently working within the prisons and probation field, 'fewer than 400 registered an interest in providing services under the programme; if indicative of the final number this would represent a considerable narrowing of the market.'

In relation to the quality of service delivery, the risk that successful bidders will simply be those that offer the cheapest price is high. The Committee also expressed strong concern about the training and qualifications of staff working in the CRCs:

'Community Rehabilitation Companies will be managing considerable risk on a day to day basis, yet will not be required to have professionally qualified staff. This is a matter of considerable concern to us. We welcome the creation of a centre of excellence for probation, and we would hope that new providers will support their staff to gain suitable accreditation and qualifications through this Probation Institute. We nevertheless believe that they should be bound by a contractual requirement to have a minimum proportion of qualified probation staff related to the volume and risk levels of offenders supervised and to provide continuous training.'

The Committee was also struck by the lack of buy-in from among the existing probation leadership. The Committee claims that it 'heard compelling evidence that neither Chief Executives nor Trust Boards feel confident that they are ready for the first stage of transition or that their concerns are being listened to'. The report also notes:

'The fact that a quarter of posts for the leadership of CRCs are unfilled is perhaps testament to the depth of feeling amongst the probation sector about these reforms, given that there are currently 35 Trust Chiefs.'

The parliamentary arithmetic and the powers to change probation structures already resting with ministers do not favour the opponents of probation privatisation. But it also appears increasingly likely that the government's plans will founder on the rocks of implementation.

The Justice Committee's report highlights where most of these rocks are.

Related items

Transforming rehabilitation and the work programme (4 October, 2013)
Risky and fundamentally misguided
(24 September, 2013)
The great probation sell-off (19 September, 2013)
Transforming Rehabilitation: five questions (10 January, 2013)