UK watchdog highlights failure of innovation-focused probation contracts

By on 04/03/2019 | Updated on 24/09/2020
Through the gate: UK probation outsourcing intended to provide better support for short-term prisoners – but contracts are being ended early (Image courtesy: Chmee2).

A confused approach to fostering innovation contributed to the failure of the UK government’s probation outsourcing reforms, according to a spending watchdog.

In 2013, the Ministry of Justice outsourced the provision of probation services for low- and medium-risk offenders to private and voluntary sector organisations, with the aim of saving enough money to extend probation services to prisoners serving very short sentences. However, a National Audit Office (NAO) report has concluded that the government has failed to achieve the wider objectives of its reforms, and that the contracts will cost it £467m (US$616m) more than planned.

Amyas Morse, head of the NAO, said: “The ministry set itself up to fail in how it approached probation reforms. 

“Its rushed roll-out created significant risks that it was unable to manage. 

The botched outsourcing has “had far reaching consequences,” he added. “Not only have these failings been extremely costly for taxpayers, but we have seen the number of people on short sentences recalled to prison skyrocket.”

Sorry tale

In 2013, justice secretary Chris Grayling created 21 Community Rehabilitation Companies (CRCs) to manage low-to-medium risk offenders, alongside a public sector National Probation Service (NPS) to manage higher-risk offenders.

In February 2015, the CRCs were transferred to eight, mainly private sector, suppliers. Their contracts were managed by HM Prison & Probation Service (HMPPS), and intended to run to 2021-22.

However, last year, current justice secretary David Gauke announced that the CRC contracts will be terminated 14 months early, due to failings in the quality of services being provided.

Innovation requested, then rejected

The original contracts were intended to allow providers to try different approaches to reducing reoffending, including a payment by results component as an incentive – but this conflicted with the ministry’s low risk appetite and had further negative repercussions, the NAO found.

“The ministry designed outcome-based contracts with payment by results to encourage CRCs to innovate,” its report said. “However, the role of probation services in protecting the public and delivering sentences handed down by the courts meant that the ministry had a low risk appetite for failure, which did not sit well with its desire for innovation.”

Furthermore, the light-touch contracts hampered the ability of the government to hold providers to account for poorly performing services, the NAO said. And the use of payment-by-results was not well-suited for probation services, where data on reoffending can take two years to become available and results are also “influenced by services such as support with housing, employment and substance misuse”.

Badly-managed outsourcing

The NAO also identified a number of failings in transformation plans the government required CRCs to prepare, in order to incentivise innovation.

These included commitments to invest in new technology, make greater use of voluntary service organisations, and better target services. However, delays in delivering an ICT gateway between CRCs and HM Prison & Probation Service led to the ministry paying £23.1m (US$30.5m) in compensation to 17 CRCs. By January, the NAO said, only two CRCs were using the gateway.

Elsewhere in the report, the NAO said that the MoJ designed and implemented its reforms too quickly and without sufficient testing. “Tight deadlines meant that the Ministry did not adequately test how the transformed system might work before letting contracts,” it said. “It did not have a good understanding of probation trusts’ delivery models, working practices and governance, and relied heavily on their information about costs.”

Pulling things back

Overall, CRCs have performed poorly against a range of performance measures – meeting, on average, only 53% of their quarterly contractual targets by September 2018. 

However, the NPS’s performance has been stronger, despite “severe staff shortfalls”, the report said – meeting 94% of its performance targets by September 2018. 

Responding to the report, prisons and probation minister Rory Stewart said: “I am pleased that the report recognises the strong performance of the National Probation Service in looking after our higher risk offenders.

“But the performance of the CRCs, which look after our lower risk offenders, is too often deeply disappointing.”

He said that the government takes the NAO’s findings “very seriously” and will set out detailed proposals for the future of probation later in the year.

The ministry plans to procure second-generation contracts in April 2019. However, the NAO report warns that the ministry “has limited time to procure the new contracts, and in persisting with the split between the NPS and CRCs, it will still need to manage risks posed by the interfaces between these organisations and the wider system.”

A common factor

The policy’s failure adds to an ever-lengthening list of collapsed services and reforms overseen by Chris Grayling, who ran the Ministry of Justice from 2012 to 2015.

During his tenure, the ministry’s reforms to courts interpretation services led to service failures, disrupting courts – and prompting scathing criticism from select committees and the NAO. Some of these criticisms closely foreshadow the NAO’s findings on the subsequent failure of the probation reforms: for example, the Justice Committee found that the MoJ didn’t understand the services it was outsourcing and failed to conduct due diligence on its chosen provider. The ministry had rushed the project, it said, and “did not have a sufficient understanding of the complexities of court interpreting work”

Grayling also introduced fees for applicants to employment tribunals, scrapped after a union challenged them in the courts. And he reformed the tendering process for legal aid, whilst cutting the support available; but after a dramatic rise in litigants-in-person led to chaos and delays in the courts, his successor Michael Gove scrapped both policies.

Grayling subsequently went to become transport secretary in 2016. Since then, the rail network has seen huge disruption caused by strikes and botched timetable changes. He was widely ridiculed last month when forced to scrap a contract signed with a ferry company which lacked any ships, then required to pay out £33m (US$45m) to Eurotunnel – which had brought a case challenging the way the ferry contract had been let.

About Colin Marrs

Colin is a journalist and editor with long experience in the government and built environment sectors. He cut his teeth in local newspaper journalism before moving to Inside Housing in 1999. He has worked in a variety of roles for built environment titles including Planning, Regeneration & Renewal and Property Week. After a spell at advertising industry bible Campaign magazine, he became a freelancer in 2010. Since then he has edited, local government finance publication and contributed news and features to Civil Service World, Architects’ Journal, Social Housing, management titles and written white papers for major corporate and public sector clients.

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