UK watchdog highlights failure of innovation-focused probation contracts

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.