The Government's focus on payment by results (PbR) is hindering the social sector's ability to help the most vulnerable, according to a new report.
Beyond big contracts: commissioning public services for better outcomes found that the current contracting environment is more suited for larger providers and could make social sector organisations more vulnerable to financial risk.
It also found that social sector organisations often lack the necessary commercial and contract management skills to succeed when operating in a PbR framework.
The report is a joint project between Collaborate and the Institute for Government, and supported by the Calouste Gulbenkian Foundation.
Institute for Government director of research, Tom Gash, said: 'The government has argued that new contracting approaches such as ‘payment by results’ will spur innovation in service delivery. However, our research shows many providers are unwilling to risk new approaches in the current fiscal climate. This is particularly true for smaller organisations, which risk bankruptcy if they fail to meet targets.
'Commissioners need a much better understanding of how providers – and particularly smaller ones – are likely to respond to financial risks. The current approach may deliver cost reductions but is likely to exclude smaller players, reduce levels of competition, contributing to inadequate provision for service users with complex needs.'
The report also found:
• Contracting mechanisms such as PbR do not play to the strengths of social sector, smaller providers.
• Commissioners and providers felt that a co-produced and more collaborative model of service delivery could lead to better outcomes.
• The blanket application of PbR could undermine this goal if insufficient attention is paid to the service differences or commissioning and provider capabilities.
