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Marketisation and Privatisation in Criminal Justice$
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Kevin Albertson, Mary Corcoran, and Jake Phillips

Print publication date: 2020

Print ISBN-13: 9781447345701

Published to Policy Press Scholarship Online: January 2021

DOI: 10.1332/policypress/9781447345701.001.0001

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Outcomes-based contracts in the UK public sector

Outcomes-based contracts in the UK public sector

Chapter:
(p.31) 2 Outcomes-based contracts in the UK public sector
Source:
Marketisation and Privatisation in Criminal Justice
Author(s):

Chris Fox

Kevin Albertson

Publisher:
Policy Press
DOI:10.1332/policypress/9781447345701.003.0003

A major innovation in public sector commissioning in recent years is the recourse of the state to so called ‘Outcomes-based Contracts’ particularly Payment by Results (PbR) in the UK. A PbR contract contains three elements, a commissioner, a service provider and an outcomes metric. The outcomes metrics is designed, in theory, to align the incentive structures of the commissioner and the service delivery agency so as to achieve efficient results. Thus, PbR is theorised to allow public commissioners to pay a provider of services on the basis of specified outcomes achieved rather than the inputs or outputs delivered. A related innovation is that of Social Impact Bonds (SIBs). SIBs are distinguished from PbR contracts in that they supposedly allow financiers to contribute to the social innovation process by providing working capital. The return on the SIB is calculated using PbR methodology. Compared to a PbR contract, the SIB contract seeks to align the incentive structures, not only of commissioners and providers, but also financiers through an appropriate metrics-based payments scheme. PbR and SIBs have been referred to as key tools for delivering change. In this chapter we set out the theoretical and practical challenges arising from the development and application of PbR and SIBs and consider the evidence of their efficacy or otherwise.

Keywords:   Outcomes-Based Contracts, Payment by Results, Social Impact Bonds, Public Sector Commissioning

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