Payment by Results

The new era of ‘outcome-based government’

The UK social policy landscape has undergone radical change in recent years. With growing recognition that the real value of government expenditure – i.e. how much it improves people’s lives – has rarely been considered, new approaches to public spending and service commissioning have been gathering momentum.

‘Evidence-based policy making’ has been adopted by a number of government bodies and NGOs, while the ‘social return on investment (SROI)’ model has been rolled out across much of the voluntary sector. These approaches seek to measure and maximise the social outcomes delivered by public spending, and signal a shift away from the policy methods of old.

Payment by Results

Within this new era of ‘outcome-based government’, Payment by Results (PbR) is another way of encouraging service providers to demonstrate the social value of their work.

Under the scheme, a set percentage of a service provider’s fee is only paid upon the delivery of results that show evidence of positive social impact, or that demonstrate the achievement of specific goals. For example, that repeat offending has been reduced, or that healthcare services have met people’s needs under the personalised care agenda.

PbR is becoming an increasingly popular public policy tool. In fact, all spin-outs from the recent reshaping of the UK probation service contained a ‘PbR element’ at point of tender. But while PbR is intended to incentivise social enterprises and other providers, its novelty has naturally made some organisations wary.

And this is where we come in.

Helping organisations measure and demonstrate value

Inspire2Enterprise is committed to helping individuals and organisations understand PbR and demonstrate the social impact and value of their services. 

We know that smaller organisations are often particularly nervous about the financial implications of not meeting PbR requirements. And so we provide dedicated consultation to ascertain an organisation’s readiness for PbR. We also explore a range of measures intended to simplify the PbR process, minimise the risks, and help negotiate contracts.

Such measures include:

• Sourcing extra funding or investment
• Fitting an organisation into a larger supply chain
• Reassessing an organisation’s business model to help improve cash flow – for example, through operational efficiencies
• Using research to help measure and show social impact and value

If you’re thinking about entering a PbR contract, or simply want to find out more about how PbR works, get in touch to see how we could help.