Is PbR the next Credit Default Swap?

I’m luckier than most, in that I managed a whole 8-days on leave in Cornwall this year and never had to come home once to deal with a crisis!!  Mind you, I did need to take work with me and had a major report deadline to hit while I was away, which thankfully due to good wifi, laptops etc was possible, if a bit inconvenient

On returning home I’ve had a brief bug (not a pleasant 24hrs) and have struggled to get up to speed with all thats going on around me, namely oldest son back to college, youngest back to school, finishing off the garden, work, house-hunting (maybe), some interesting business opportunities and Newsnight on BBC2 last night predicting the meltdown of European economies and a double dip recession – I’m in a constant state of anxiety

Tonight’s Newsnight was discussing the riots / re-offending and Ken Clarkes comments, about a ‘so called’ feral underclass

Suddenly, after years of a drug policy that used drug treatment as a crime reduction tool we have the coalition deciding that prisons and the criminal justice system should focus on reducing re-offending and the prime initiative for achieving this will be to Pay by Results

For the uninitiated this means that the government will pay various “providers” (whether charities or private sector providers) a sum of money if they get an offender to stop committing crime (and go straight – according to Nick Herbert MP on Newsnight).

In doing so are we writing off all the money we currently pay the legion of public sector staff charged with running the system to date – why doesn’t the Government pay them by results?.  Are we saying that a sort of socio-serco-tesco or a large charity can really succeed where all the institutions of the state have failed?

Does that make the Payment by Results model the equivalent of a Credit Default Swap in sub-prime mortgage terms – I wonder how things will turn out!!

You dont need to be a rocket scientist to work this one out.  What amazes me is that the civil servants seem to be able to sell this type of mutton dressed as lamb to successive governments and successive governments, it seems, adopt this ludicrous stuff as policy.  Its suggesting that the same ends (crime reduction) via a different means (PbR) and less process and target measures will be a good policy – in reality it is the old policy rebranded, repackaged and after a bit of running about, business as usual

If you talk to ex-offenders, ex-drug users, to people that have turned their lives around and ask them what helped them, they will tell you, from the vantage point of their new lives, it wasn’t the gimmicks, or the policies, the systems and the companies, or the charities for that matter – invariably what they tell me is that it was people, (the prison officer, the teacher, the probation officer etc etc) relationships, someone that believed in them, went the extra mile with them.  They will tell you that somehow this caused hope to rise up in them.

A hope that helped them to dare to believe that if they embarked on this journey of change that they had a reasonable chance of success.  Hope is a powerful thing and I dont hear us talking about hope much.  Payment by Results, we want the result and we will pay someone to go and get it for us because we want the good stuff, the changed person and the good behaviour and by offering a financial incentive to a company or a charity to go and get it for us what we are offering is in effect a credit default swap that defines a persons worth like a sub-prime credit or debt and sells it on for a profit – or we call it a social bond if we are a bit left of centre and don’t like the idea of a profit – no thanks

When the dust settles we will have an invoice for the public sector (that didn’t shrink that much), an invoice for all the “results” (that will turn out to be mainly short term) and a load of charities will be left holding the toxic debt for the bogus results and we will have to watch them fail or bail them out, either way we’ll end up paying at least 3 times for a situation that is far worse that it is now

What we need to do is employ strategies that work, not credit default swap PbR gimmicks.  If we want to change behaviour we need to send a greater proportion of people in the system, to a rehabilitation setting, somewhere they can address their addictions, their relationships, their behaviour, including their offending and their attitudes to themselves, to others and to society

Currently very few people get intensive help in prison and hardly anyone gets to go to rehab after prison and there is enough money in the system for this to happen, right now – I know, I work in the system, I work with rehabs, with prisons and I am regularly in touch with people in the criminal justice system, workers and offenders.

Rushing PbR into a criminal justice and treatment system in flux and expecting it to help everyone do more with less is like re-arranging the deck chairs on the Titanic and expecting it to float as a result.  The system does need change, it does need rebalancing but it needs to use the tools currently in the box.

The Titanic, sadly, never used all its lifeboats, the lifeboats it did use were not full up and so people died needlessly.  We know the current system is damaged, leaking badly and we have to ‘save’ as many as we can which doesn’t mean rushing off and building a new boat (at least not yet).  It means shifting resources away from the over bloated prescribing budgets that maintain people in addiction, erodes their will and cognitive ability to change and causes inter-generational problems (for addicts as carers and for the children in their care)

We need to identify the most in need and divert them to the best and most appropriate help, in many cases this will mean rehab, whether in a residential setting (after or instead of prison) or an intensive programme in prison e.g. a 12-step or a TC option

It will mean using the money we have much more effectively, there are millions of pounds being spent on things that dont work, and treatments that work are dying on the vine because very few are investing in them – please believe me when I say we are NOT short of money.

In 2008 I authored a pamphlet for the Centre for Policy Studies called inside out: how to get drugs out of prison and some people were genuinely shocked to hear that we had illicit drug markets operating in all of our prisons.  Today this is not a disputed statement.

Rather than using common sense and a degree of foresight that comes from experience, we may have to accept that we had the resources to make a difference, in our prisons and with the most prolific of offenders, but that we used our time and our resources badly.  Designing a system of payments instead of a system of care and support!!

Viva the next market bubble – money never sleeps

All the best



One thought on “Is PbR the next Credit Default Swap?

  1. There are a lot of concerns about the moral and political nature of PbR – is it just a Trojan horse to move provision to the private sector? However, in a more positive light, PbR can be seen as a way of focusing attention on outcomes instead of just counting activity.Given the huge investment in drug treatment services over the last 12 years or so, it is very disappointing to see how little of that work was focused on recovery. Instead of the proposed PbR focus on outcomes, we had providers being measured by the number of people they kept in their services for 13 weeks and not how many they helped to get off drugs. Contracts were dependent on meeting these targets in exactly the same way as providers in the future will need to meet PbR outcomes.One of the potentially very effective, if somewhat terrifying, aspects of PbR is that the financial incentive (do or die) will drive providers to focus on outcomes, focus on recovery. In the same way, it was only the political concern with the amount of drug-related crime which drove up investment in treatment services in the first place.I think it is going to be a time of incredible change in drug treatment – let's hope it's for the good.

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