Written evidence from Working Links (TRH0080)

Introduction to submission

We welcome the call to evidence offered by this inquiry given the critical crossroads that the Transforming Rehabilitation (TR) programme now finds itself.  Given the seriousness of the issues in hand, we would be more than prepared to supplement this submission with oral testimony in coming weeks before the committee. 

Section 1: Executive Summary

1.     The Community Rehabilitation Companies (CRCs) have made very substantial losses on delivery of the contracts. Independent auditors EY, commissioned by the Ministry of Justice (MoJ), have calculated these losses to March 2017. Losses will continue to increase substantially to the end of the contracts in 2022. These numbers are commercially sensitive, as you will appreciate, and we are seeking a meeting with the Chairman of the Committee to share the information in a private, confidential way to assure you on the validity of these points.

2.     The contractual changes brought in by Government in July 2017 were aimed to stem some of the future losses. There is a perception that a financial payment was received, it was not. The MoJ did not recompense the CRCs for the losses incurred to date nor fully address the future funding envelope required to run the CRCs. We did, however, receive an increased fee to partially offset future losses.

3.     Since the CRCs were acquired by Working Links in 2015 we have incurred losses but have still invested for the long term viability of the contracts through transforming, restructuring and integrating the CRCs into the company. Changes outside of the CRCs control means that we do not have the means to recover this investment over the life of the contract.

4.     As early as July 2015 problems emerged with the baseline volumes provided during the bidding competition and a change notice was issued on 1 July 2015 to reduce the funding of the CRCs. Since then there has been a myriad of data reconciliation issues including:

1. Baseline reoffending binary data set 4 years earlier than the start of the CRC contract (2011 vs 2015)
2. Less than 12 month licences under probation supervision not previously supported by probation before TR contaminating all baseline data.
3. Reoffending frequency data being influenced by the interaction with reductions in the number of reoffenders
4. Assumed split of cases between the National Probation Service (NPS) and the CRCs
5. Reducing volumes of workload from the NPS resulting in falling WAV banding and subsequent revenue reductions.
6. Fee of Use (FFU) proof of delivery, resulting in non-payment for services provided

These differences make it very difficult to assess accurate baseline data and therefore assess our actual performance.

5.     The numbers of service users referred to our CRCs has dropped substantially, affecting our capacity to deliver on the innovations and services we planned at the outset of the contract. This volume continues to drop as increasing numbers of offenders are deemed higher risk and managed by the NPS.

As an urgent priority, we would welcome the Committee’s clarification of what the actual allocations are between CRCs and NPS.

6.     The MoJ proposed a sensible way forward earlier in Q1 2017 which unfortunately stalled due to the snap General Election in June and we strongly recommend this is now revisited.

7.     We are introducing the innovations we set out in our original bid to reduce reoffending such as our Community Hubs approach, but the financial uncertainty has resulted in change being slower to realise and at smaller scale than intended. This also limits the development of services such as volunteering, mentoring and those that will support effective resettlement into the community such as Through-the- Gate.

Section 2: Background on Working Links and our CRCs

1. Working Links was established in 2000 to deliver specialist and tailored services for people with often complex needs to enable them to create better futures for themselves and their communities. Delivering flagship Government programmes including TR, Work Programme and Work Choice, we help many people who face social exclusion every day, and have supported more than 300,000 people into work.

2. In Great Britain, we work alongside funders including the Department for Work and Pensions (DWP), Ministry of Justice (MoJ), the Skills Funding Agency and the European Social Fund. We have over 17 years of experience supporting people with complex needs and now collaborate with an increasing number of overseas partners providing specialist services and innovative solutions to those looking to learn from best-in-practice UK systems.

3. We run three CRCs: The Wales Community Rehabilitation Company Limited, The Bristol, Gloucestershire, Somerset and Wiltshire Community Rehabilitation Company Limited and The Dorset, Devon and Cornwall Community Rehabilitation Company Limited (DDC).

4. We have designed and implemented a new probation model where the greatest amount of resource is focused on those with the highest level of risk and need. To achieve that we have amalgamated six probation trusts and created a service for those on sentences of 12 months or less who were previously unseen and currently account for seventeen percent (17%) of our total number of service users.

5. At any one time our CRCs are supporting more than 20,000 low and medium risk offenders helping to reduce reoffending across 116 justice locations including Urban Centres, Community Hubs and Community Payback sites. Our people use redesigned functional IT systems and can now work out in the community across the large geographical area our CRCs cover.

We have further invested in a community based hub delivery model through over fifty such hubs where service users can receive support building on desistence theory of what is effective for low risk offenders. The hubs are co-located with a range of organisations which offer additional services which can help further reduce reoffending. We also work with nine third sector partnerships, and across fifteen prisons.

6. Safety considerations for the public and for service users are our top priority. Our operating model is designed to give the greatest level of oversight and support to those who present the greatest risk of harm to the public and have the most complex needs. We have a multi-agency approach to managing issues such as child and adult safeguarding and domestic abuse and work closely with police, local authorities and other key organisations.

7. Official reoffending statistics for the October-December 2015 cohort show statistically significant reductions in reoffending by the DDC and Wales CRCs. This evidences change in service user behaviour.

Section 3: TR commercial challenges

All our CRCs are experiencing commercial challenges, most of which were unexpected at the beginning of the contracts.

1a) Enabling longer term financial stability

Early in the contract period a number of factors emerged which qualified the data provided at the initial contract stage by the MoJ.  This has proven to be very problematic, affecting the viability of the contracts.

The CRCs owned by Working Links are the most rural amongst the 21 CRCs. Approximately 90% of the costs for delivering our probation services are fixed and yet we have experienced a large drop in the numbers of service users allocated from the courts to our CRCs. This impacts on the funding received to run the services. 

The table below shows the decreasing WAV band which equates to the funding for the CRCs.  In contract year three (CY3) which ended in March 2017, we saw banding of 16% lower than the original bid.   By contract year five (CY5), we now expect this to be 29% lower than the original bid.

Long term financial stability is lacking with uncertainties in the contract payment mechanisms. In July we agreed a contract variation to remedy the contractual payment issues which had resulted in all CRCs making losses on the contract. At the time this variation was intended to provide stability for two years, however, with the new issues identified with the Payment by Results (PbR) mechanism, this time period has now decreased to a mere nine months and we are yet again in a difficult period where accurate financial predictions are impossible. 

We would welcome the Committee calling for a further audit to establish the financial reality of delivering the contracts. Greater long term stability would be welcomed as this will allow us to plan with a stronger degree of confidence and focus on improving services further. At the heart of this issue is the allocation of service users by the NPS to CRCs which has resulted in the NPS more than doubling its case load while the number of service users allocated to CRCs has decreased.

The original expectation was that the ratio of cases allocated between the NPS and CRCs would be 20:80. Recent anecdotal evidence suggests this is closer to a ratio of 40:60 and may even be 50:50 in some places. These figures are anecdotal, and given the crucial importance of this issue we would welcome the Committee’s views and clarification of the actual true allocations

1b) Definitions of contractual performance

Performance against contract measures are largely being achieved by CRCs and there are good indications that reoffending rates are reducing. Further improvements can be anticipated now that delivery models are in place, given adequate resource and stability.

There is a danger, however, that contractual arrangements become so tightly defined that providers are excessively restrained by measurements which do not support the intended goals of government policy, including around innovation to improve services. The effectiveness of our services cannot be measured through tick box exercises, and this was not intended at the outset of TR.

Concentration on timeliness and process measurements does not encourage a holistic quality service which should be based on qualitative outcomes for service users.  We would encourage the MoJ to find a better balance between making sure there is clear accountability for standards of service, while providing the flexibility to providers to innovate and deliver tailored services which meet the needs of each service user.

Measurements which reward the achievement of intermediary outcomes would be a constructive means of incentivising best in class CRC probation work. This would be the best way to achieve the aims of reducing reoffending by tackling service user issues around factors such as housing, drug and alcohol addiction and support into employment.

The current PbR mechanism does not reward the right behaviours to reduce reoffending. Instead it has generated a debate about the data, rather than the positive outcomes of changing the lives of the people who access our services and moving them on from criminal behaviours.  There remain questions about data validity and the reoffending risk profile of the service users we are tracking. Reoffending data from  2011 is currently used to calculate the base line for reoffending. The data should be used from 2015 when the CRCs took over the service as we are currently being held accountable for a decline that took place prior to our involvement in the delivery of the service.  This doesn’t make any sense.

The creation of joint performance measures has strong potential to improve outcomes for service users. We would welcome further development in this area which acknowledges the shared responsibilities across probation services and more widely to achieve the policy outcomes desired from TR.

1 (c) Shared TR responsibilities

Reducing reoffending cannot be the sole responsibility of one organisation whether that is a unified probation system or not. It is an issue instead that cuts across society involving everything from housing issues, employment opportunities, sentencing and police regimes, along with NPS and CRC performance.

The effectiveness of policies and delivery in these and other areas all combines to determine reoffending rates. Lessons from the use of PbR in DWP contracts have shown that providers can only manage what is within their control to improve individual situations and prospects. CRCs cannot determine the long term impact of these factors on our service users. Over the life of the contract 30% of our funding was planned to be available to CRCs through PbR however there is great uncertainty whether this income can be realised. The fixed fee to run the service decreases year on year anticipating financing from successful reductions in reoffending through the PbR mechanism which is now in doubt.

We believe that incentivising the achievement of intermediary outcomes is the only way forward.  This will allow providers to invest and build better services which are more targeted to achieving outcomes known to reduce reoffending.

The current PbR mechanism needs revisiting to be effective. This mechanism rewards reductions in binary and frequency reoffending rates. The reoffending baseline is calculated on figures from 2011 and not from the start of the contracts in 2015. The 2011 baseline did not reflect a rising trend in reoffending in the intervening years before CRCs were operating and this will result in CRCs facing financial penalties if they do not reverse it. 

The interplay between binary reoffending rates and frequency is also emerging, and as binary rates of those reoffending decreases the frequency rate of reoffenders is increasing. We are working with the MoJ to understand this however we need to focus on delivering what these service users need and align the funding mechanism to deliver it.

2. Magistrates and community sentences

Magistrates have lost confidence in the effectiveness of community sentences and their use is declining[i]. This trend predates TR; however the lack of effective mechanisms for the engagement of the CRCs with sentencers has exacerbated this factor, partly due to lower levels of awareness amongst Magistrates of the range of services available which would meet the needs of the offender. The NPS are responsible for ensuring there are liaison opportunities between sentencers and CRCs. It would be useful for there to be direct access for CRCs to sentencers both pre and post sentencing so that sentencers are fully apprised of the interventions available within the CRC and provided with assurance on the delivery of the sentences they have imposed

The NPS is responsible for giving advice to courts on the most appropriate services available from the CRC however it is the CRC which is financially penalised for service users who do not then complete the courses recommended at this stage.

The move to significantly increase the proportion of pre-sentence reports delivered on the day has limited the scope and the ability of the NPS to provide comprehensive assessments of the needs and risks posed by offenders that would otherwise inform sentencing decisions. This has resulted in a significant reduction in the number of accredited programme requirements and an over reliance on the new Rehabilitation Activity Requirement (RAR) option.

3. Relationship between CRCs and MoJ

It is right that the MoJ plays a role in market stewardship across probation services. 

We are positive that the Whole System Improvement Board referred to previously will help resolve issues including the purchasing of CRC rate card services by NPS and workforce strategy across probation. Current rate card mechanisms are complicated and time consuming, placing a disincentive on NPS staff to purchase them.

A further positive development is the work of the Operational Assurance Board examining case allocation between the NPS and CRCs. As is widely known, case allocation to CRCs is considerably lower than anticipated at the start of the contract and continues to decrease, reducing CRC’s funding further.

Overall, we have a close relationship with the MoJ, and will continue to work with them to resolve the issues within the contract.

4. Through-the-Gate provision

Turning to Through-the-Gate provision and how it can be improved so that prisoners get the right help before their release from prison and afterwards, it is important to highlight that the current service is heavily loss making for all CRC providers. 

This core fact was recognised by the MoJ earlier this year and we were invited to suggest how the service could be improved through the Probation System Review. The process has stalled since then and we believe a solution which is based on measuring and rewarding the successful completion of intermediary outcomes is the best way to deliver on the policy intentions behind the service. Joint measures should be introduced with prison governors and local authorities so that they are invested in ensuring Through-the-Gate services are better facilitated within prison and in the community, particularly in relation to the provision of suitable accommodation post release where CRCs can signpost to housing support however the local authority controls what accommodation is available.

Support to find employment for service users on release from prison has eroded despite the strong association between work and reducing reoffending. At the start of the contracts, day one referral was available into the Work Programme. The DWP has replaced this with the smaller scale Work and Health programme (WHP) . We would encourage the committee to consider the benefits of clear referral pathways into the WHP and continued access to support into work for all service users needing support to gain employment.

5. Voluntary sector

The voluntary sector has a great deal to offer and a strong track record of innovation. The resources we have had available have tended to us commissioning larger third sector organisations with a bigger geographical footprint, and not as many of the smaller charities with locally embedded presence as we would like due to lack of their capacity.

Ring fenced government funding could be expanded to increase the amounts available here. CRCs could then support funding applications through identifying gaps for their services and working with smaller voluntary sector organisations to help build their capacity and increase local provision of services to better meet the needs of offenders in the community.

RAR requirements could also be made more flexible to allow providers to refer service users to third sector providers without need to enter into overly cumbersome procurement and supply agreements which are off putting to smaller organisations due to the reporting and auditing processes required and increasing restrictions on data sharing.

6. Other recommendations

Beyond these issues, we also believe that the government should look into the following issues surrounding probation services:

• We would encourage a separate review of NPS practices and financing.

• We would welcome a system of greater long-term support for innovation for CRCs and invite the government to consider the creation of an innovation fund. This approach has been used successfully in other parts of government, including by the DWP on its welfare to work schemes.

• We were contractually required to migrate way from the MoJ IT systems and subsequently invested £6.5m into developing our own IT solution. The MoJ then changed approach.  Faced with a higher cost to continue than to turn back, we opted to halt our development and continued use of the MoJ existing IT systems.  The resources we invested have not been compensated for and would otherwise have been available to invest in our frontline probation services.
• Additional investment in probation officer training to enable the CRCs to train more of their own staff to fill these important roles at a time of increased demand  by the NPS for new staff which is negatively impacting the ability of CRCs to recruit and retain people in these posts.

We thank you for the opportunity to submit evidence, and reiterate our commitment to providing oral testimony to expand on these remarks should that be helpful.  We also stand ready to address any questions in writing that you have on this text.

November 2017