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The power of a financial incentive in reducing imprisonment

Penelope Gibbs
25 Mar 2015

The Lord Chancellor has given CRCs a financial incentive to reduce offending under a payment by results mechanism.  It remains to be seen whether it works.  One of the huge downsides of this scheme is that any profits are kept by the CRC ie the public sector cannot gain financially for any success achieved – except indirectly.  A different financial incentivisation approach  (justice reinvestment) seems to have been rejected by Chris Grayling.  The Ministry of Justice has just slipped out an evaluation of the boldest UK justice reinvestment experiment yet – the delegation of the whole of the child custody budget to consortia of local authorities.  The idea was championed originally by the Prison Reform Trust, and in turn by the Ministry of Justice and the Youth Justice Board.  In the end it was the Chair of the YJB, Frances Done and the Chief Executive, John Drew, both with a background in local government, who pushed through two radical approaches to justice reinvestment – the delegation of the child remand budget to local authorities nationwide, and the delegation of the whole of the child custody budget to four consortia of local authorities.  The evaluation shows how the two consortia who stayed the course of the two year pilot radically reduced their use of custody.  They were tasked with reducing the “bed nights” they used for remanded and sentenced children below a particular benchmark.  The West Yorkshire consortia had to exceed a 10% reduction in year one and two.  In fact they achieved a 28% reduction in year one, and 42% in year two.  The West London consortia achieved a reduction of 40% in bed nights in year two.  The consortia saved money on any reduction beyond the benchmark, and could use the savings any way they liked.  But if they had not reduced their use of child custody sufficiently, they would have lost money.  The report is incredibly positive about the power of the financial incentive, how it inspired good and innovative practice and prompted staff to go above and beyond.  One YOT suffered from children often missing appointments, and then being breached.  The YOT tried hand delivering letters about appointments and found that the children who received instructions this way, were more likely to turn up.  Most YOTs used a whole system approach, which meant they analysed every factor leading to imprisonment.  This approach was advocated by Chris Stanley and Tim Bateman when they worked at NACRO ten years ago and pursued by the Out of Trouble team at the Prison Reform Trust in influencing local reductions in custody.  Altogether these pilots in delegating the custody budget to local authorities were a huge success, but a success which the government has not celebrated at all – maybe because they have chosen another path.