Tuesday, 19 December 2017

CRCs Set Up To Fail

A statement from Meg Hillier MP, Chair of the Committee of Public Accounts:
“The Committee raised concerns in 2016 about dismal ‘through the gate’ services failing to help offenders find employment and accommodation on release. What today’s report from the NAO shows is that the government set these services up to fail when it massively under-estimated how much it would cost to deliver them. Hundreds of millions of pounds of additional taxpayers’ money is now being directed at CRCs, but it remains to be seen if the changes are enough to fix the government’s broken system, and help reduce reoffending.”

As we all know, timing is everything, and especially so in politics. To be perfectly blunt, on December 19th, who really gives a flying fig about a leaked report on the staggeringly poor conditions in HMP Liverpool, and now another devastatingly bad report into the failings of TR. Parliament is about to go into recess; Lydington has probably done his last tour of TV and radio stations; the media are winding down and the Nation is beginning to have collective Christmas 'gate fever'. Nevertheless, this from the NAO website:-

Investigation into changes to Community Rehabilitation Company contracts

An investigation into why and how the Ministry of Justice adjusted Community Rehabilitation Companies’ (CRCs) contracts; and the financial and other implications of the adjustments to the CRCs’ contracts.

In June 2014, the Ministry of Justice (the Ministry) introduced its Transforming Rehabilitation reforms to probation services by dissolving 35 self-governing probation trusts into a public sector National Probation Service and 21 Community Rehabilitation Companies (CRCs). The Ministry let contracts from February 2015 for the CRCs to provide rehabilitation services supervising offenders presenting a low or medium risk of harm. The 21 CRCs are run by eight, primarily private sector, parent organisations.

In 2017, the Ministry took action to ensure continuity of probation services in England and Wales by amending its contracts with CRCs from 2017-18 to improve their financial stability. The Secretary of State for Justice announced in July 2017 that the probation system had “encountered unforeseen challenges” and that the Ministry had “adjusted the CRCs’ contracts to reflect more accurately the cost of providing critical frontline services”. The contract changes took effect from 1 August 2017 for most CRCs.

The National Audit Office investigation focused on why the Ministry adjusted CRCs’ contracts; how the Ministry adjusted the contracts; and the financial and other implications of the adjustments to the CRCs’ contracts.

The key findings of the investigation are:
  • The volumes of activity CRCs are paid for are well below the levels expected when the contracts were let, while the number of offenders supervised has increased. The CRC contracts specify different payment bands for providing different types of rehabilitation services. CRCs are paid on the basis of weighted volumes that reflect these differences. In the first quarter of 2017-18 the volumes of activity were between 16% and 48% less than originally anticipated. At the same time between the first quarters of 2015-16 and 2017-18, the number of offenders supervised by CRCs increased by 20%.
  • The Ministry projected that the maximum it would pay CRCs for rehabilitation services over the duration of the contracts had decreased from £3.7 billion to £2.1 billion. The reduced volumes of activity CRCs are paid for led the Ministry to project in 2016-17 that, if the terms of the contracts were applied, the maximum fee for service it would pay CRCs would be £2.1 billion. By the end of 2016-17, the Ministry had paid £956 million to CRCs in fees for service, £42 million more than it would have done had it applied the terms of the contract. CRCs told the Ministry, however, that they could not maintain existing levels of service if they were paid at lower rates. 
  • By the end of June 2017, CRCs had met one third of the performance targets set by the Ministry although the Ministry expected CRCs to be meeting 24 targets from the end of February 2017. By this point, the Ministry had raised service credits with an overall value of £7.7 million, and it had applied £2 million of these in deductions from its payments to CRCs. The remaining service credits were reinvested by CRCs back into services, waived or are subject to ongoing negotiations. In June 2017, HM Inspectorate of Probation and HM Inspectorate of Prisons reported that CRCs are struggling financially and most have “invested little” in services beyond minimum contractual expectations. 
  • Between October and December 2016, the Ministry sought to stabilise the CRC contracts and improve operational performance. In July 2016, the Ministry concluded that adjusting the payment mechanism in the CRC contracts should be an immediate priority. The Ministry developed a range of options to change the contracts. It considered their likely impact on the performance and continuity of the contracts, value for money and other factors such as having to instigate a new procurement, affordability and the risk of legal challenge. It chose to adjust the payment mechanism to allow it to alter the way in which its fee for service payments to CRCs changed in relation to CRCs’ costs, and to maintain the continuity of probation services. 
  • Throughout February 2017, the Ministry commissioned external assurance work to better understand the financial positions of the CRCs. CRCs’ financial returns reported: total projected losses of £443 million from 2016-17 to 2021-22 across all CRCs if the contracts continued without any changes; higher average levels of fixed costs (77%) than the 20% the Ministry originally assumed; and a large variation in fixed costs between CRCs (44% to 99.8%). 
  • The Ministry concluded it and bidders had overestimated CRCs’ ability to reduce their costs, and amended the contracts to recognise this. The Ministry amended its payment mechanism to take account of the higher than expected fixed costs reported by the CRCs. It made this decision so that, if CRCs’ payment bands fell further due to lower weighted activity volumes, the amount the Ministry paid to CRCs would fall at a slower rate. 
  • While it was negotiating the contract change, the Ministry paid 14 CRCs additional fees of £22 million for the period 1 April 2017 to 31 July 2017. These payments reflected a weighted volume of activity that was higher than the CRCs actual positions. 
  • Following the contract adjustments, the Ministry’s maximum projected payment for fee for service to CRCs increased by £278 million. Combining this with the additional payments of £42 million and £22 million gives total additional projected payments of £342 million. The Ministry estimates the maximum fee for service payments will increase to £2.5 billion. This is below the £3.7 billion projected in 2016, but covers much lower volumes of activity than projected at that time. 
  • The impact of the contract change affects different CRCs to different degrees. The Ministry applied its payment mechanism change equally to all CRCs, but its impact will depend on the financial position of individual CRCs. 
  • As the contracts progress the level of income CRCs receive will increasingly depend on their success at reducing reoffending. The Ministry included payment by results arrangements to incentivise innovative approaches to reducing reoffending. Its maximum projected payments to CRCs through payment by results is £567 million over the life of the contracts, representing 18% of total projected payments. This proportion increases from 6% in 2015-16 to 28% in 2020-21. Initial reoffending data for England and Wales since the Transforming Rehabilitation reforms show a 2.2% reduction from the rate in January to March 2011. However, the frequency of reoffences per reoffender appears to be increasing. Initial results show that 13 of the 21 CRCs have made statistically significant reductions in the reoffending rate in the first quarterly cohort when compared to 2011 baseline reoffending rates. The first performance payments to CRCs informed by reoffending data are due in January 2018, when the data on frequency of reoffending are published.

This is how it was reported on the Civil Service World website:-  

Ministry of Justice ‘set probation services up to fail’, say MPs

NAO investigates why department was forced to redraw contracts and increase projected payments to CRCs by £342m

The Ministry of Justice has been criticised for “massively underestimating” the costs incurred by the new providers of probation services for low- to medium-risk offenders at the time it tendered contracts in 2014. The department revised its contracts with Community Rehabilitation Companies in August this year after the providers projected losses of £443m between 2016 and 2022 due to higher-than-expected costs and a reduction in the number of offenders being referred to them.

In a report published today, the National Audit Office said projected maximum fees by the ministry to CRCs had now increased by £342m over the life of the contracts. This includes payments of £42m in 2016-17 and £22m in 2017-18 that were made in excess of the fees paid under the terms of the original contracts. MPs on the Commons’ Public Accounts Committee said the government had “set these services up to fail” and that hundreds of millions of pounds were now being directed at CRCs without evidence that they will succeed in reducing reoffending.

In 2014, the MoJ introduced reforms to dissolve 35 self-governing probation trusts into a public sector National Probation Service – to manage high-risk offenders – and the 21 CRCs. Contracts with CRCs were let from 2015, but both the ministry and the providers themselves underestimated the costs of providing services, the NAO found. The contracts assumed that fixed costs would be 20% of total costs, but CRCs reported fixed costs of 77% on average.

The NAO also said that the volume of activity CRCs were paid to do in the first quarter of 2017-18 was between 16% and 48% less than originally anticipated, so they received less money for their services from the MoJ. Critics of the new system have said these threats to financial stability have led to poor CRC performance. The auditors found that the MoJ had expected CRCs to be meeting 24 performance targets from the end of February 2017, but by the end of June 2017 they had met just eight.

Commenting on the NAO report, PAC chair Meg Hillier pointed out that the committee had raised concerns in 2016 about the failures of services to help offenders find employment and accommodation on release. “What today’s report from the NAO shows is that the government set these services up to fail when it massively underestimated how much it would cost to deliver them,” she added.

“Hundreds of millions of pounds of additional taxpayers’ money is now being directed at CRCs, but it remains to be seen if the changes are enough to fix the government’s broken system, and help reduce reoffending.”

Contracts with CRCs include payment-by-results arrangements, so in future the level of income CRCs receive will increasingly depend on their success at reducing reoffending. The NAO said that while initial reoffending data for England and Wales shows a small reduction in the rate since reforms were introduced, the frequency of reoffences per offender appears to be increasing. The first performance payments to CRCs informed by reoffending data are due in January 2018.

A Ministry of Justice spokesperson said: “As we said in July, probation services are falling short of our vision for a high-quality system that reforms offenders and commands the confidence of courts. That is why we have changed CRC contracts to address the challenges CRCs are facing as a result of their financial situation, due to the reduction in the volumes of offenders referred to them. We are clear that CRCs must deliver a higher standard of probation services, which strictly enforces sentences, reduces reoffending and protects the public."


  1. Evidence the trusts were nowhere near as flabby in their operations as the centre insisted. Also suspect that simply deregulating the trusts somewhat would have been substantially cheaper, more effective and caused far less harm to all involved.

    1. Agree. But then these changes were never about what was sensible or practicable.

    2. Exactly, and it sure as hell wasn't about the under 12 month cohort or the costed model proposed by Joe Kuipers et al would have found traction.

  2. What an absolute mess, the MOJ need to ask CRC practitioners directly what is really happening. The amount of resource going into recording performance and measuring data is obscene. Red tape, paperwork and box ticking means very little meaningful work is being done face to face anymore, stuck behind our desks. 100% set up to fail.

  3. So, as stated throughout the TR project by many, the MoJ expedited an ideologically-driven policy regardless of its validity or efficacy. This scorched earth approach led directly to:

    - the loss of professional probation service provision
    - the loss of support for those subject to probation supervision, the loss of many hundreds of jobs & thousands of years of experience
    - the shovelling of £billions of public funds into the pockets of private enterprise - with nothing worthwhile to show for it.

    Grayling, Wright, Cameron, Romeo, Brennan & everyone else involved in this scandalous travesty should be brought to account. They should be publicly named & shamed, humiliated on the record in Hansard to ensure the shameful history of TR cannot be forgotten.

  4. All sold off on an idiots "gut feeling".

  5. https://www.nao.org.uk/wp-content/uploads/2017/12/Investigation-into-changes-to-Community-Rehabilitation-Company-contracts-Summary.pdf

  6. And on the daily politics show they were discussing why young people are not entering into politics as MP's. Who would want to join that band, rotten all the way through. Will the unions take them to task I wonder on their failures in procuring public services.

  7. I have seen a couple of comments regarding the upcoming move for Harrow CRC to Denmark House - which is in the borough of Barnet. A distance of 6.2 miles from the current office.

    The impact this can / will have on Service Users is worrying, to say the least.

    Service Users will now face anything from a 45min - 1.5 hour journey to attend appointments, depending on where they reside in Harrow. Giving ongoing coverage of lack of face to face meetings, this can only be viewed as negative in terms of engagement.

    Just think about the service users who have mental health issues (paranoia, PTSD, anti-social disorder etc) and how they will fare on a 3 bus trek to attend an appointment. Along with those with drug / alcohol dependencies who struggle at times to attend appointments, on time, locally. Service Users of NFA in Harrow. Those who have no funds to purchase food let alone an increase in travel expenditure.

    The impact this will have on a practitioners ability to support, engage and advocate for service users.

    Gone will be the ability to support cases in real crisis to local housing services. No longer is the civic centre a three minute walk.

    Gone will be the ability to support cases to local agencies such as WDP to ensure scripting.

    Gone will be the ability to support those in MH crisis to Bentley House for urgent assessment or support.

    Gone will be the ability to link in quickly with the Job Centre when Service users are being failed and need someone to advocate on their behalf.

    Now, we will have to instruct them from Barnet, back to Harrow, to engage with such services.

    There is a lot of focus on how poor CRC teams operate. How poorly they enrage with service users. Probation Officers (which is what we are...not Offender Mangers!) want to have a positive impact with those we work with. The few restrictions now in our way highlighted above, it’s just demoralising.

    This year alone, I am aware of service users managed by Harrow who have received quality 1-1 support to help achieve change. Being out of borough will, I guarantee, reduce such positive change.

    It’s all well and good being told we can provide travel fares for service users - though not to promote this (we are though, loudly). This isn’t the issue. It’s being removed from local services, partnership agencies which contribute to change. It’s scandalous.

    Despite being only two weeks away from this move - local agencies are yet to be informed by management. No discussions have been held about how such a move will be managed going forward. Look Ahead - a very important housing service for OM’s and Service Users - have stated they will not attend Denmark House and are likely to withdraw there service.

    Still, no office space has been secured for staff moving to Denmark House.

    Of concern, as seen by Dorset Close recent move to Askew Road - will there even be adequate interview rooms to hold appointments covering Barnet & Harrow cases? There isn’t at Askew Road to meet demand.

    No changes in letter heads, OM contact number. It’s all very silent from management given such a big change approaching.

    Such a move - all to save a few quid - is neglectful to the service users and the public. It’s being managed appallingly by senior management. It’s a shameful and shambolic decision.

    BIONIC. Nonsense.

    1. London has comprehensive public transport, elsewhere we don't and have been faces with this situation for years.

    2. Just imagine the difficulties offenders have when travelling 30+ miles in rural locations, some with extremely poor or non-existent transport links. How can you conduct meaningful work when someone has to spend upto 3 hours travelling in each direction to appointments.

    3. Salisbury group participants used to be taxid'd as much as 90mins across Salisbury plain twice a week for groups. Bath group members often had to travel to bristol. Doesn't even have to be rural particularly, trying to get public transport to central Bristol from 5 miles out can be nigh in impossible.

    4. No one put in a formal complaint about this Office move. It was all informal moaning and grumbling. A formal grievance that can be done on a group basis force the organisation to account for its decisions and records staff reservations and concerns. If this is not done it looks as if you were all holding hands and singing Kumbaya rather than fighting the closure.

    5. However you will not receive travel expenses if:
      You are earning a wage
      You live within a two mile radius of the office you report to
      You are attending for a court report
      You are attending an unplanned appointment.

      So Guess what you can claim travel for all appointments
      FIND OUT

  8. "Assume 20% fixed costs and it turned out to be 77%"
    What kind of business did the MoJ and the private companies think that Probation was? So called professional companies such as Sodexo MUST have known that an assumption of 20% expenditure on fixed costs was totally and unbelievably wrong. Simply considering that fixed costs would include staff costs, pension contributions, accommodation costs, computer systems costs, provision of computers, telephony and office machinery would indicate to anyone with an IQ larger than their shoe size that 20% was nowhere near sufficient. (and I haven't mentioned travel costs, postage, security systems and a host of other "fixed costs" that would need to be taken into account.) That the MoJ proposed 20% as their assumption demonstrates how appallingly bad their knowledge of the real costs of doing any type of business actually is. They are not safe to be let loose. Is it any wonder that it has all gone so terribly, terribly badly. I concur with 18.06 that all those involved should be publicly "outed" for their shameful destruction of Probation and for the massive cost to the taxpayers that they have brought about. The public should know who these self-serving people are and front page shaming of them in EVERY daily newspaper would be just dessert for them.