In November 2012, an article in The Telegraph reported that a flagship UK government welfare-to-work scheme was “worse than doing nothing.” In May 2016, the Independent splashed another headline to make the government wince: “Watchdog Criticises Government’s Privatisation of Probation Service.” And in December 2016, BBC News reported on an attempt to “turn around the lives” of families facing difficulty: “Troubled Families Turnaround Claim Misleading, Say MPs.”
What do these three ugly headlines have in common? The answer is quite straightforward: The three government programs they refer to all made use of a Payment by Results arrangement—a form of outcomes-based contracting largely synonymous with Pay for Success or results-based financing. Instead of paying local service-delivery agencies and private providers upfront, the government agreed to pay at least partly in arrears, based not on specified services but on the outcomes program participants achieved.
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