As the government introduces payment by results for prisoner rehabilitation, Channel 4 News looks at how the new scheme will work.

As the government introduces payment by results for prisoner rehabilitation, Channel 4 News looks at how the new scheme will work (Reuters)

At the moment, prisoners are dealt with by the public sector (the probation service) when they are released. This is changing.

What is the government doing?

From 2015, prisoners in England and Wales serving sentences of under a year will have to undergo a period of rehabilitation when they are released. Currently, rehabilitation for these prisoners is voluntary.

Who will deal with them?

The probation service will continue to monitor former inmates who have served long sentences, including all of those convicted of violent or sexual offences.

But private sector companies and voluntary organisations will look after those who have been locked up for under 12 months. They will be paid by results.

The change means that 70 per cent of the probation service's work will in future be carried out by private firms and voluntary bodies.

What is the government's rationale?

The Ministry of Justice says: "Consistently high re-offending rates have led to the radical overhaul with almost half of all prison leavers re-offending within 12 months - for those serving less than a year that figure rises to almost 58 per cent. And half a million crimes are committed by convicted crooks each year."

Justice Secretary Chris Grayling says these people leave prison with £46 in their pockets and no support.

Does the government hope to save money?

The probation service costs £1bn a year and the government argues that with high re-offending rates, taxpayers should get a better deal for their money.

In a Ministry of Justice consultation paper, Mr Grayling makes clear that money is a priority: "Given the challenging financial context, we will need to increase efficiency and drive down costs to enable us to extend provision to those released from short-term sentences."

The paper goes on to say: "We will award contracts to those providers who demonstrate that they can deliver efficient, high-quality services and improve value for money."

But the commitment for now is that savings will be used to extend rehabilitation, while over time reductions in re-offending "have the potential to deliver benefits across the criminal justice system and society more broadly".

So the assumption is that costs will eventually fall.

How will payment by results work?

The consultation paper says that "providers will in future only be paid in full when they reduce reconviction rates in their area".

It adds: "We will apply payment by results, only paying providers in full if they achieve a sufficient reduction in re-offending ... we will not reward services that fail."

Targets will be agreed with providers: if they achieve them, they will be paid in full; if they fail to do so, they will receive less money.

That sounds clear, but HM chief inspector of probation, Liz Calderbank, says probation officers deal with "damaged individuals" who need help and may be difficult to measure on a payment by results basis.

For illustration purposes, she uses the example of someone imprisoned for a serious offence who goes on to commit a minor crime. Is that success or failure?

There is also a concern that providers will choose to work with former inmates who are least likely to re-offend - the easy cases.

The government's answer? "We intend to develop our payment structures to incentivise providers to deliver effective services for all offenders, even the most problematic repeat offenders."

This implies that providers working successfully with the most difficult offenders will be well rewarded.

Has payment by results been used before?

Yes, but not in the probation service. Channel 4 News has investigated the welfare-to-work provider A4e and discovered that the company had found sustainable employment for fewer than four in every hundred people it dealt with.

Government figures also show that just 3.5 per cent of long-term unemployed people found a sustainable job through the flagship work programme.

This is around 2 per cent short of the government's target and a worse performance than would have been expected if there had been no government scheme in place.

In the welfare-to-work sphere, sustainable employment means being in a job for at least three months.

Providers, like A4e, receive a small attachment fee when a jobseeker joins the work programme and bigger payments after three or six months in a job.

Further payments can be claimed for up to two years, with more money available for participants who are hard to help.

Are there other ways of cutting re-offending?

Yes, Channel 4 News reported in 2010 on a scheme in London called the Diamond project which involved police, probation and housing officers working together under the same roof, their aim to keep petty criminals out of prison.

Assessing such "integrated offender management" strategies, academics from the Criminal Justice Partnership found that there was much to build on in such an approach.

But it concluded that "helping people to turn their backs on a life of crime is a slow and uncertain process. It is frequently a case of 'two steps forward, one step back', because of the complexity of offenders' lives".