Payment for Success is a vital element in the White Paper ‘Open Public Services’, which sets out the reform agenda. It is part of the strategy for delivering more for a lot less. It will contribute in helping to move on from the often dysfunctional debate about how much is spent on what services to consider what is achieved.

This paper from KPMG outlines the problems in existing public sector reform and an integrated approach to solving them through a strategy called “Payment for Success”. Payment for Success offers the chance to fundamentally change what is achieved out of spending on public services – if it is implemented aggressively, consistently and systematically. It sets competitive prices for those results (the funding). It puts power in the hands of the right customers and makes their satisfaction what matters (the accountability). It also gives suppliers the requirement and the freedom to make whatever changes, however hard, to deliver the desired results for the prices on offer (the freedom to deliver).

The strategy is not about original ideas. It’s about getting off the fence in public service reform and committing to a clear direction, based on ideas which have been around for some time but which haven’t been implemented radically or consistently. The alternative to the strategy is too ugly and unnecessary to consider – crude cuts in historical budgets, handed down to unreformed providers, who, without new inspiration and trapped by rigid rules, cut value output rather than reduce unit costs, causing outrage from disempowered individuals and communities.

Payment for Success is about tapping the initiative of millions of people to solve the fiscal deficit, rather than imposing on them a bureaucratic, top-down solution.

The paper can be downloaded.