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Foundation Councils - Payment by Results

Cllr_barrow_1 Cllr Colin Barrow, leader of Westminster City Council, concludes his series on Founcation Councils by looking at incentives for delivering good results

Over the last week, I have outlined the concept of Foundation Councils and the sort of areas where I believe such empowered local authorities could make a real difference including realising year on year savings. I wanted to conclude with a scheme that is already up and running in Westminster but where a new approach from central government to supporting the council to deliver this work is needed and one that goes to the heart of possible future service delivery.

The problem

Westminster’s Family Recovery Programme (FRP) seeks to work with problem families by bringing together a multi-agency team including the police, welfare and health services who support families at risk of losing their children, home or liberty.

FRP has always been intended to avoid costs to the public purse by improving outcomes for those involved. As we all know, the costs associated with long term worklessness and criminal behaviour are enormous. FRP has been successful as a pilot project with a relatively small number of families but there are obstacles that prevent it from reaching more families and delivering significant savings to the public purse.

At present there is no incentive for the council to invest in a programme which essentially subsidises government departments such as the MoJ and DWP.

The possible solution

Based on our evaluation of the programme so far we estimate that if the programme ran for 11 years, the saving to the public purse in terms of cost avoided would be in the region of £18 million. However, of this we estimate that 30% of the saving falls to the council with the remaining 70% falling to other public bodies in particular MoJ, RSLs, Home Office, NHS and DWP.

Whilst FRP is demonstrably successful it requires a new funding model for the longer term based on who benefits. This could be a ‘payment by results’ approach with the outcomes agreed upfront with the beneficiaries such as the MoJ. The framework for this could be a social impact bond or a grant model but with a clawback mechanism for non achievement.

Defining better outcomes

Interim evaluation has provided the following evidence of success:

  • Reductions in anti-social behaviour; significantly better school attendance; a drop in domestic violence and substance misuse; increasing GP registration; safer, faster Child Protection intervention and outcomes.
  • Positive interim professional and family qualitative evaluation.
  • Delivering cost avoidance benefits for much longer than the 12 month period that a family is supported by FRP.

Accountability and delivery

The payment by results model would require the council to enter into a contractual arrangement with the Government where funding is linked to performance. A Government commitment to the principle of payment by results could be made through the Decentralisation Bill, with implementation in individual
policy areas delegated to the relevant Government department who would then contract the relevant Foundation Council.


I hope that over the last week, I have managed to set out the basis of how Foundation Councils could work, their roles, responsibilities and powers and the sorts of areas where they could make a major improvement and difference to the local communities they serve. Ultimately, this is about delivering better services more
efficiently and effectively and at a better price. And I believe that the new breed of councils, set free from the shackles of central government red tape and trusted to get on with the job, would welcome this opportunity and challenge.

Finally, we will be hosting a series of events at party conference to further explore the Foundation Councils idea. I very much welcome the opportunity to discuss it with you there.


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