When a child is struggling in school, we want to know that they are on a programme that will help them improve their grades rather than just give them a few more hours of learning support. When a person is homeless we want to see them settle into long term housing and employment rather than given shelter for one night. In recent years, there has been consensus that public services should be focused around outcomes rather than activities provided. However, there are fundamental questions that we must raise when taking a closer look at what this means. How can government achieve better outcomes? Do they have enough capacity? Is it an effective use of tax payer money? Will the outcomes be sustained?
Such questions were discussed in the GO Lab's session at this years' Challenges of Government Conference at the Blavatnik school of Government. Mara Airoldi, Director of the GO Lab was joined by Caroline Mason, CEO of Esmee Fairbairn Foundation and Amel Karboul, CEO of the Education Outcomes Fund for Africa and the Middle East. Together with a lively audience they explored such questions and more. You can view the recorded session online and read on for our three takeaway points.
A consensus emerged during the discussion that greater outcomes could be achieved if we build capacity within government. Amel argued that for an outcomes based contract to have a chance of success, a government needs to be able to articulate the right outcomes, measures and prices. It then needs to be able to consider how best to procure and manage the contract, before learning from the implementation of the programme. With greater capacity, government can understand how best to design and develop programmes, making it more likely that they will succeed.
Amel acknowledged that the best case scenario is far from reality. As a former Minister of Tourism in Tunisia, she knew only too well that governments change often and decisions reflect short term priorities. She argued that if outcomes are the focus, government needs to think about how to embed the learning so that capacity can be sustained and longer term outcomes can be achieved.
If government doesn't have capacity to develop robust outcomes contracts, the programmes may be designed in a way that fails to mitigate against the wrong type of incentives - for examples, working with people who are less in-need because they achieve outcomes more easily. Responding to a question around how to manage these so-called 'perverse' incentives, Caroline Mason said that we need to improve transparency in public contracts. She reminded people that in the UK government's widely-publicised Transforming Rehabilitation programme for supervising ex-offenders, some criminals were not escalated to high risk where they would receive more intensive support because providers would not have been paid. Creaming and parking of cases is bad practice because for a government 'outsourcing risk is not the same as outsourcing responsibility'. Caroline argued that in order to overcome such bad practice we should look to open book accounting and more transparency in the way we price outcomes and show financial returns. Amel also saw this lack of openness as an issue and argued that 'too few SIBs have failed. If SIBS are about funding innovative, risky programmes, then you'd expect to see more failure.'
When it comes to developing outcomes based contracts, such as social impact bonds, one of the common concerns is the complexity of developing these approaches. SIBs are highly technical, as you need to ensure there are robust systems in place for setting and measuring outcomes, setting up the payment mechanism, conducting an evaluation, and more.
However, when Caroline reflected on her experience of investing in social impact bonds, she argued that she often looked beyond these technical aspects. In her view, the key questions are what is being valued in the programme, who is involved in the design, are there any unintended consequences, and what happens at the end? The underlying point is that we need to look at the bigger picture when considering how best to support citizens. Beyond the individual project and how to set it up well, we need to understand how to build sustainability into the approaches.
One a similar note, Amel argued that outcomes approaches can be a catalyst to change the way we think: 'They have the potential to be a game changer in solving some of today's global challenges, but are not the solution to everything'.
The GO Lab will continue to investigate when outcomes based contracting can make a difference, and what the lessons are that we can learn. With greater government capacity, more transparency and a focus on the broader picture we will get closer to finding the solutions to some of the most complex problems in our society.
We'd like to thank Amel Karboul, Caroline Mason and the audience for joining us at the Blavatnik School of Government for such an engaging and interactive discussion.