Government plans to contract out probation services to the voluntary sector carry “significant risks”, Margaret Hodge, chair of the Public Accounts Committee (PAC) has warned today.

The PAC has today published Probation: landscape review, a report into planned reforms of the probation service, which will see 200,000 medium and low risk prisoners transferred to Community Rehabilitation Companies run by private and voluntary providers. The report highlights several concerns with the pace and scale of these reforms.

A number of charities and social enterprises are on the 30-strong shortlist to be prime contractors on the government’s Transforming Rehabilitation programme, including Catch 22, the Shaw Trust, the St Giles Trust, Crime Reduction Initiatives and Bridges Ventures.

"We recognise that the reform programme is still developing, but the scale, complexity and pace of the changes are very challenging," Hodge said in a statement accompanying the reports. "The MoJ’s extremely poor track record of contracting out – such as the recent high-profile failures on its electronic tagging contracts – give rise to particular concern."

Hodge also said that plans to pay providers through a combination of payment by results and fee for service was “complex, untested and remains subject to agreement with providers”.

Hodge also said that the MoJ needed to ensure that all new contracts contained open-book accounting arrangements - a process which involves sharing financial information about contract delivery freely.

Hodge made similar comments last week at CFG’s annual conference where she also said the Freedom of Information Act should apply to all organisations delivering government services, including charities.

She said that large contracting organisations such as Capita and G4S were happy to follow these processes, and charities should be too.

“It’s hugely important that charities should provide public services,” she said. “But it needs total transparency and openness.”

The PAC is the second Parliamentary committee this year to raise concerns after carefully examining the government’s Transforming Rehabilitation plans to contract out supervision for medium and low risk offenders to voluntary sector and provider providers on a payment-by-results basis.

In January, Alan Beith, chair of the Justice Committee, said there was a lack of information on the information about the risks the government might encounter during implementation of its programme and the steps it will take to mitigate the risks.

'Dangerous game of roulette for charities'

Other parties have also raised strong concerns about Transforming Rehabilitation in the past few weeks.

Last month, the Social Market Foundation raised concerns about charities' involvement with the payment-by-results element of the programme.

In a report called Breaking Bad Habits, it said that charities will be “playing a dangerous game of roulette” if they are paid by results.

It warned their would be cash flow problems because of the delay between investing in a service and being paid for results.

SMF also said there was a risk charities “will underachieve and recoup only part – or potentially none – of the costs already incurred”.

“A principal rationale for the reforms is that expertise from charities and social enterprises can be brought in to help turn around the lives of offenders,” said the report.

“The research shows that smaller providers will be playing a dangerous game of roulette if they are paid by results on the reoffending rate.”

Reforms "sensible"

Commenting on the PAC’s report today, Justice Minister Jeremy Wright said:

"Each year there are more than half a million crimes committed by those who have broken the law before, and 50,000 of the most prolific offenders are released on to the streets, totally unsupervised and free to go back to their criminal ways. Living with the status quo just means accepting more crime and more victims, and that is not acceptable.

"The public expect us to deal with this glaring hole in the current system and we make no apology for doing so as a matter of urgency.

"These reforms will be rolled-out in a sensible way, to properly protect the public, and we will test our progress at every stage."

"Biggest disaster ever"

Sir Stuart Etherington, chief executive of the NCVO, last week also cautioned against large government contracting programmes.

He told the CFG conference that the Work Programme had been “the biggest disaster ever foisted on the voluntary sector”.

Etherington said that for the relationship between the charity sector and government to work, “we need to change the procurement landscape”, and that at the moment there were too many examples of poor government contracting.

He said the sector is shrinking because of disproportionate cuts in government funding going to the sector.