Paid to deliver

Payments by results is the key to innovation in the public sector. It will help transform public services from something delivered by a state monopoly into being provided by a variety of suppliers who compete for state funding with best practice rewarded.

The work programme to move the unemployed off benefits and back into work – outlined by Chris Grayling today –  is the biggest move to payments by results we have seen in this country. Groups can be paid up to £14,000 for moving the long-term unemployed permanently back into work. This should ensure that groups have an incentive to tailor their programmes to the individual rather than relying on a top-down, centralised model.

This work programme is also crucial to ensuring that if jobs follow the recovery, it is those who are out of work who actually get them. As we saw over the last decade, without welfare reform job vacancies just lead to higher levels of economic migration.