Labour Conference 2011: Payment-by-results 'the only game in town' for early intervention

Graham Allen, who has championed the cause of early intervention for several years, told delegates at a fringe meeting at the Labour conference in Liverpool that however unpalatable the concept may be, payment-by-results is the only way money can be raised, calling on party members to back the idea.

"If Ed Miliband becomes Prime Minister tomorrow, there is not going to be a great slab of public money to make these interventions," he said.

"We will be in a situation where we will need to be smart about how we raise money and this involves outcomes-based commissioning and payment-by-results.

"We have got to make sure it is not like PFI [private finance initiatives] for the sake of the children we represent.

"I would love to do all this with public money but the reality is it is not here with this government, or the next Labour government. [Payment-by-results] is the only game in town.

"To do the things we want to do for children we must explore other initiatives and not just hide behind the argument that it should be done with public money – that is a big cop-out."

Models for payment-by-results in different areas appear to be making some progress with pilots under way and research ongoing about how best to implement the system in different scenarios, such as reducing numbers of children entering care.    

Allen said Prime Minister David Cameron recently pledged to match every pound raised for the creation of an early intervention foundation, which will champion best practice, up to a maximum of £10m.

However, the concept has come in for criticism on both ideological and practical grounds.

Concern has been raised that those running schemes could go for easy returns, selecting children and families that have the highest likelihood of successful outcomes, while neglecting the most difficult cases.

Speaking at the meeting, which was staged by the Social Market Foundation, journalist and commentator Polly Toynbee criticised Allen for teaming up with Work and Pensions Secretary Iain Duncan-Smith to pursue payment-by-results models.

"Working closely with IDS and the Tories is a mistake," she said. "You end up being a fig leaf for what the government is doing, which is appalling."

She criticised the government for cutting the education maintenance allowance, family intervention projects and benefits.

"I think the social deficit being created here will be infinitely worse than the economic deficit. It will last from generation to generation, to generation."