Nick Herbert, the shadow justice minister, announced the plans at the Conservative Party conference earlier this week. As part of the party's youth justice policy, charities would be responsible for ensuring young offenders do not reoffend within two years.
Barry Roberts, director of strategic business development at Turning Point, said: "Providers should be rewarded for effectively reducing reoffending, but the financial risk involved should be shared among partners so that payment by results becomes workable.
"However, we welcome any new and innovative models of delivery that support young people and help them turn away from crime."
Crime reduction charity Nacro and youth charity Rainer Crime Concern declined to comment.