Chris Grayling, the justice secretary, told MPs he does not want to commission probation contracts that are so large "no one in the voluntary sector can bid for anything", but defended the need for large contracts in general.
The Ministry of Justice last week finished a consultation on a redesigned probation system that would contract out the support of most offenders to private sector organisations and charities using a payment-by-results system.
Speaking to the House of Commons justice committee this morning, Grayling said he wanted this system to involve voluntary sector organisations – he wanted to encourage them, he said, to form consortia that would bid for larger contracts.
Grayling said he was keen to increase "commercial expertise" in the voluntary sector to ensure that charities did not sign up to deals that were bad for them. "I’ve spoken to voluntary sector providers who said they’d signed up to deals where they’re losing money," he said. "The sector needs to get more savvy and get more commercial expertise.
"We will do everything we can to support the voluntary sector in reaching decent deals."
The department has set aside £500,000 to help voluntary sector groups bid for and deliver payment-by-results contracts.
But Grayling defended the need for large contracts, saying that smaller areas would involve high administration costs, there was not sufficient expertise in the system to commission multiple smaller services and contract areas needed to be aligned with police authority areas and Work Programme contract areas.
Larger contracts would also allow continuity of supervision for offenders, he said.
Grayling said he hoped to set up an accreditation framework for voluntary sector bodies. A subcontractor who was accepted under this framework, he said, might not have to go through screening procedures with individual primes.
"We want to set up a system where we say ‘this is a good organisation’," he said. "We want to make sure voluntary sector organisations don’t have to fill out a million and five forms."
Grayling also said he would be keen to encourage existing probation trusts to spin out into the voluntary sector as independent mutuals, and to develop social investment packages to do so.
He said he wanted to set up a system of measurement that would prevent ‘creaming and parking’, in which providers allegedly cream off those clients who are easiest to deal with and park those that present a more difficult challenge with subcontractors.
Grayling said he had not made a final decision about which metrics to use for the payment-by-results system, but that he wanted to use the social impact bond model being used at HM Prison Peterborough.
Grayling said the aim was to introduce the new system by 2015.