Payment by results will be the norm for government departments in the future, the justice secretary said today as he explained his ‘vision’ to reduce the ‘endless spiral of reoffending’.

Speaking at a conference on rehabilitation, organised by the thinktank Policy Exchange, Chris Grayling said his department is analysing responses to a consultation on transforming the rehabilitation of offenders.

However he said that ‘before too long’ the government will bring forward initiatives involving collaboration between the public, private and charitable sectors – and with participants paid by results.

He said he expects to bring about an ‘incremental year-on-year reduction in reoffending over the next decade’.

Payment by results is ‘not rocket science’, he said, but rather it is paying for a service that is delivered and giving organisations the chance to ‘innovate and compete’.

‘It will be the norm for most government departments in the future’ he said and is a commonsense move that will deliver value for money and real social change.

Citing the Work Programme, which he led at the Department for Work and Pensions, Grayling said he and the government had recent experience in large-scale payment-by-results contracts.

However he attempted to allay fears by saying that payment by results would not mean easy contracts for outsiders with money but no experience. ‘It is not an opportunity for any big private company from the left-field to get a contract,’ he said, stressing that ‘quality’ will be a large part of the assessment of any tenders.

Grayling said he is determined to change the way people are rehabilitated and to cut reoffending, which he said costs between £9.5bn and £13bn a year.

Half of those sent to prison reoffend within a year of being released and one in three is classified as a prolific offender, meaning that they have 15 or more convictions or cautions, he said. But he said the ‘scariest’ statistic, is that one in four people in prison have been in care as children.

‘They therefore do not know how to get their lives together and need support to do so,’ he said.