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<p>Having agreed to terminate CRC contracts early, we now expect expenditure on CRCs
to be approximately £1.4 billion less in total than originally expected over the shortened
lifetime of the contracts.</p><p>Between July 2015 and March 2018, £7.4m of financial
penalties (known as service credits) were levied in total across all Community Rehabilitation
Companies (CRCs). As referenced in the National Audit Office report of 1 March 2019,
£4.1m was applied and paid back to the Department and £3.3m was re-invested back into
services by the CRCs.</p><p>Our starting presumption is that penalties are applied
if accrued by CRCs for under-performance. Penalties have not been applied where we
have agreed that factors out of the control of the CRC have led to the under-performance,
or where a recalculation has shown that penalties should not have been triggered.
On relevant occasions where it has been considered appropriate not to apply the penalties,
we have sought to agree a reinvestment of the value of the penalty back into the delivery
of services.</p><p>Contract Management Teams continue to closely monitor and robustly
manage CRCs to ensure that they fulfil their contractual commitments and deliver value-for-money
for the taxpayer.</p>
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