Magazine article Public Finance

Cost-Cutting Concern over Private Prisons

Magazine article Public Finance

Cost-Cutting Concern over Private Prisons

Article excerpt

There are few parts of the public sector now left unaffected by the doctrines of competition and contestability. From auditing to welfare, the plan to open up public service provision to private and third sector operators has well and truly kicked in.

Even the politically sensitive area of offender management is not immune. Last summer, the Ministry of Justice launched its competition strategy, which could offer private providers a much greater share of the prison market

Private prisons have been operating since the early 1990s. Three providers - G4S, Serco and Sodexo - now manage 14 private prisons in England. A tender process, currently under way, will contract out eight more public prisons to private operators. A ninth, G4S-run Wolds, is being re-tendered. Contracts are expected to be awarded in November.

These tenders mark the first phase of the MoJ's Competition strategy for offènder services, published last July. Opening up offender management services to competition will become the government's default position under the plaa Justice Secretary Ken Clarke says: 'The guiding principle for offender services will be that competition will apply to all services, rather than as a means to select providers for new services orto address poor performance.' Contracts will be focused on outcomes.

Payment by results - already in use at Doncaster and Peterborough prisons - will be extended, a move that will 'drive innovation and ensure better value for money*, Clarke says.

It might also lead to some new firms entering the market. Interserve is aiming to secure some contracts and Mitie is partnering with the Prison Service to bid for the running of all nine prisons.

Yvonne Thomas is the former operations director at the National Offender Management Service and has since joined Interserve as managing director of its justice divisioa She acknowledges that the focus of the outsourcing tenders is cost, but adds that it also presents an opportunity to 're-engineer parts of the system in manageable chunks'.

She tells Public Finance: 'It will lead to some significant innovation in the way we reduce re-offending at lower cost'

Interserve has submitted bids for three of the nine prisons - Durham, Onley and Wolds - and Thomas says taking over only a small slice of the prison estate makes genuine transformation of these prisons a realistic prospect

'Changing three prisons is an awful lot easier than changing 135,' she says. *You can put in different systems from the ones the Prison Service uses, you can put in different linkages and you can form strong local partnerships. You can do these things more quickly and more easily because you're not constrained by a lot of rules, regulations, financial and political constraints that the public sector is subject to.'

But Juliet Lyon, director of the Prison Reform Trust, warns that the MoJ's emphasis on value for money must not turn into a cost-cutting exercise and an 'inevitable race to the bottom'.

She says: 'Costs per place are rumoured to be as low as £11,000 in one particular bid. If that* s true, it contrasts starkly with £45,000, which is the current average. The MoJ needs world-class commissioners to see past the rhetoric of highly experienced bidders and scrutinise bids to make sure that they lead to the outcomes we all want to see.'

Lyon observes that the justice secretary's objective is to reduce prison numbers and questions how greater involvement of commercial operators fits with that. *Will increasingthe level of vested interests in the justice system in general, and prisons in particular, lead to pressure to grow a market that arguably should be shrunk? …

Search by... Author
Show... All Results Primary Sources Peer-reviewed


An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.