The Government appear to have taken a surprising u-turn on their prison policy after deciding to keep four of the nine prisons under state control that were due to be outsourced as part of it's prison privatisation programme.
On the 8th November 2012, Justice Minister Chris Grayling, was expected to announce a short list of bidders for 9 prisons as part of the largest privatisation scheme of prisons in England and Wales thus far.
However, instead the Government made an announcement that HMP Coldingley, HMP Durham and HMP Onley would stay under the control of the public sector, management of those prisons having previously been out to tender. The Ministry of Justice said that the competition process had failed to produce a 'compelling package of reforms' that would cut costs and would improve the prison regimes at the institutions in question. An MOJ spokesman said the competition for these prisons is not proceeding and they will remain in the public sector.
A fourth prison, HMP Wolds, which has been run by G4S since it opened in 1992 will also revert to the public sector, once the current management contract expires in July 2013. This follows a report in August from HM Inspectorate Prisons that show that the prison had 'behavioural issues' and high levels of inmate drug use. G4S is of course the company that recently gained notoriety in the summer, as a result of the last minute revelation that they were falling well short of being able to supply the necessary number of security staff for the Olympic event sites, leading to a large number of members of the armed forces having to step in to the breach.
The change of policy has come as a shock to the bidders involved, including Serco, G4S, Interserve and Geo and it is estimated that the change in policy will cost the prison industry possible revenues of £1.1 billion per year. The MOJ had indicated that 'fresh ways of making savings had come to light during the competition progress'. All public sector prisons will now be obliged to make extra savings, as part of an effort to make additional efficiencies, the prison service will be outsourcing ancillary services such a maintenance and re-settlement, all of which is expected to generate £450 million in savings over the next 6 years.
Mr Grayling said "I have decided to take this new approach to how we compete prison services and reduced unit costs across the prison estate, that will lead to better value for the taxpayer, linked to more effective services to reduce reoffending. This is the challenge the public sector must rise to". He did however say that future prison by prison computations to privatise had not been ruled out.
The Howard League for Penal Reform had said that handing over the management of prisons to the private sector was a 'mistake of Olympian proportions'. Their Director Frances Crook said "something as important as taking away someone's freedom should only be done by the state, answerable to taxpayers, rather than by international private security firms, answerable to only their shareholders. Three of the countries five most over crowded prisons - Doncaster, Altcourse and Birmingham - are run by the private sector. Even more worryingly, at least 35 people have died in private prisons since January last year. Six of them took their of lives". Ms Crook added that it was in her view 'worrying' the criteria for warding prison contracts had not been made public. "I am writing to the Chief Executive of the National Offender Management Service to request the details of how the bidding process is being decided" she said.
It is not known at present how much money has been spent on the abandoned privatisation process.
The above is not legal advice, it is intended to provide information of general interest in current legal issues.