The problem of outdated and overcrowded prison accommodation is well-publicised and common across the UK and Ireland.  The three Governments concerned, however, seem to have different attitudes to enlisting the help of the private sector to address this problem.

Over a dozen PFI deals have been signed in England and Wales for the design, build, finance and management of prisons and detention centres.  The private sector has also been successful in competing against in-house teams from the Prison Service for contracts to manage several publicly built and publicly financed prisons.  The last prison PFI deal in England signed in 2003 and there has been a period of several years with no new activity in the market.  With the number of prisoners in England now at a record high, and predicted to rise further, however, the Ministry of Justice looks set to kick-start a new wave of PFI projects to deliver a large proportion of the 9,500 additional prison places that it has pledged to provide by 2012.

This contrasts starkly with the situation north of the Border where PFI is now well and truly off the agenda for delivering new prison accommodation.  In Scotland there is one fully operational PFI prison and a second under construction.  Proposals for a third PFI prison at Bishopbriggs had been announced in 2004 but these were axed by the Scottish National Party (SNP) soon after it came to power earlier this year.  When the project was announced back in 2004, the then Deputy Justice Minister for Scotland declared that the public sector would be given an opportunity to complete with the private sector on costs and delivery.  This would have allowed for a full and frank assessment of the value for money benefits of privately financed and operated prisons.  Notwithstanding that opportunity, it is clear that responsibility for prison operation and custodial services in Scotland will remain with the public sector for the foreseeable future.  A political, rather than a commercial, decision based on a fundamental principle that prisons must be owned and operated by the public, for the protection of the public and not for private profit.

A slightly different approach is being taken in Ireland where the prison PFI model is accommodation-based, rather than service-based, which means that it does not involve a private prison operator.  The Irish Prison Service is in discussions with a preferred bidder for the design, build, finance and maintenance (as opposed to management) of a new prison at Thornton Hall.  The prison service will retain responsibility for the prison services, which is in line with its other policies for reforming prison services such as a raised level of qualifications for prison officers and a structured training programme and syllabus leading to the award of a National Certificate Level qualification.  This structure is more akin to that used in the health service, for example, where the private sector is responsible for the asset but the public sector responsible for the healthcare services.  This model may yet prove an interesting option for the Scottish Government to consider in the face of a tight spending review and lack of capital for investment despite a quite obvious need for investment on the ground.  This model would address concerns about private contractors profiteering from custodial services in England where the biggest criticism of current PFI projects appear to stem from staffing issues.

The successes and failures of existing PFI prisons have been well documented.  In particular, a report by the National Audit Office (NAO) in June 2003 concluded that there are some good, and some not-so-good, examples of PFI and privately managed prisons and that there is no single factor that would point to them being a good or a bad idea.  The NAO looked at performance data for a group of twenty-one prisons – seven operational PFI prisons, two privately management prisons (built by the public sector) and twelve public sector prisons considered to be the best comparators to the nine private sector prisons.  The results showed that PFI prisons span the range of prison performance – the best PFI prisons were better than comparable public prisons whilst the single worst PFI prison was among the worst in the prisons estate.  Out of the twenty-one prisons studied, only one PFI prison was in the lowest performing group and four PFI prisons were in the highest performing group along with two privately managed prisons.  Whist at the time all but one PFI prison had incurred financial deductions for poor performance, these tended to be in the early years of operation suggesting that PFI prisons, like all prisons, experience initial teething problems which generally settle down after a period of time.

The NAO report identified specific benefits and failings in privately managed prisons.  Private prisons tend to do well in terms of decency (treating prisoners with respect) and regimes (providing purposeful activities) but perform less well when it comes to safety and security.  Private contractors have shown innovation in areas such as prisoner/officer relationships and flexible working arrangements, but the issues with safety and security at privately operated persons have been linked to concerns about the relative inexperience of many private sector prison custody officers, high staff turnover and lower numbers of staff.  The high turnover of staff in most private prisons compared to the public sector has been a thorn in the side of many private sector contractors.  The results of the NAO report indicated that PFI prisons struggle to offer salaries which attract and retain staff.  Reports at the time suggested that private sector staff where earning on average £4,500 less per annum than their public sector counterparts.

An extreme example of the security and safety concerns with PFI prisons in HMP Ashfield.  The Prison Services used legislative powers to take control of this prison for 5 months in 2002 due to concerns for inmates' safety.  Faced with the prospect of termination of the contract, the private sector contractor was allowed to resume operation of the prison after implementing an agreed rectification programme.  This example may be used as a basis for criticising the private sector's involvement in prison services.  Equally it can be viewed as an instance of a PFI contract operating in exactly the way it is meant to.  The contract provided a mechanism for the public sector to take action where it had concerns with the way in which the services were being delivered and allowed the private sector to resume the services once it had demonstrated it was in a position to do so effectively.  The financial penalty regime in place provided a driver for improvements that can never be replicated in the public sector.  HMP Ashfield was able to correct its failings and resolve its service delivery issues.

The NAO report also suggests that opening custodial services to the private sector has forced the public sector to sharpen up its act.  The private sector competes with in-house Prison Service teams for prison management contracts and the in-house teams have been successful in some instances.  There is a danger that growing competition on price could result in neither the public nor private sector teams being able to meet the required performance standards.  However, on the whole, any efficiencies and flexibility in the private sector that can be mirrored in the public sector must e a positive thing.  It would seem that there are lessons that the private sector needs to learn from the public sector too, particularly in areas such as staff training, recruitment and retention.  In the next round of PFI projects, the Prison Service will no doubt want to address these types of issues.

The UK Government is once again actively pursuing the use of PFI in delivering prison accommodation in England.  Two projects were advertised in the OJEU in August this year.  These projects will provide 1,200 of the 9,500 places that are needed and are part of a programme that is expected to include up to 5 new PFI prisons.  The UK Government clearly believes that PFI is working well in the prison sector and for the time being it is sticking with the design, construct, finance and manage model that has served it well to date.  It has the benefit of the NAO recommendations, and a wealth of experience from the early projects, which will no doubt influence its approach to the latest programme.  The contracts for the current round of projects will be based on SoPC4 but this in itself does not mean that they will be radically different from the contracts that have been signed up to before.  Indeed an SoPC4 contract has already been tested and adapted on the Addiewell project in Scotland.  The UK Government's current programme of schemes and its commitment to PFI means that there seems to be a bright future for the private sector who will continue to have an active role in delivering prison services in England.

Rhona Harper is a partner specialising in PPP with UK law firm Shepherd and Wedderburn
0141-566 8547

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