Earlier this month one of the most damning National Audit Office reports I have ever seen detailed the disastrous damage done to a previously reasonably well performing public probation service by a privatisation botched from the start, every which way, predicted by everyone to fail, and which has now utterly failed, with contracts ended early, wasting stupendous amounts of public money. But there is still more to this scandal:

1. In spite of MoJ re-jigging the contracts part way through to make it easier for probation companies to ‘achieve’ targets for reducing numbers reoffending, most still failed to do so, while the numbers of new offences per offender actually rose
2. MoJ nevertheless claims that CRCs ‘achieved’ a 2.5% fall in numbers reoffending. But did you know that MoJ fixed it so that you cannot compare this ‘success’ of CRCs with what the public sector NPS achieved - with much more difficult offenders? Very likely, given that inspections consistently show much higher compliances by NPS than by CRCs, the NPS has done much better. But MoJ have concealed this information from us.
3. In any case all this stuff about ‘achieving’ reductions in reoffending is a nonsense – rates for those receiving a disposal which does not involve the probation or prison services at all have fallen by much more – 2008-2016, caution down 18.7% to 14.9%, discharge from 36.5% to 29.6%, fine 31.7% to 25.7%. For that matter, rates for prisoners serving 4-10 years fell from 26% to 19.8 % over the same period - just as our prisons moved from stability into violent chaos. The idea that correctional services’ performance is reflected in such figures simply defies the real-world evidence. It is an ideologically-driven fantasy.
4. The probation changes were driven by the wish to extend post release supervision to those serving under 12 months, so as to cut high reoffending rates. But MoJ now says there is no point in sentences of 6 months or less – because of high reconviction rates! MoJ have thus themselves destroyed the policy  basis of their own privatisation.
5. Nevertheless, MoJ persist with this model of privatisation, despite the express comment of the NAO that this model is ill-conceived and cannot work.
6. The official who presided over probation policy, Justin Russell, is set to become Chief Inspector of Probation. In the new role, he will be expected to comment on the disastrous results of policy for which he had responsibility. This bizarre appointment makes a nonsense of a so-called independent inspectorate. Why not make the chief executive of G4S the next Chief Inspector of Prison?

Further evidence that the MOJ is simply unfit for purpose.

The Government has published its ‘Outsourcing playbook’, an effort to stop cocking up major contracts. ‘Playbook’ – isn’t that so, well, ‘hip’? (‘Outsourcing’ here is used much more widely than I would, to apply to any service that Government contracts for, including those that have never been done in house, and which it is utterly inconceivable that they should ever be done in house, such as construction of prisons, tempting though it is to envisage mandarins laying brick upon brick, like Ivan Denisovich.)

It’s all good stuff, based discussion with contractors (Rupert Soames of SERCO has been bravely saying this sort of thing for some years) and on learning from what has gone wrong with so many major contracts in recent years:  electronic tagging (3 times), Carillion, probation, Birmingham prison (and that’s just the MoJ).  

The text is supplemented by voluminous ‘toolkits’ (sometimes mere ‘tools’), templates, scorecards, guidance notes, Green and indeed Orange Books, Codes of Conduct.

The document sets 11 key principles, which I will translate into English:

1. Publish pipelines i.e. say what you think you might be buying some years ahead, so potential suppliers can measure future opportunities and start talking to Government well ahead of time, and not just look at each contract as a one-off
2. Assess market health i.e. look at the number and capability of suppliers, and think how best to match contracts to that (or maybe draw in new suppliers)
3. All big projects to have a Project Validation Review i.e. experts brought in by Cabinet office will mark your homework
4. Make v Buy assessment i.e. explain why are you outsourcing, if it is or can be done in-house?
5. ‘Should cost’ modelling i.e. relating bids to what your own costs are and being sure you understand how bidders could be much cheaper than you
6. Pilots i.e. when you’re outsourcing a complex service for the first time, pilot it first, rather than going for a big bang (wake up Grayling, at the back there!)
7. KPIs i.e. you must have appropriate and proportionate measures of how well suppliers do the job, that will be made public
8. Risk allocation i.e. who bears which risk to be assessed will be “subject to greater consideration and scrutiny”
9. Pricing and payment will be “subject to greater consideration and scrutiny”
10. Assessing the Economic and Financial Standing of Suppliers i.e. assess risk that supplier may go bust
11. Resolution planning i.e. work out what to do if supplier does go bust.

It’s is basic common sense. Indeed, some of it is quite banal.  We need measures of performance – are we really stating that, as a new insight, fully a third of a century after Thatcher’s Financial Management Initiative made that its central theme? Risk allocation, payment mechanism and pricing are to be ‘subject to greater consideration’? Verging on bathos. ‘We screwed up a lot, but in future we will give everything greater consideration’. So there!

Still, if actually followed, it would have prevented many previous disasters. It’s useful to test the document against that walking, talking procurement disaster, Chris Grayling. Principle 6 would have forced him to pilot probation outsourcing (as we did indeed pilot prison outsourcing, in the early ‘90s). Principle 4 would have forced him to justify his belief that companies with no experience of running probation services, indeed that were only formed to bid for these contracts, could nevertheless be assumed to do much better than the public sector (the reverse has since been proved by repeated audit and inspection). Principle 11 would have required him to explain how services would be maintained if the contracts proved impossible and/or contractors went bust (as has indeed happened). Principle 2 would have stopped dead successive attempts to procure tagging services using a technology which did not then exist and using a delivery structure that was a nonsense in techincal and oepraional terms. Might also have stopped him to contract for ferry services with a company that has not got, and never has had, any ferries. And so on.

Why, then, am I less than optimistic that the future of outsourcing is rosier in the light of this document?

Mainly because we have been here before. This exact same spot. Instructions, guidance, bought in expertise, training, independent external checks at different stages, you name it.  Take, for example, the Office of Government Commerce, established with much trumpeting in 2000, with its elaborate structures to ensure distinct roles and responsibilities for major projects, its detailed guidance notes, its hierarchy of independent expert Gateway Reviews. Or the Major Projects Authority, set up in 2011, to provide independent assurance at different stages of major projects.

And yet the disasters have gone on. You see, it’s not that people didn’t know they were doing the wrong things, and not doing the right things. They did know. They just didn’t take necessary action.

Examples from MoJ, where people knew what they should do, then didn’t do it:

1. Market assessment: from the outset of prison outsourcing (1992), we decided we needed at least 4 credible operators. But in the mid-2000s, MoJ let the market consolidate to just 3. Worried about this, Government repeatedly, over a very long period, invited new entrants to bid, and then always awarded contract to the big 3. Result: when SERCO and G4S were disgraced by the tagging fraud scandal, the market collapsed
2. On the disastrous probation outsourcing, Grayling simply bypassed the Major Projects Authority at a point when it should have independently assessed risk. The homework never got marked.
3. ‘Should cost’ wouldn’t have helped with the Carillion contract - because MoJ didn’t know what its in-house costs were
4. MoJ was busy piloting the novel Payment By Results mechanism when Grayling cancelled the pilots because he thought it so obvious it was a good idea that he didn’t see the need to test it out.

The question Government ought to be asking is, why, when we keep doing the same things to ensure things are done right, do they keep going wrong? That’s tricky to answer. 

Part of the problem is how far you can idiot-proof projects when you have idiots like Grayling in charge. Arrogant, bullying ministers who think it weakness to listen to advice. (As we all know, bullies are fundamentally weak people: strong ministers, like Straw, listen courteously to advice because they didn’t feel their manhood threatened by conceding the possibility that they don’t know everything. And if they are wrong, they want to know that now, not later.) Who exactly is going to face down the sublime arrogance of a Grayling (and don’t suppose there isn’t a limitless supply of them on both sides of the House)? The centre of Government i.e. Cabinet Office and Treasury, simply isn’t strong enough, at official level, to say ‘no’ to such people? And at Ministerial level PM’s are more likely to listen to their loyal or at least essential political allies than to worried officials. Just look how May stands by Grayling  now, even after the ferry contract fiasco, the railway fiasco, the probation fisaco...

Another way into this is to ask is, what actually happens when projects go badly wrong? Well, usually the National Audit Office produce a report saying what went wrong (but never naming officials); the Public Accounts Committee have an enjoyable morning roasting the officials; a critical report is published: Government says ‘we are busy learning the lessons’; and those concerned sail on through their careers and into well paid retirement. And of course, if those responsible have moved jobs, or retired, when the auditors have finished their work years later, they aren’t even hauled before the Committee, they are never asked to explain themselves, as they have ‘moved on’. I am not a fan of management by scapegoating, having seen that practised close up by Michael Howard. We all make mistakes, and hopefully, learn from them, certainly I did, and anyone who says otherwise is a danger to himself and others.  But surely there is something wrong, if in terms of pay, promotion, career trajectory and retirement, there is no difference in the career path of those who hashed things up badly and wasted public money, and of those who did the job well and achieved benefits for the public?

Then there are problems of expertise, and culture. Is there, even now, enough procurement expertise in Government, and of the right calibre?   Earlier this decade, inquiries into MoJ management of the tagging contracts, which involved officials paying out £200m over many years or work which was never done, noted that this occurred against the background of severe cuts in procurement staff, difficulties in recruiting and retaining such staff – in 2009, MoJ did not even have a central procurement department (1). Maybe it’s better now but somehow, with the cuts in administration spending in Departments, I doubt it.

Then there is the Civil Service culture,  which traditionally  has found ‘policy’ more attractive and career-friendly than the ungentlemanly tasks of running things, or buying things. Thus, the risk is that the bought-in expert is always positioned slightly to one side, rather than inserted into the heart of the business, as they surely should be in a Department like MoJ, spending over   half its entire budget on contracts (2).

Looking to the future, there are four reasons why I don’t see a bright future for outsourcing, even if Corby never graces No.10.

First, the boom is over. Around one third of Government expenditure is on outsourced service – a fantastic amount. Plainly, there can be only a marginal further increase in outsourcing volumes in future. (And all those contracts, however imperfect, are out there now. How does the new ‘Playbook’ help with that?)

Second, related to that, Government has learned so little from this vast experiment. To give a couple of examples: DH told me that they have no research to point to, in house or external, that compares public and private healthcare providers. They simply do not know; and it hasn’t occurred to them that they should know. Likewise, on prisons, there has been no substantive study by Government comparing public and private operators since 2000 (3).  There is a vast amount of experience in Government, and local Government, about making, shaping, and managing the many utterly different types of outsourcing market – from the single customer/3 supplier model of prisons to social care, with hundreds of suppliers, hundreds of customers and millions of users. But what has Government learned from all that experience? Practically nothing. The Institute of Government, and NAO, have done some good work examining different sorts of outsourcing and different kinds of quasi-markets, but it never seems to have occurred to Government itself to reflect on such matters.

It is incredible that there simply does not exist a body of evidence to tell us where and how outsourcing has brought benefits, and where it has not, in what sectors or environments it appears to work and where not, what sorts of market work and how are markets best reregulated, and so on. It is willed ignorance on a colossal scale, and surely the root reason is that the advocates of outsourcing fear that impartial assessment would show, in many cases, that it has not brought any public benefit at all, indeed has done real damage. The consequence of this willed ignorance is that the case for outsourcing is not made, and that the practice of outsourcing does not improve.

Third, it is unclear how outsourcing can work well in an age of austerity. If there simply isn’t enough money to run services to an adequate standard, how can outsourcing help? In prisons, we showed in the 1990s and 2000s that private companies could run decent prisons at lower costs because the existing public service was so wasteful – we didn’t use staff efficiently, overpaid many of them, dint have the slightest grip on procurement, and so on. There is no reason to think that the problems of the NHS or schools are down to too many doctors and teachers, paid too much, not working hard enough. And there is unbelievably, almost no evidence that the private sector can run services better. In which case, what is the case for outsourcing?

Fourth, the game is completely lost politically. Poll after poll (4) shows remarkably high levels of public opposition to many forms of outsourcing, and remarkably high levels of support for Labour’s promises to re-establish public sector monopolies. The argument that outsourcing can work better for the public than state monopoly has been lost. And that has been entirely an own goal. It has been lost because Government has simply asserted private sector good, public sector bad, without ever bothering to produce evidence. It has never explained to the public what benefits they are enjoying because of outsourcing. Yet at the same time the public see endless stories of corporate greed and incompetence, of Government botching contracts and contract management and then failing to do anything about it, of failing contractors bailed out by government.  

To me, as someone who believes that competition, properly targetted, intelligently and responsibly run, can in some cases do more for us than monopoly, this is  sad. Because it means that we will then go around the track again. Labour state as a self-evident truth the surely equally daft mantra, public good, private bad. A generation who never knew British Rail at is worst, never waited for months for the Post Office to put a phone in, never knew the scandal of the publicly run prison service of the 1980s, or the horrendous NHS waiting lists of the early 1980s, will have to learn again that monopoly power tends to be high cost, tends to be self-serving, is often resistant to new ways of doing things, and is often in reality barely more accountable than G4S or SERCO. Which is where Mrs Thatcher came in.


NOTES

 
 (1) Details in my book
(2) ‘Government procurement: the scale and nature of contracting in the UK’. Institute of Government, December 2018
(3)  The excellent comparative study of service quality by Alison Liebling and others was not conducted for Governmen. There have been no comparisons of cost since 2000
(4) Populus 2012, YouGov 2017. Actually the polls show the public to be much more discriminating than one might suppose.  They think it OK for buses and airlines to be run privately but not trains, phone services but not mail, banks but not the Post Office.
 
 

In July last year the Criminal Justice Alliance sent a paper,  How to start reducing the prison population, to Rory Stewart. They argued that  the population could be reduced by 12,000 in 4 years, saving £900m. Some of their ideas can be done without legislation, some not.

I am in in favour of this sort of pragmatic ‘how to’ approach and we badly need to get prison numbers down quickly.

However, it is marred by mistakes and weaknesses which are all too common when pressure groups are  keen to explain that this or that policy change will liberate huge amounts of dosh, as follows:

1. It assumes the marginal savings of reduced demand are the same as the average cost. Thus, they assume that if the prison population is reduced by 5%, MoJ save 5% of the prison budget.  That clearly isn’t so.  Savings are made by discontinuing activities that cost money (and, let’s remember, CJA, by sacking staff, you heartless fiends!). The unit cost of savings is therefore geared – the bigger the unit reduction, the bigger the saving per unit. If the population falls by 10, there is hardly any saving per unit – perhaps a few pounds on clothes and food, maybe not even that, because orders are placed for large volumes of these things and any surplus gets used one way or another, and orders won’t be reduced. If the population reduces by 500 there are savings, but nothing like the average cost, because some costs will not vary proportionately, or in some cases, at all (the costs of Rory Stewart, for example, and his quite splendid Permanent Secretary, and all their many personal staff, chauffeurs, PR spinners, their expenses, pensions etc remain the same). So, the real savings are nowhere near what the CJA claim.
2. The CJA say the savings will by £900m. But that is by adding up savings over 4 years – a dodgy trick Gordon Brown pionerred, when seeking to show how generous his financial settlements were. This is a quite arbitrary and misleading way to present the figures - MoJ will not have £900m a year savings, as the headline figure implies to the unwary. There is no reason to aggregate the years in this way – indeed, the figure would be even bigger over 5 or 6 years, or why not add it all up over 10 years and get a much bigger number? The CJA’s figure work is better than most, in that they show how savings would gradually build up. But in such cases, it is much more honest to say, ‘rising to £x a year’. But then that gives a much less exciting number - £334m a year
3. The proposals save money in prisons, but cost money elsewhere.   The CJA make an admirable effort to net off these new costs, at least in probation supervision, which clearly is less costly than prison places.  So, they produce a net figure for savings. But a careful look suggests not all the new costs are captured.  For example, in advocating quicker release of IPP prisoners, the CJA argue that these prisoners “are often deeply institutionalised and require intensive independent advocacy support to facilitate their resettlement in the community”. On reducing recalls generally, they say: “the best way to prevent an unnecessary recall is to ensure there is no breach in the first place, by providing effective rehabilitative support. Unfortunately, as highlighted in the Justice Committee’s recent review, probation services are critically underperforming and the effectiveness of Transforming Rehabilitation is in serious doubt.10 Securing accommodation is particularly problematic, especially for young people leaving custody,11 and recalls cause critical disruption to an already challenging process.”   Reducing numbers on reman might best be done by increasing use of tagging on remand.  Reducing number of women in prison would require more funding for women’s services in the community, such as Women’s Centres. Now it impossible to be sure, but given the information that is presented, my understanding is that not all of these new costs, seemingly integral to the proposals, have been costed in.
4. The CJA say their assumptions about the numbers of prisoners reduced are conservative. I disagree. On the contrary, they look optimistic - and sometimes the explanation of just how the change is to be brought about are too vague to carry conviction. This is   important given the long history of such efforts at reducing use of custody which have had nothing like the effects promised at the outset. Some are to be brought about by ‘encouraging’ sentencers or issuing guideless – that has had a very mixed record in the past. And often, there is  no particular reason to accept one figure rather than another – why suppose, for example, that such ‘encouragement’ will halve number of recalls, rather than cut by 75% or 25%? Why assume that every single one of the 1,400 prisoners in jail on remand who in the event don’t get a custodial sentence, can be kept out of prison in future by the simple means of the MoJ asking sentencers to apply the existing law – admitted by the CJA to be entirely satisfactory – ‘more rigorously’? This isn’t real. On general sentence inflation, the main cause of the near doubling of the population, a reduction of 2,000 prisoner is to be achieved by the rather airy suggestion that “For instance, sentencers might be encouraged to sentence more creatively, restricting the requirements to use the upper limits of guidelines and allowing them to sentence below the lower limit”.  All 2,000 prisoners serving short sentences assessed by the Bradley Report as suitable for community sentences are to be removed form prison at a stroke by, it seems by, yes, even more, ‘encouragement’ and re-training of sentencers. Yet this has for so many decades been the hardest area to make successful changes. The list goes on and on. I don’t question these ideas, but their conversion into places and cash saved in as short a period as 4 years is often little more than wishful thinking. Certainly not cash in hand for a Minister desperately short of the stuff.
5. There is always a tendency when savings are made in a public service for them to be re-absorbed the service in question, and sometimes, for very good reason. After all, most public services have a long list of unsatisfied demands, standards not met etc. - if a way is found of treating some cancers in a primary setting, would you expect oncologists to be fired, or use the freed-up time to shorten waiting lists for treatment of other forms of cancer?  This applies in spades to prisons. For the CJA seem to suggest that every penny of the savings is available for other purposes. But hold on a mo. That means leaving prisons dangerously understaffed, because the savings assume prison officers will be sacked in proportion to the reduction in prisoner numbers – so the present dangerously high staff/prisoner ratios will remain that way. Surely the nice people at CJA can’t be thinking that? Much better to use the savings, whatever they are, to increase staff numbers in an effort to reduce the awful toll of violence, self-harm, suicide and drug abuse that Grayling has wrought. Of course, the savings wouldn’t be enough to get back to pre-Grayling levels, but enough to make a big difference in the worst jails. But then, the costs of the prison system would not reduce at all.

(In one respect, the CJA may have underestimated savings, in that a reduction of 12,000 or even 6,000 would be enough to close prisons, so there would be capital income as well. But that assumes the CJA is content to leave overcrowding at its present near record levels, with all the damage that does. On the other hand, if you keep all prisons open, so that overcrowding reduces as prisoner numbers fall, you much reduce your savings per unit, as it were. And in any case, on latest projects the population will continue to rise, making it problematic to close prisons only to have to reopen or rebuilt them later.)

It seems a little harsh to criticise the CJA since they have at least shown some of their their workings and tried to net of some new costs. But it’s very clear that the real net savings achievable through this plan are a fraction of the £344m a year claimed, that the £900m figure is misleading because arbitrarily accumulated over years, and that any net savings that can be made must stay in the prison system itself, if we want to alleviate their current disgraceul state at all.

As FD, I always thought smaller amounts based on realistic assumptions had more impact than big numbers resting on dubious foundations. And it matters much more now:  because in the post Brexit world, where there is good reason to believe that the economy will slump for many  years, and no reason to think rates of growth can ever recover to pre-2008 levels, the only way we can improve services – or preventing them deteriorating – will be through radical, but utterly realistic, ways of doing thiings differently. And we know, from  so many examples, how difficult it is to realise savings in services through deliberate changes in policy and practice, rather than arbitrary cuts.

For the terrible truth is, we aren’t almost out of austerity – we are about to re-enter it, courtesy of the monstrous self-harm of Brexit.

Rory Stewart's plan for re-introducing competition for running prisons, announced in November, is the most ambitious and is some respects, most sophisticated ever attempted.  But can it work?
 
For the private sector, there are three main deterrents to entering this market. First is the stop-start, hand-to-mouth nature of such competition, with no assurance of any long-term prospects – indeed, many competitions have been aborted or petered out half way through. Second is suspicion that, when the public sector is allowed to compete, there will be some sort of bias in its favour. Third, no company wants to win contracts at such unfeasibly low prices that failure is all but inevitable.
 
Stewart's plan addresses the first point with a 10-year programme, comprised 10,000 places in new prisons to replace ageing, cramped prisons with poor facilities, together with the re-competition of existing private prison contracts when they end (the first of the 25-year PFI contracts will end in 2022) – so, not far short of 20,000 places in total. It dwarfs anything that came before.
 
The 10-year planning horizon is unprecedented in this sector, and highly unusual in any area of public policy. It offers a long term 'pipeline' of commercial opportunities which is exactly what the private sector, particularly aspiring new entrants, need. This is not appreciated by those with no understanding of how the private sector works, which sadly includes many ministers as well as civil servants, who tend to regard the private sector as a tool for Government to switch on or off as convenient.
 
The need for a pipeline isn't greed: it's a commercial necessity. Bidding is costly: it requires the bidder to assemble a team, which must include a credible Governor or two who, if you are a new entrant, generally has to be poached from the public sector: and good governors will be hard to attract, especially if this is a first ever bid, since if unsuccessful, there may never be a prison to govern.  A good bid team, plus lawyers etc, costs around £500k minimum, much more for PFI; moreover, these are people who could be bidding for prisons in other countries, or for other opportunities in the UK, so there are big opportunity costs also. There are huge diseconomies in operating one prison only.  Prisons are a highly specialised market, so the company's board will need persuading that there are long-term opportunities. Government's habit of announcing competitions as one-off, abandoning many of them part way through (an astonishing 11 out of 14 market tests since 1992 have been aborted), and invariably awarding contracts to the existing big three operators, is massively discouraging to companies contemplating entry to the market, as I well know, having worked for two.
 
So, Stewart's 10-year programme is welcome indeed. Trouble is, the UK system of government makes such long-term strategies entirely undeliverable, especially where there is no bi-partisan agreement. By 2028, there will have been at least two General Elections, but probably several more – there is every likelihood of one being called in the next month!  Labour strenuously oppose competition and are committed to re-introducing monopoly provision. Even within a single Parliament, Government spending planning has a maximum horizon of 3 years, so there is no guarantee of funding beyond that – especially as we approach the uncharted seas of Brexit, with likely further deep cuts in Government spending as the economy tanks. On top of that, there is the rapid turnover of ministers, and the strange convention nowadays, that continuity of policy within an Administration means nothing, rather we have a succession of distinct policies by different Tory minsters. And Stewart himself has pledged to go if he can't reduce violence in prisons by August 2019 (but expect some re-engineering of that promise: 'reduce' meaning 'stop rising further', 'prisons' meaning 'some prisons' etc). 
 
So, the chances of his strategy lasting 10 years are vanishingly small. Proof of that is what has  happened to previous strategies: the 5 year programme to compete a quarter of prison and probation spending launched in 2006 (1), or the grand plan in 2009 to increase capacity to 96,000 places and replace ageing city centre prisons with new ones, but with competition to run new prisons  limited to the private sector (sound familiar?) (2)  or Ken Clarke's competition for 9 prisons launched in 2011 (3). None of these lasted more than a year or two, or came anywhere near the volumes promised, for all sorts of reasons: lack of persistence and nerve by Government, change of minister or Government, the Crash, disgrace of bidders.
 
On the second issue, the public sector is apparently to be excluded - it isn't totally clear that Stewart means they will never be allowed to bid in any of these competitions, but that is seemingly what he says. This too will greatly encourage bidders. But is it in the public interest? If the private sector gain 7 or 8 new super jails, replacing perhaps 12 or 15, old public sector prisons, then the private sector share of the prison 'market' would rise from about 18% at present to around 30%.  Why exactly is that desirable, given that as Stewart rightly says, there is no consistent difference in performance between the two sectors? Stewart does not say. Of course, the answer he should make, is to increase competitive pressure on the public sector. But if all the competitions for the next 10 years exclude the public sector, and if the growth in the private sector is entirely through new builds and new-for-old, and not through market testing of existing prisons, then where is the competitive pressure on the public sector? Successive heads of the Prison Service have said that an important driver of improvement in the public sector was knowing that if you persistently failed, another operator be brought in to take over your prison. On Stewart’s strategy, the public  sector face steady erosion of their market share - but are never challenged to show how they could  improve performance.  'Competition',  yes - but never between sectors. Missing the point, surely.
 
This brings us to the question of the purpose of this strategy. Here Stewart is less than clear, and seems content with the usual platitudes that have been offered in every competition for a quarter of a century now.  He says it 'is not about the difference between the public and private sector'. Rightly, because on quality, there isn't, and never has been, a clear consistent lead of one against the other; on price, there probably still  is a significant private sector advantage but we don't know how much, and the main cost difference, pensions, is unknown, indeed unknowable.
 
So, what is Stewart trying to achieve? ' Driving quality and innovation'. But he has admitted that there isn't a difference on quality. As for innovation, the evidence is that innovation by the private sector, though useful,  has been of marginal importance and certainly not a game changer, and not just in this country. (In my book, I make the argument that prisons are simply not a particularly suitable sector for innovation, for various reasons.) And there is nothing inherently good about innovation, it isn’t some sort of magic powder you sprinkle over everything – it can be harmful, as we have seen in probation.). The private sector did innovate in prisons, two decades ago, by cutting building times and costs in half and reducing operating costs by around 30%. But they no longer have quite the same edge now. And that was about cost, not what they achieved with prisoners.
 
Stewart also wants competition to reduce re-offending. On this, there is no evidence that private prison operators do so better than the public sector, here or in any other country. Nor privatised probation.  I believe that looking to 'innovation' to reduce reoffending is a mistake, resting on an uncritical belief that innovation is invariably the route to improvement (it wasn’t in the 2000s: we just started managing. Though for Government, OK, that was an innovation.) We know very well what  sort of things reduce risk of reoffending: we just don't do them very well, because they  cost money.  Indeed, as I have argued elsewhere, it is my growing conviction that for various reasons, no correctional service can reduce reoffending by more than a few percentage points, and any such success is  likely to be drowned out by fluctuations in the reoffending rate due to societal and other changes which we do not control  and do not understand. To be sure, to help the offender in front of you lead a more law-abiding, satisfying and self-reliant abiding life is always a moral imperative: but the correctional services are not a machine for changing society.
 
So, I am not much impressed by the supposed aims of this strategy. Yet surely, it isn’t too hard to describe what we really want. Not shiny gizmos or clever new panaceas. We want prisons that aren't desperately overcrowded or full of drugs, prisons that are safe, decent, and provide the regimes and activities which, we already know very well, help prisoners stay out of crime on release.  Prisons we needn’t be ashamed of and which, if they don’t do much good, at least don’t do much harm. But all that costs money.
 
Which brings us to the third concern – the risk of the race to the bottom. Stewart says he wants 'value for money' but what does that even mean nowadays, when the entire system is in a bad way?   Grayling cut public sector staff/prisoner ratios, and staff starting pay, to something much closer to private sector levels; staff ratios were cut in some private prisons too.  Meanwhile there has been no relief from high overcrowding. Add to that the new drugs, and the result has been catastrophic: a prison system which in 2010 was in as good a state as it had been in living memory, has become, in local prisons particularly, a violent, drug-fuelled chaos that shames this country and, of such a thing were possible, this Government. (In 2011-11, not one prison received the lowest performance rating, giving 'serious concern'; last year, 15 prisons were so rated, with no great difference between public and private sectors).
 
So, the question is, can extending the private sector be helpful, in a system so damaged by austerity? I can see how it just might. Bigger, newer jails will mean significantly lower operating costs; and in addition, it looks to me that the private sector is still significantly more efficient than the public sector, not necessarily because the staff: prisoner ratio is lower, but because   they get more work time out of staff, pay lower pensions, can be more sensitive to local labour markets, and so on. Put those things together and the operating cost of a new big private v old smaller public prison might be 25 or 30% lower per place.  If those savings are reinvested in staffing levels and decent regimes, it might be that the private sector will have a better shot at running decent, safe jails, which moreover will have sufficient, modern regime facilities.
 
But will those savings be re-invested in the new prisons? I can’t see that happening. MoJ is currently running a structural deficit of £1bn a year, almost as big as MoD's. That is to say, current operations are under-funded by £1bn, which is being covered in various hand-to-mouth ways. If MoJ were a business, it would be required to file for bankruptcy. Brexit will for some years drive down GDP and hence spending, while driving up spend on benefits and support for what was previously EU funded. The court reform programme, which promised savings, is already in deep trouble and looks set to be next MoJ failure.
 
And there’s another obstacle, of Stewart’s own making, to retaining and reinvesting savings: rising numbers. Gauke and Stewart have talked a good talk about cutting short sentences, but done nothing. If  the number of sentences under 6 months were halved, that would cut numbers by only a couple of thousand.   On current projections, we need more capacity by the early 2020s. That suggests that 'new for old' will be impossible – we will need to keep some of the old prisons going to meet demand.  But if the old prisons in reality cannot   be closed, then where are the operating costs for new prisons to be found from? So, my guess is the Treasury will want its pound of flesh and any savings from ‘new for old’ will go to offset the MoJ's frighteningly huge operating deficit and to keep existing prisons going. Making the race to the bottom the only game in town.
 
A further question, that I’ve raised before, is who will bid.  SERCO and G4S are still (after 5 years!) under investigation by the SFO, leaving only one operator, Sodexo, as an acceptable bidder.  The obvious source of new bidders is the privatised probation service, in particular MTC, who operate prisons in the United States, and Interserve, who build and service prisons here. Both companies have been marched up and down this hill previously, but may reckon that their CRC experience, which means they are used to dealing with offenders in the UK, justifies the triumph of hope over experience, especially with £5bn or so of contracts potentially on offer. What is their track record? Privatised probation has been a failure: its contract has been terminated early, its performance has been much poorer than the public sector, innovation has, says the chief inspector, been marginal and some of it downright harmful. MTCs record in America is not terribly attractive; private prisons generally in the US have not been as much a success as here, and there is the nagging worry that American methods of running prisons are nothing like ours (The Shawshank Redemption v Porridge, if you will).  And Interserve have been teetering for some months on the verge of becoming the next Carillion – and a hefty Brexit-driven recession could well tip them over. So, it’s not clear where Stewart’s transformative effect will come from.
 
Prison operators, existing and new, are therefore being offered the prospect of running huge new jails, that will be perpetually overcrowded and near the limits of control and decency, with the sort of blowback on reputation that G4S has suffered, and on tighter than ever margins.  Some offer!  Still, a pipeline with a value of maybe £5bn will get very serious attention. And companies looking for public service outsourcing contracts can’t pick and choose – they are stuck with government, as customer, for better or worse. So bidders will come forward, smelling the big money in an increasingly bleak world.
 
I am just not sure that it’ll do much good – I mean, deliver any real public benefit, which is the only justification for outsourcing. When most prisons were doing OK, the threat of competition helped keep them that way. But when both sectors struggle, in a system so badly damaged by deep cuts in funding, but none in prisoner numbers,  and in much worse shape now than for the past several decades, does competition promise any more than a choice of operators who can barely cope?

(1) “Improving prison and probation: public value partnerships” Home Office 2006
(2) “Capacity and competition policy for prisons and probation” MoJ 2009
(3) https://www.gov.uk/government/news/prisons-competition-and-capacity-announcement

If people want to argue that privately run prisons are wrong, fine - but let them argue the case, and not merely assert it.

But too often, they assume that because they personally think the idea wrong in theory, it must be wrong in practice too - privately run prisons must fail, because they think they should. And here they part company with reality. And that I do not respect.

Among such ideologues are: Richard Burgon, Labour Justice spokesman; Alan Travis, the Guardian Home Affairs correspondent; and Frances Crook, chief executive of the Howard  League (for over 30 years! - come on, trustees, wakey wakey!).

My book shows that over 25 years, neither sector has convincingly and consistently done better than the other, though quite clearly, the private sector has been cheaper. And since all public spending has an opportunity cost, that you might think that means the private sector has done better.

Here is the assessment of the (public sector) HM Prison and Probation Service Agency for prisons in 2017-18, based on an elaborate methology which includes asking prisoners what they think, via anonymised surveys.

 Of course, where ideology collides with reality, ideology usually wins.  So I am not expecting to change any minds. Or even open them. 

But let the facts speak for themselves.