Richard Burgon, Shadow Justice Minister, had a field day with his debate on prisons and probation on 14 May, here. His advocacy of a return to monopoly services had both wind and tide with it, what with the disaster of botched probation privatisation plain for all to see, and a timely bit of analysis showing the levels of violence are higher in private than in public prisons.
But what really made his day was that David Gauke had nothing to say in defence of the private sector, other than bland platitudes about innovation and some favourable inspection reports. Granted it was difficult to use the argument that, thanks to Grayling's cuts, the public sector is as fucked up as the private sector (the public sector 'flagship' of Berwyn springs to mind). Difficult, too, to run the argument that the private sector is ony more violent because (even) more overcrowded.
But it is astonishing that he made no use of the Cambridge research that has shown the private sector stronger on 'respect' though weaker on 'control' (shorthand for a much more nuanced report), or improving dramatically at Birmingham in the first years after G4S took over; and that he failed also to point out what a scandal the public sector was when last a monopoly. It is also beyond belief that the civil servants appeared not to have noticed previously that private prisons have a higher level of violence, or to have any response to those figures, which they themselves had just put together.
As I pointed out in my book, one of the most astonishing, and unpardonable, things about privatisation has been Governments (Labour and Tory) complete lack of interest either in evaluating the results, or making the case publicly. The privatisers seem to think it unnecessary to make their case, even though polls showed as far back as 2011 that the public did not support privately run prisons. They now reap the reward.
There is a kind of institutional studidity in Government nowadays, on this and many other matters. The MoJ sees to have dispensed with its research unit altogether. That made Gauke's attempt to contrast the Governments' supposedly evidence based approach with Labour's ideological bent doubly painful - because on this occasion, Labour had the evidence, the Government had none. It is not Labour that will kill off outsourcing, one of the biggest policy experiments in UK history: it has already been killed off by the ignorance and incompetence of Tory Ministers.
Not that Labour emerge with any credit. Burgon, like Khan before him, has never shown any real interest in justice, beyond a weapon to beat Government with on cuts and privatisation. In particular, Labour have been way behind all other parties in committing to sentencing reform. Everything Labour has to say about the importance of rehabilitation has been said dozens of times before, by every single Minister right back to Michael Howard. Labour, too, are bereft of any real ideas (1), other than restoring the monopoly power of their union friends, the Prison Officers' Association . And there is very good evidence as to where that leads.
(1) Has there been any significant new idea in the past quarter century - since Labour introduced 'what works' evidence-based interventions in 1997 (but sadly not evidence-based sentencing, on which Government continues down the decades to do what it knows does not work).
Grayling with mouth wide open, foot sure to follow.
Gauke's announcement today of renationalisation of the probation service was the right decision and will be welcomed by everyone (except 'Reform', the PR people for outsourcers, I notice). Indeed, it was inevitable, the Balkanised structure Grayling set up had to be replaced by a unifed service, and that could only be publicy run.
Many questions remain about the new structure, not least cost.
Much has been made of the figure put out by the National Audit Office of £500m, but that was the cost in excess of what the Grayling reforms should have cost Similarly the Public Accounts Committee). But the Grayling structure could never have worked, that is now clear.
The important figure is the cost of the new nationalised service compared to what it would have cost, had Grayling been strangled at birth, and the old public system continued. That, together with set up and transitional costs (which may run into many tens of millions), would give us the true 'cost of Grayling'. We won't know that figure for some time, not least because MoJ is now consulting on the new structure. The calculation is complex, for example Grayling extended probation supervision to short term prisoners, so extra workload, but then total court ordered supervision of offenders has fallen - and Gauke wants to do away with short terms sentences altogether.
What is certain is that the new arrangements will cost a shedload of money more than MoJ has available, since their spending plans were based on Grayling's reforms working, and part of that was to get cost out of the old public sector structure. The discussions with HMT must have been interesting, as MoJ was struggling with a £1bn overspend even before this volte face.
If one adds to this the cost of Grayling's bizarre contracts for ferry services with companies who don't in point of fact run ferries, which were then cancelled at huge expense, the successful claim by Eurotunnel, the forthcoming claim by rival ferry companies, the legal actions by Arriva and Stagecoach relating to Grayling's handling of rail franchise contratcs, to name only the ones we know about, Grayling seems to be one of the most expensive idiots in politics (a closely fought field). It looks like the all up costs of Grayling to the British state could be as much as £500,000 for each day in office.
(I refer only to financial costs. There are then the human costs - staff made redundant, staff public and private sector alike over-worked, offenders not properly supervised, left homeless, self harming and being assaulted in prisons as a result of those cuts....)
What this saga reveals is that the system of accountability on which Parliament relies isn't fit for purpose. Because if you keep moving quickly enough from one Department to another, it's your hapless successors who have to clear up the mess you dumped on them, and answer for it.
The Public Accounts Committee should innovate - they are always demanding that the public setcor innovate, now's their chance to do so. Hold an inquiry into the consequences for public spending of Christopher Stephen Grayling.
In 2013 the Government announced that it had just discovered that G4S and SERCO has been billing excessively for their contracts for electronic monitoring of offenders. The companies were made to pay back some £200m. It has been established that amongst other things, the companies were billing for work they had not done.
The Government referrred them to the Serious Fraud Office. 6 years later, the SFO are still mulling over the case. Granted, it is one of the most complex in the entire history of the SFO, featuring as it does no fewer than one victim, no fewer than 2 companies, no fewer than 2 contracts and no fewer than one jurisdiction. Obviously, that must takes many years to unpick!
Meanwhile, here is an interesting graph. It is interesting because as a general rule, if volumes of work done under contract rise, in this case getting towards doubling, the unit cost - the cost per item - can be expected to fall. This is because fixed costs are spread over more items. This is a basic rule of intelligent contracting.
But in this case, the unit cost actually increased as volumes increased. That would be bizarre whether or not the companies billed for work not done. And suggests that there was something very wrong indeed with the contracts themselves.
Source: National Audit Office, 'The Ministry of Justice's electronic monitoring contracts', 2013
Students of Civil service arcania will be familiar with the procedure for an Accounting Officer's request for ministerial directions. Briefly the Permanent Secretary who heads a Department has a personal, statutory responsibility to Parliament for use of public money, independent of that of ministers, requiring that he be satisfied that it meets the four tests of regularity, propriety, value for money, and feasibility. If ministers require civil servants to act in a way that does not meet those tests, the Accounting Office must write to the minister seeking a formal Direction to proceed, and his letter and the minister’s reply must be published, and the National Audit Office and Treasury must be notified. Responsibility for the decision then rests with the minister giving the direction.
Considering how daft, ill-considered, ineffective and wasteful so much Government spending is, the procedure is surprisingly seldom used – some stats collected by the Institute for Government are here . The National Audit Office has commented that officials lack confidence in challenging ministerial decisions, not least because it might damage their career projects. (Information from Martin Stanley’s excellent website www.civilservant.org.uk.)
Such an exchange had just been published between Sir Richard Heaton, Permanent Secretary of the MoJ and David Gauke (here and here). Gauke wanted to pay the debts of subcontractors to Working Links, whose 3 Community Rehabilitation Companies went into administration, due to loss making contracts. Heaton noted that there was no legal obligation to make good losses by subs, and rightly questioned whether using public money in this way would pass the tests of propriety and value for money. After all, if the subs had a beef it was with Working Links as main contractor. Heaton concluded that such payments would create a ‘moral hazard ‘ – i.e. a situation in which a company takes on a risky business, but knows it will in fact always be bailed out – of which there are innumerable examples in outsourcing including as indeed had previously happened the CRCs themselves.
Gauke’s response is interesting. He said the subs had asked MoJ to stump up in view of “the unique circumstances of this first-generation probation outsourcing, the comfort given by my predecessors about how the Government would steward this market, their status as ‘Permitted Subcontractors’ in our contract structure, and the extent to which these organisations were delivering frontline statutory services on behalf of Government.” He added that a partly privatised service could be hard to maintain if subs bore their own losses. So he made the Direction, again quoting ‘unique circumstances’ that meant Government has a ‘moral duty of care’ to the subs.
What was, then, ‘unique’ in these circumstances? After all, Government contracts all the time, passes risks to contractors all the time (that is a main purpose of outsourcing), contractors do the same to their subs all the time, those subs deliver ‘frontline statutory services on behalf of Government’ all the time, and contractors go belly up quite often. Moreover, there is no shortage of other contractors waiting to take over business.
The idea that if contractors or their subs get into difficulties, Government has aa ‘moral duty of are’ always to cover their losses would of course make a total mockery of outsourcing, which would instantly become pointless and a huge waste of funds.
Was the ‘unique’ consideration that created a 'moral duty' to meet subs' losses that the then Minister who implemented probation privatisation, Grayling, acted recklessly and by so doing, mislead the subs, or made perhaps understandings and promises which he should not have done (‘comfort given by my predecessors’)? Considering Grayling’s record of dubious spending decisions and dodgy contracts, those possibilities must be considered. We don’t know.
The only body able to probe this is the National Audit Office. It should do so.
I was formerly Finance Director of the Prison Service and then Director of the National Offender Management Service responsible for competition. I also worked in the NHS and an IT company. I later worked for two outsourcing companies.
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