Interesting NAO report on commercial relationships across Government, accounting for a third of all public spending (1). If you read that the big spenders are MoD (Type 45s), Transport (Network rail and franchises), MoJ (probation, tagging) , DBEIS (nuclear energy), you will be unsurprised at the conclusion that there are profound long standing weaknesses in Government procurement, but - and this has been said ever since I were a lad - 'government is now starting to address the issues'. 'Addressing' the easy part, 'delivery' another.
But it isn't as simple as just bringing work back in house. All those Departments have serious problems with direct management as well. 'Management' indeed is just the problem. Plus bringing work back will carry huge bills, eg for migrating all staff onto public sector pensions.
The conclusion I come to: Government should stop trying anything clever or innovative in contracting , because it'll almost certainly cock it up. Make sure you can walk before you try running - never mind hop, skip and jump.
Berwyn Prison near Wrexham, which began operations in February this year, will be the biggest prison in the UK by some margin, with very tight staffing. It is in several ways something of an experiment.
The privately operated Oakwood and Northumberland prisons – also Cat C male, so these are all the same type – have been criticised by opponents of the private sector both for being too large, and having high staff/prisoner ratios, thus causing unsafe conditions.
But Berwyn will be much bigger - but not quite so tightly staffed (1):
capacity operational staff per prisoner (2)
Oakwood 1605 1:5.9
Northumberland 1318 1:6.8
Berwyn 2106 1:5.5
It will be interesting to see what happens, as Berwyn builds up numbers – it is currently only at about a third of capacity .
If it manages to maintain a stable, safe regime, that may put in question the assumption that staffing cuts are the main cause of the worst prison crisis in a generation. Might it also suggest that MoJ has found the 'sweet spot' where staffing is lean, but still safe? No: since prisons with similar or lower ratios are in deep trouble. Even so, MoJ's 9 'new for old' prison programme assume still further staffing cuts, to generate net savings in operating costs. But might it not also suggest that MoJ as customer has driven staffing ratios too high in private sector prison contracts - such as, indeed, Oakwood and Northumberland? (3)
If, on the other hand, Berwyn turns out to be chaotic and unsafe, it will validate the hypotheses about low staffing - and call in question the judgement of those who planned it. And - here's the difference relative to the privately run prisons, which are held to contact - staff numbers may have to increease.
There are differing views about mega-prisons. I haven't any expertise in the matter. They offer economies of scale, so are cheaper per place. Opponents say they will be factory-like and impede the relationships essential to good prisons. Advocates say that 3 or 4 units for different types of prisoner within a mega jail, each with their own identity, management and staff, would in fact be a series of smaller prisons, not one big one, and would have benefits for prisoners eg better specialist healthcare on site. Maybe: but I suspect that despite that, it will still feel like a mega jail, and something will be lost. Their sheeer size means that prisoners cannot be held as close to home as would the case if we built a network of small community prisons instead, though that would cost more.
Berwyn marks a major change in accommodation policy. Hitherto, we had always aimed at one man to a cell: that was how overcrowding was measured - how many were held two or even three to a cell. In Berwyn, many(I think the majoirty) will be housed two to a cell, albeit one designed for double occupancy, whether they like it or not. No credible reason is advanced for this, other than packing more in, and driving down construction and operating cost per place. I am surprised how little comment there has been on this historic change. It should be independently evaluated.
I haven't mentioned cost. The headline figures are:
annual cost per place, £
Berwyn (est., when when full) (1) 14, 000
Oakwood (4) 14, 348
Northumberland (4) 14, 548
So why are privately run prisons more costly, even though they have leaner staffing? Because they aren't. To compare like with like, you'd need to make several additions to the Berwyn figure:
Past experience of trying to ensure a level playing field in competition suggests an addition of around 2% for item 1 (6).
MoJ accounts show the on cost for item 2 is 25% for the private sector but 60% for the public sector, thus we should allow 15% differential on cost to the public sector (7).
3 is unknowable - but pension experts think that even under the reformed PSC scheme, the combined employer and employee contributions are likely to be 5% short of actual costs even on current assumptions, and it could be much more. But we'll never know – that's the beauty of the thing. Uncosted and uncostable (8). As so often nowadays - pensions, nuclear power, climate change, the NHS, social care, the ageing housing stock - when long term costs look too big to ever be affordable, we just ignore them.
That suggests the true comparison requires an additional 22 % for the public sector, thus:
annual cost per place, £
Berwyn (when full) 17, 500
Oakwood 14, 348
Northumberland 14, 548
About 5-7% of the higher cost in the public sector is having more operational staff; the rest is a a mix of higher (though hidden) pension costs, more non operational staff, higher pay, longer holidays, more sick absence, shorter working weeks, less flexibility, or more costly supplies and service contracts including central services (6). Of course, if we were looking at operational cost, rather than cost to the public purse, the gap between sectors will be even larger, because of the profit margin.
The significance of these figures is considerable. It means that in stating to Parliament that public and private prisons are equally efficient, Government has told an untruth (9); indeed that Government doesn't actually know what the true comparison is (10); and that in terminating competition on the bogus basis that there is no longer significant cost difference between sectors, MoJ has shown precisely the kind of 'producer self interest' which might be expected, given that the public sector has, until recently, both awarded contracts for prisons and has also been the biggest competitor in those competitions. (11)
It also implies that on a true cost comparison, the private operators could provide a better service than the public sector for the same money – but is not allowed to, because its costs are being mis-represented, relative to the public sectors.
No wonder the companies I worked for were so wary about competing against public sector prisons! (12). The match is rigged.
MoJ's prison programme can't work as planned - and even if it did, wouldn't address the causes of the prison crisis. Time to dare to....think?
FT article today
Plan to overhaul UK jails faces £1.6bn shortfall Overcrowding and building delays mean problem of prison violence ‘will not be resolved’
Britain's prison populationhas almost reached full capacity, at nearly 90,000 people
A plan to tackle overcrowding and violence in Britain’s prisons is underfunded by £1.6bn over the next five years and will not work, according to a former finance director of the prison service. Julian Le Vay, who was the service’s finance director for five years until 2001, suggested that a higher-than-expected prison population and delays to building plans for new prisons mean that the present levels of unrest and violence will not be solved without fresh funding. The most recent prison population figures show 86,075 people in prisons in England and Wales, only just short of the 87,411 total capacity.
The Prison Reform Trust, which released his analysis, said it showed the fundamental problems with efforts to resolve overcrowding by providing new spaces, rather than by cutting down the numbers of offenders sentenced to prison. The severe overcrowding of prisons has helped to produce a significant rise in violence, with 27,193 assaults or serious assaults in the year to June and a 25 per cent rise in attacks on guards. Many analysts also believe that overcrowded prisons lead to worse rates of reoffending on release. After trying the same failed policy for nearly four decades, the time has surely come for a change Peter Dawson, Prison Reform Trust
Mr Le Vay said he believed a shortfall in cash means the government’s 2015 plan to build nine new prisons “is not going to do what they want it to do.”. The plans for the five years to 2020 were meant to provide around 10,000 new places in five new prisons, at a capital cost of £1.5bn. The project was meant to be funded largely by closing old, expensive-to-operate city-centre prisons such as London’s Holloway and selling the sites for housing. But so far the government has done no more than identify the sites of four new prisons and, in March, told parliament only that it would be submitting planning applications in future.
Mr Le Vay said that, based on the experience of Berwyn Prison, near Wrexham, which opened in February this year, the service could expect a 3½-year gap between planning application and partial opening. That meant none of the new prisons would be open before 2020, while the prison population is expected to grow by 1,600 by 2022. He added that because the facilities would not open on time, it would be impossible to close the city-centre prisons on the anticipated schedule and the money for those sites would not be received as planned.
The study highlights the dilemma that the government faces as courts respond to increasingly tough criminal law by sending growing numbers of offenders to jail, despite a long-term decline in most measures of violent crime. Mr Le Vay calculates that spending for the 2018-19 financial year on prisons in England and Wales will be £162m more than budgeted because of extra staff costs. His projections anticipate steadily higher-than-budgeted spending over the following five years, to £463m by 2022-23. The total underfunding over the period amounts to £1.57bn.
Mr Le Vay argues that efforts to build capacity to relieve overcrowding have never been successful, since courts tend to sentence extra offenders to prison, filling up the capacity. Ministers have generally been wary of changing sentencing policy to divert offenders away from jail because of the risk of a public backlash.
But Peter Dawson, director of the Prison Reform Trust, said the UK was continuing to “throw” taxpayers’ money at prison building, at a time when many developed countries were reducing their prison populations. “After trying the same failed policy for nearly four decades, the time has surely come for a change,” Mr Dawson said. The Ministry of Justice said the analysis was “pure speculation”. It said it was investing to create “high-quality, modern establishments” and closing older prisons that were not fit for purpose. “This will help deliver prisons that are more safe and secure, so our staff can work more closely with offenders to change their lives and turn their back on crime for good,” it said.
Copyright The Financial Times Limited 2017. All rights reserved.
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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