The reputation of the privately managed prison sector in the UK has taken a beating in recent years. Does this spell the end for the ‘whole prison’ contracting era, asks Dr. Simon Bastow

Bastow, Simon

LSE Research Online

11/07/2017 Curtailing the market for private prisons: schism or blip? | LSE Managementhttp://blogs.lse.ac.uk/management/2017/05/01/curtailing-the-market-for-private-prisons-schism-or-blip/ 1/4Curtailing the market for private prisons: schism or blip?The reputation of the privately managed prison sector in the UK has taken a beating inrecent years. Does this spell the end for the ‘whole prison’ contracting era, asks Dr. SimonBastow.For nearly 25 years, new prisons built in the UK have predominantly been procured through‘design build finance and operate’ (DBFO) contracts with the private sector. So the opening earlierthis year of a new supersized prison to be financed and operated by the public sector – HMPBerwyn in north Wales – puts the future of ‘whole prison’ contracting in doubt.Should we see this as a fundamental break with past orthodoxy? Or is it just a blip in thedevelopment of a mature and ever-growing market for privately-managed prisons?The Figure below shows the trend towards a mature oligopolistic market that has formed animportant integrated part of the national system. Three firms – G4S, Serco, Sodexo – hold aboutone third each of the market share, running 14 prisons between them, equivalent to around 18 percent of the total prison population.11/07/2017 Curtailing the market for private prisons: schism or blip? | LSE Managementhttp://blogs.lse.ac.uk/management/2017/05/01/curtailing-the-market-for-private-prisons-schism-or-blip/ 2/4Up until recently, the British government has shown confidence in this role for the private sector.The operation of Birmingham prison, one of the largest and strategically most important in thenational estate, was handed to G4S in 2011. And Serco and G4S each opened brand new prisonsin 2012.But since 2012, reputation of the private sector has unravelled – and tested the patience ofministers in the process. Central to this were damaging allegations that G4S and Serco hadfraudulently claimed payments for electronic tagging of offenders. But this also coincided withhigh-profile failures in private prisons, not least the serious operational instability in the early yearsof the Oakwood prison.The Ministry of Justice (MOJ) responded with a combination of punishment and retrenchment.G4S and Serco were banned from bidding to operate any further prisons. G4S also lost thecontract for The Wolds prison that they had held since 1992, as the contract expired in 2013 andwas taken back into public sector management. MOJ also shelved plans in 2013 to ‘market test’and transfer several prisons to private sector operation.But the response seemed more than punishment alone. Underlying the subsequent decision tokeep Berwyn in the public sector was the belief that the public sector could now operate prisonsas cost-efficiently as their private sector competitors. A quarter of a century of learning from andcompeting with them had finally closed the gap. Or so ministerial rhetoric had us believe.Also the Berwyn model guarantees more than one third of its prison services will be commissionedexternally. This signals a move to a kind of ‘public sector core and commissioned periphery’model, one that fits neatly with reforms in the probation system with regional CommunityRehabilitation Companies (CRCs) providing commissioned services around a core public sectorNational Probation Service. The CRCs incidentally were another set of contracts for which G4Sand Serco were not allowed to bid.There are also questions about the sustainability of the more recent prison contracts in terms ofadequate staffing and resourcing. In recent years the pressure to procure low-cost prisons haspushed bidders to offer up more services at stripped-down prices. If ‘governments get thecontracts they deserve’, why would we be surprised that MOJ’s emphasis on low-price contracting11/07/2017 Curtailing the market for private prisons: schism or blip? | LSE Managementhttp://blogs.lse.ac.uk/management/2017/05/01/curtailing-the-market-for-private-prisons-schism-or-blip/ 3/4About Afroditi-Maria KoulaxiAfroditi was the editor of the Management with Impact blog betweenFebruary - June 2017. In September, Afroditi is starting her PhD at LSEto investigate the mediation of migration.Mail | More Posts (16)has contributed to serious breakdown of control in two of their most recently procured prisons,Birmingham and Northumberland.Firms’ interest in these ‘low price’ contracts has begun to wane too. In terms of reputation, there isvery little desire on the part of the firms to be associated with catastrophically failing prisons.Believe it or not, firms and their directors want to be associated with high-performing prisons – notfailing ones. As contracts are squeezed and expectations increased in return for what is generallyseen as diminishing profitability, the risk-reward pay-off begins to look much less attractive for theprivate sector.Of course, this unravelling may just be a blip. We should not after all underestimate the resilienceof the market and the ability of firms to take their punishment, demonstrate sufficient humility, andfind ways to grow existing and new markets. Neither should we overlook the fact that although allthree incumbent firms have suffered high-profile failures in recent years, they all run high-performing prisons as well.It is also a fact that most of the contracts in place are not up for renewal until after 2023, and theinterim cost of cancelling them would be exorbitant. Incidentally, all of the early contracts that havereached expiry have been transferred back to the public sector – the next contract to reach expiryis Doncaster in 2019. So it may be business as usual for at least another couple of years.Clearly the system has been through a period of punishment and retrenchment, but in the newBerwyn model there are signs of a constructive and designed break from the past orthodoxy. The‘whole prison’ contracting model may be creaking, but it has brought insights and understanding tothe public sector over the years. One would hope now that a new model of a strong and leanpublic sector core, combined with an innovative, competitive, and integrated commissionedperiphery can push on towards more constructive and rehabilitative prisons.Notes: The post  gives the views of its author, not the position of Management with Impact  or the LondonSchool of Economics.Simon Bastow has been an LSE Fellow in the Department of Managementsince 2015. Simon has worked in university research and teaching since theearly 2000s in the fields of political science, public policy, and publicmanagement. He worked as a Research Fellow at the School of Public Policyat University College London, and from 2005 he was a Senior Research Fellowin the LSE Public Policy Group, working on a wide range of public policy andmanagement projects. This included research with colleagues to produce sixcommissioned Value for Money (VFM) studies for the UK National Audit Office.In 2012, Simon received his doctorate from the LSE Government department for research oncapacity stress in the England and Wales prison system, which he has subsequently published asa research book. He also co-authored a book in 2014 on the Impacts of Social Science.11/07/2017 Curtailing the market for private prisons: schism or blip? | LSE Managementhttp://blogs.lse.ac.uk/management/2017/05/01/curtailing-the-market-for-private-prisons-schism-or-blip/ 4/4May 1st, 2017 | Management with Impact | 0 Comments

Curtailing the market for private prisons: schism or blip?

Abstract

Similar works

Full text

Available Versions

LSE Research Online