The private sector has brought benefits to the Prison Service

10  The provision of custodial services by the private sector following market testing has introduced an element of direct competition. In response, the Prison Service has recently accepted in-house bids, delivered competitively, to replace private-sector management at two prisons. It has done this, in part, by reducing the price of its bids through more flexible staffing.

11  Competition has been important within the prison system for improving both management and conditions for prisoners. The success with PFI prisons at a time when the Private Finance Initiative was faltering in other sectors was critical for sustaining a competitive market for the benefit of the Prison Service. However, as the bids become increasingly competitive, so there appears to be evidence that both private contractors and successful in-house bid teams are struggling to meet required standards of performance. This is apparent in the problems faced by Ashfield, Dovegate and Rye Hill in recruiting and retaining staff to the levels stipulated in their contracts and in concerns regarding staffing levels voiced to us by the staff at Manchester. Prison Custody Officer (PCO) 

shortfalls can be accommodated by transferring staff from other prisons managed by the contractor, but such strategies can only be viewed as a short-term solution. The Prison Service considers that the competitions at Peterborough and Ashford (Middlesex) in 2002 may have addressed this problem since in terms of cost per place, these appear more expensive than recent bids. However, Ashford will have to compete for staff within the vicinity of Heathrow Airport, and both Peterborough and Ashford will contain female prisoners which usually makes such prisons more expensive4.

12  The use of the PFI has brought innovation, mainly in the recruitment and deployment of staff and use of new technology; however, there appears little difference in terms of the daily routines of prisons. A key innovation by the private sector has been in promoting a more constructive staff/prisoner relationship. PCOs are encouraged to treat prisoners in a more positive manner, for example through the use of first names and mentoring schemes. The senior management of the Prison Service has been able to use the success of the private sector in nurturing better staff/prisoner relationships to encourage their own staff to adopt a similar approach.

13  The prison population in England and Wales has increased by 36 per cent since January 1996 when the Prison Service let the first PFI prison contract. The use of the PFI to build new prisons has helped the Prison Service cope with this increase speedily and cost effectively and has created the necessary conditions for competition in the management of existing public prisons. Although the PFI has brought an increase in capacity, the operational performance of the prisons has been mixed. Furthermore, there has been only limited evidence that the innovation and good practice of PFI prisons is easily applicable to the rest of the Prison Service. However, the Prison Service has successfully integrated private management within its national arrangements for making the best use of available accommodation which has in turn, helped generate a common correction professionalism, irrespective of employer.

14  The use of the PFI is neither a guarantee of success nor the cause of inevitable failure. Like other forms of providing public services, there are successes and failures and they cannot be ascribed to a single factor. This report shows therefore what we should expect. A relatively new procurement method such as the PFI is associated with encouraging and disappointing results and that performance will improve over time. But a general verdict that the PFI is either good or bad in the case of prisons, or more generally, cannot be justified.

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4  Due to factors such as the increased health care provision and the need for more facilities such as Mother and Baby units.