Q61 Mr Gibb: I am not against contracting out, what I do not understand is why you do not just pay the invoices for construction of the prison when those invoices arise instead of paying for them using an HP contract.
Mr Steele: In my view there is no distinction in terms of whether you get a good prison at the end of the day between one or the other.
Q62 Mr Gibb: All of you have answered that question very inadequately.
Mr Narey: I am sorry, we will try again.
Q63 Mr Gibb: I must move on. It confirms the view of many people on this Committee that this is an accounting business, which is why you bring in private finance from the banks, and nothing to do with the more efficient management and construction of prisons. May I ask you about overcrowding, which is also referred to in the Report as one of the penalty things when you have unauthorised overcrowding? Can I just ask you about a forecast prison population? In a Parliamentary Answer we were told by 2006 a forecast population of 91,200, but by 2006 an uncrowded capacity of 69,500. What are you going to do with the gap?
Mr Narey: I do not know the answer to that and I have been studying the projections very closely now to see whether they are going to be met. There is some indication-I am not getting too excited about it-that the very depressing projections are not being met at the moment and the population at the moment is growing rather slower than that. We have to meet the gap, however big it is, by putting more prisoners into sharing cells than we would otherwise wish to do.
Q64 Mr Gibb: The current population is 66,000. Are you saying you do not expect that to rise by 3,500?
Mr Narey: The current population is 73,600.
Q65 Mr Gibb: Sorry, the uncrowded capacity is 66,000. Are you saying that will not rise by 3,500? 73,000 is using the doubling up in cells and we saw last week, even in Altcourse, that there were prisoner's cells meant for one person which had two people in them.
Mr Narey: Indeed, there are 13,000 prisoners at this moment sharing a cell originally meant for one and that is the extent of the overcrowding which we have to sort out.
Q66 Mr Gibb: What are you going to do about that?
Mr Narey: We are doing a number of things. First of all, some additional accommodation is being provided and we are building as fast as we can, but essentially, if we cannot build out of this crisis, if the population does grow quite as quickly as some of the projections suggest, then we will have to find other ways of controlling the prison population. Most importantly in my view, we need to try to convince sentencers that community penalties are as useful and as constructive in reducing crime, than very short prison sentences. For example, the proportion of first time Offenders sent to prison has doubled over the last three or four years. There is no reason for that, no explanation for that.
Mr Gibb: I think the public will be alarmed by those answers, but my time is up.
Q67 Jon Trickett: Paragraph 1.22 says "The Prison Service could not provide a clear audit trail between historical performance . . . and the actual financial deductions". This is in private prisons. What is an audit trail and why is it something worth commenting on?
Mr Narey: I accept this criticism. Part of the problem is that it is very difficult to get an exact correlation between financial penalties and the performance of a prison. For example, even Altcourse prison, which I think everybody who visits thinks is a very good prison and is possibly the best prison we have, has been fined something like £420,000. It does not mean it is a bad prison, it means that we would now view the performance measures we introduced, when we were setting up Altcourse as one of the first, as being somewhat inflexible. We have tried to refine those and improve things as things go on. The contracts we have now for new prisons will give a much greater link between financial deductions and the performance of the prison.
Q68 Jon Trickett: You have given me a reason why there is no audit trail rather than answering the question which I asked, which was: what is an audit trail? If I try to summarise what you were saying, is it true to say that we have not been consistent in imposing contract conditions on different private providers?
Mr Narey: No. We have certainly been assiduous in imposing contract conditions, but in some cases, with Altcourse for example, to keep that example, we have changed the demands we have put on Altcourse. For example, Altcourse was originally intended as a training prison, which would have been half adult, half young offender. The performance criteria we developed for that population were inappropriate for a core local population, which is what Altcourse became, dealing with prisoners sent straight from the court and some category A prisoners. So the original performance criteria, which were established and the points we deducted from Altcourse, were unfair because we had changed the role. I do not think for one moment that does not mean we were not very strict in managing the private sector and I think the deductions we have taken from Altcourse, when it is a very good prison, show that.
Q69 Jon Trickett: Is it not the case that you have consistently pulled your punches as a client in relation to the private sector providers?
Mr Narey: I do not think it is the case at all. Premier lost £3.2 million and suffered a very severe loss because of the failings at Ashfield.
Q70 Jon Trickett: Yes, but it could have been worse had you imposed the conditions fully, as you might have been entitled to do according to the contract, could it not?
Mr Narey: I do not think we could have done very much more. We closed half the places at one point and their revenue plummeted. Premier lost an awful lot of money on their venture into running Ashfield, which I am sure Mr Beeston would be able to tell you more about. I think we have tried to encourage the private sector. I work with Mr Beeston and Mr Banks as partners, they run very good prisons and they have improved the quality of the public sector because of the competitive element.