Q71 Jon Trickett: Is it not a fact that you are ideologically committed to a section of the Prison service being privatised for reasons which we might go into in a minute? Is it not the case that you are ideologically committed to ensuring that there is a mixed economy?
Mr Narey: I have never been accused of that before. On the contrary, I have usually been accused of favouring the public sector, in which I have worked all my life. An earlier shadow Home Secretary criticised me severely when I took two private prisons, Blakenhurst and Buckley Hall, back into the public sector after market testing.
Q72 Jon Trickett: Yes, because the public sector tenders were lower than the private sector ones?
Mr Narey: Yes and better on quality.
Q73 Jon Trickett: You are quoted by the CBI in a press release as saying that the benefits of a mixed economy are clear for further progress.
Mr Narey: I believe that is the case.
Q74 Jon Trickett: So you are ideologically committed to it?
Mr Narey: I am ideologically committed to good prisons, whether run by the public or the private sector; prisons which reduce re-offending. I believe the presence of the private sector has not only delivered good prisons in the private sector, but it helped me when I was Director General and Mr Wheatley, now he is Director General, to deliver a better and more cost effective and efficient public sector as well.
Q75 Jon Trickett: Is it not a fact that the privatisation process, or the PFI process, has been used to overcome a culture of resistance to change within the existing prison service and to reduce cost by basically cutting wages and conditions for staff?
Mr Narey: That is certainly true. We have been trying to make the whole of the Prison service more efficient and more effective so we can make a better job of re-offending. The evidence shows we are beginning to do that.
Q76 Jon Trickett: So it is so, that the privatisation process at least was used to bring about a reduction in cost?
Mr Narey: The introduction of the private sector was in part to bring better value for money right across the prison service and I think it has done that.
Q77 Jon Trickett: By cutting people's wages in effect or by cutting wages of staff as shown in this Report?
Mr Narey: No. May I give you an example of what happened at Blakenhurst and at Buckley Hall, both prisons run well by the private sector, one of them by Group 4? Shortly after I became Director General, I asked management consultants whether there was any possibility of the public sector matching the private sector against those prisons. I was told none at all. In fact, a competition, a market test in which the POA played a full and enthusiastic part, confounded those suggestions and both those prisons were won back by the public sector in situations which would have been inconceivable a few years before.
Q78 Jon Trickett: Yes, but I have read the Report as well as you and it says there that the cuts in staffing levels may be so stringent now as to jeopardise the service, does it not?
Mr Narey: There are some concerns about staffing levels, at Manchester particularly, and some concerns at Blakenhurst, less so at Buckley Hall. Both of those prisons are good and decent prisons.
Q79 Jon Trickett: I looked at the organogram on the first page, which shows you, at the head of the service and then two wings. On the one hand there is the public sector managed directly through the Director General of the public prison service. On the other side is the Director of Strategy, Finance and Competition, who is both deciding competition policy and managing the private prisons. That is a striking combination of functions on the left-hand side of this page, is it not? I would have thought it would be more logical for the management of all prisons, whether private or public, to be done by a manager and for competition strategy to be kept separate with a clear distinction between the managerial role and the setting of competition policy and the monitoring of performance. What you have done neatly is shift under the Director of Strategy, Finance and Competition, the management of the private sector prisons. Why? Have you ever given consideration to making sure that the management is on the one side of the organisation and the monitoring and competition policy is on the other? Why have you done it in this particularly interesting way?
Mr Narey: I think we have separated the two. John Steele, the Director of Strategy, Finance and Competition, does not run any of these prisons, they are run by the private sector and they are run to contract and I have described how we are trying to improve the performance management of those prisons. What previously happened was that I, as Director General until a few months ago, not only managed the public sector prison service but made decisions about which prisons, if any prisons at all, should be contracted out or which prisons should be brought back into the public sector. That did look rather odd, particularly to colleagues in the private sector. These changes are meant to try to bring some neutrality to bear and the decisions I will make, as accounting officer for the whole of the prison service, will be based only on the quality and cost-effectiveness of prisons, not whether they are public or private.
Q80 Jon Trickett: I am running out of time and I want to establish this point clearly. This Figure 2 on page 1 shows a directly continuous line going from the Director of Strategy down to PFI prisons, but a dotted line, which means hands-off management, to privately-managed prisons. It clearly states there that the management of private sector prisons is in the hands of the Director of Strategy and also the Director of Strategy is dealing with contracting out and competitions. Are you not leaving yourselves open with that managerial line of accountability to the accusation with which I began my questioning, that in fact you are pulling punches on the private sector because you need them to bring about the kind of change we have just discussed?
Mr Narey: Obviously that is a conclusion you may draw, but I do not believe that to be the case. I repeat that all I am interested in is good and decent prisons which do a better job of reducing re-offending.