Q121 Mr Osborne: May I just ask about women's prisons and in particular in my constituency I have Styal prison, which has become the largest women's prison in the country. Is there any PFI programme in women's prisons?
Mr Narey: Yes. We have signed contracts for both Ashford prison and Peterborough prison and Ashford will be completely female and Peterborough will be half male and half female. I hope this will bring some much needed relief both to Holloway and Styal.
Q122 Mr Osborne: Are you going to attempt to bring in any particular innovations through these new PFIs?
Mr Narey: Both those prisons relative to some of the more recent contracts we have are going to be quite expensive because we made sure that there was a requirement for them to be sent to the private sector. In the bids we approved there is a very significant emphasis on addressing the very particular problems facing women prisoners, which you will know from Styal, very heavy levels of mental illness, the need for greater numbers of staff. For example, at Peterborough the staff ratio for the women's side of the prison will be about one to 2.7 as opposed to one to 3.5 on the male side. We need more staff to look after women, who are a much more difficult group to look after; they need a much greater investment in health care, they need offending behaviour programmes which are designed specifically for them rather than simply being adapted from those we use for men. We will see all those features in the two new prisons when we open them.
Q123 Mr Osborne: Less transport around the country? I am going to discuss this with Mr Wheatley later in the week.
Mr Narey: I hope that will be a benefit. You will know just how much we have to move prisoners in and out of Styal and the particular catastrophes we have had in terms of the incidence of suicide in recent months.
Q124 Mr Davidson: I was looking at the table on page 23 giving the various categories and I found it immensely complex to draw any lessons from it. Then, when I turned to page 8, the clearest single correlation is between the age of the prison and whether or not it is in the red or any other category, with 50% of those in the red category being built in the 1800s and only 20% in the orange and 10% in the green. Is age of the prison not the more important predictor than public, private or anything else?
Mr Narey: It is a very important predictor, but it is not an absolute predictor. Some of the prisons which would give me and, I would suggest, Mr Wheatley most concern are not the very oldest prisons. Some of the Victorian prisons have some real advantages, not least in safety, which have been reproduced in modern design. Some of the prisons built in the 1960s are frequently not safe prisons and are extremely expensive in terms of manning.
Q125 Mr Davidson: Are those factors not a better determinant of how effective a prison is going to be than the question of public or private?
Mr Narey: I agree that they are very important factors and I never believed public sector good, private sector bad or vice-versa. Both sectors can run good and bad prisons.
Q126 Mr Davidson: How effective is the regime of financial penalties in concentrating your minds and improving behaviour?
Mr Beeston: In the case of Ashfield, which is clearly documented in the NAO Report, it cost Premier £4.2 million last year, so it did focus the mind.
Q127 Mr Davidson: You got the penalties because it was a disaster and because it was a disaster your mind would have been focused anyway. Rather than the nuclear option there of the enormous penalties, I was thinking more of the incremental penalties which seem to be popping up now and again. To what extent does that actually grip your attention? Is it something which really determines behaviour or not?
Mr Beeston: It is important, but it is not the primary factor. The prisons are run by prison directors who want to meet and achieve performance targets and are now within a system where they are grouped into peer groups and comparator groups and there is some degree of pride there in achieving good performance. The financial penalty is really a result of not achieving good performance. It is a consequence rather than the root cause.
Q128 Mr Davidson: If we are reading across from this to health, education, anything else, are you saying that financial penalties are not something we really ought to be picking up from here as being an example of significantly good practice?
Mr Beeston: By definition financial penalties only occur when there are elements of failures. They are not where you want to focus your mind because you want to focus your mind on success and getting the best job done. Where financial penalties do trip in, then clearly there is an issue and that is an area of management focus. The system does work, it does maintain accountability and focus on areas which are giving problems versus areas which are not.
Mr Banks: The threat of financial penalties certainly focuses the mind. Financial penalties in themselves do not produce excellent performance, they produce contractually compliant performance. Excellent performance comes from the commitment of directors, their management team and their staff.
Q129 Mr Davidson: Yes, but we cannot necessarily construct a mechanism which delivers that in other areas of work. How valuable do you think the question of financial penalties is for our use elsewhere from the lessons of here? Do you think it is something we ought to be building in to anything else we hand over to the private sector to manage?
Mr Banks: It is an important part of the whole risk management mechanism that the risk management is actually backed up by financial penalties, yes.
Mr Narey: I thought with the particular instance of Ashfield, which caused me so much anxiety, that if we had not been able to make very severe financial penalties, the other part of the Premier partnership-because until Wednesday Premier is part owned by Serco, which Mr Beeston represents, and part by Wackenhut-I do not think we would have got the other part of that partnership to respond seriously. I did find with Wackenhut that it was very important to make very significant financial reductions and take away places before I felt I was getting them to take the nature of Ashfield's inadequacies seriously.
Q130 Mr Davidson: You mentioned earlier on the relationship with prisoners and the question of prisoners sometimes basically being devious and manipulative and so on. The parallel I look at here is the relationship between the controllers and the companies and the question of institutional capture and so on and so forth. I am not clear from this, notwithstanding the points which have been made, how exactly you have overcome that and whether or not you believe that has been a genuine issue. We are hearing just how important and significant the financial penalties can be and a relatively isolated group of staff can be pressured by the people round about them and their circumstances.
Mr Narey: Yes, they can and we are alive to that. The changes we have made in terms of managing private sector prisons all together as one group by one manager will mean managing the controllers as one group, bringing the contractors together much more, we shall try to give them much more support, try to make sure that we have greater standardisation in their behaviour and we will be anxious to ensure that we prevent what you call institutional capture. I cannot deny that that may not have happened, indeed some years ago in one prison with one particular controller I believe it probably had happened and that particular controller retired. The record of the fines imposed on prisons, even those prisons which all commentators, including the Chief Inspector of Prisons, think are very good prisons shows that we have been pretty hard on the private sector. Look at Altcourse which impressed nearly everybody, which has lost nearly £500,000 in recent years.