Can justice be a matter of profit and loss?

Spectator Business

April 2009

Edie Lush visits a private prison, and wonders whether there should be limits to the involvement of shareholder-owned businesses in the provision of such sensitive public services

There’s something unnerving about the idea of a private prison. When you drive up to the gates of HMP Dovegate, the first thing you notice is the Serco sign – it has friendly round letters with a little red line under the ‘o’. It’s a little weird to walk into a Category B prison, filled with rapists and murderers, that’s run by the same FTSE 100 company I noticed cleaning my London street this morning.

But once you’re inside Dovegate, it is recognisably prison-like. Many of the cells were empty because inmates were busy in the workshops, including one which produces lights for Cooper Lighting that end up in hotels in Dubai. Director Wyn Jones told me that employment levels are above 90 per cent in the prison. I spoke to one prisoner who was doing a degree in sociology and another who had completed three National Vocational Qualifications. Both these prisoners represent their wings in weekly meetings with prison management. Top of their list this week is the issue of whether ‘older chaps’ with little prison income should pay less for their television rental than the £1 a week paid by those with jobs. Prisoners use an ATM to order from the prison shop and top up their phone call entitlements – eventually they’ll be able to book visits and doctors’ appointments through them as well.

Leaving the main block and entering Dovegate’s Therapeutic Prison (TP), I saw a Buddha and a water fountain which wouldn’t be out of place in a meditational retreat. Prisoners in the TP do group therapy in the morning, work in the afternoon and are allowed to keep budgies as pets to encourage bonding and responsibility. Drug rates in Dovegate are low, and even lower in the TP, because according to Jones, ‘If you use, you’re out’. That’s not to say HMP Dovegate is a picnic; by no means. I saw one prisoner who’d had his ear cut off in a prison fight. On returning from hospital outside, he attempted to smuggle a watch-phone back to prison and had to serve time in the ‘Care and Separation Unit’.

The latest (broadly positive) Independent Monitoring Board Report argues the cells are small, poorly heated and ventilated, and that the medical provision in the prison isn’t great because the subcontractor providing the service, Serco Healthcare, had experienced high levels of staff turnover. Like any prison, Dovegate suffers from overcrowding and around 10 per cent of cells in the main prison have double bunks. Jones is quick to point out that most of these are in the reception wing, where prisoners stay when they first arrive.

Jones says Dovegate’s main problems are the same as in state prisons: drugs and mobile phones. Phones are a problem because prisoners can use them to intimidate witnesses, organise drug drops to the prison and continue to run criminal networks. There are violent attacks between prisoners but they are substantially less than the ‘target’ acceptable level. Jones attributes the fact that there has not been a violent attack on staff for over a year to a focus on order, safety and control. Levels of drugs and home-brewed ‘hooch’ are at similar or lower levels to comparable state prisons. After several years of hard work, Dovegate exceeds every ‘Key Performance Target’ set for it by the government’s National Offender Management Service.

Meanwhile, on the outside, private prisons are getting a bad rap on both sides of the Atlantic. Last month, two judges in Pennsylvania were convicted of accepting $2.6 million in bribes from private-prison companies to send 2,000 children to juvenile jails for very minor offences: one student who lampooned a teacher on MySpace was sent to prison for three months. The judges took money for sanctioning the building of a new private prison in their area and closing a county-funded prison nearby, as well as filling the new jail. Other charges against the private-prison sector in the US range from profiteering from the crackdown against illegal immigration after 9/11 to being paid to hold non-existent prisoners, because their contracts guarantee minimum inmate numbers.

Privatised criminal justice in the UK isn’t immune from criticism either. Stephen Nathan, editor of Prison Privatisation Report International, asks whether, morally, private companies should be allowed to provide this service. ‘Is the target of making profits acceptable when you’re dealing with some of society’s most vulnerable people?’ He also says the danger in creating a criminal justice market is that, in order to maximise profits, that market must continuously expand. ‘Once you involve the private sector, it influences public policy to reflect the industry’s interests over society’s. Privatisation is completely at odds with ensuring that prison is only used as a measure of last resort.’

The early record for private prisons was not stellar. Introduced in the UK in the 1990s, they had higher levels of drugs and violence than their public counterparts, and high levels of staff turnover. By January 2009, however, a report by chief inspector of prisons Anne Owers noted that: ‘the only clear difference…was in relation to safety, where privately managed prisons performed less well.’

Back in 2005, Owers issued a damning report on Forest Bank – run by Kalyx, a subsidiary of the giant catering group Sodexo Alliance – noting that prison officers were doused with a bucket of excrement during the inspectors’ tour and that 40 per cent of prisoners tested positive for drugs. In 2007, she found serious failings at Rye Hill – run by GSL, part of G4S, formerly Group 4 – saying ‘it was unsafe and unstable for both prisoners and staff’. At Dovegate in 2006 (the start of Jones’ tenure as director), Owers observed a ‘stretched and inexperienced staff struggling to maintain control’. Jones points out that turnover is now at much lower levels and staffing levels have increased.

Serco notes in its 2008 annual results that its ‘long-term contracts’ allow ‘excellent visibility over revenues’. But these 25-year contracts also worry critics – Nathan says that even after a damning inspection, a company is unlikely to have its contract terminated.

David Banks, group managing director of G4S Care and Justice Services which runs four prisons in the UK, denies that claim. ‘There was a time when Rye Hill wasn’t performing well,’ he admits, but ‘it is now performing exceptionally well, with far lower turnover rates and greater stability.’ Tom Riall, chief executive of Serco Civil Government, argues that the sanction for private prisons is much greater than that on public prisons. ‘Traditionally, when public prisons perform poorly, the most you can do is fire the governor, although the trend towards service-level contracts in public prisons is to be welcomed. Private prisons are fined for poor performance, and ultimately the contract can be terminated if you don’t improve. Your reputation suffers and you’ll fail to win the next contract if you don’t provide high levels of service.’

Both Riall and Banks say there are examples of good prisons in both private and public sectors. Banks says that the PFI initiative has enabled an ‘optimum balance’ between design features and use of manpower – and that these prisons have been completed on time and budget. Riall says the private sector has been able to show substantial reductions in cost – in some cases up to 50 per cent.

As for the charge about staff being insufficiently trained, Banks says that because all private prisons have been new prisons, officers in them tend initially to be inexperienced, though middle and senior management usually have extensive experience. Private prisons are not subject to the same national pay agreements that the Prison Officers Association has negotiated with state prisons. Private prison staff are paid less, which can lead to higher churn rates. Director Jones describes his staff churn of 9 per cent as something he’s ‘comfortable with’, arguing that ‘some turnover is good – a fresh injection of people into a prison prevents a negative culture from building up.’ Both Banks and Jones say their companies’ pay is commensurate with local levels and Jones says recruitment hasn’t been a problem. At a recent job fair, Dovegate distributed 700 application forms.

It’s very difficult to compare the ‘success’ rates of private prisons to their state counterparts. Prisoners tend to move around, so it’s difficult to connect reoffending rates with specific prisons. It’s also problematic to compare a prison designed ten years ago with Victorian-built state institutions. Private prison operators won’t publicise their profit levels, but Riall points to results for 2008 showing that Serco Group made a profit margin before tax margin of 4.7 per cent. ‘Some prison contracts are better than that, some worse.’

Serco profits from running prisons just as it does from cleaning streets and running the Docklands Light Railway. Should private companies be profiting from services that were once only provided by government? If they do a better job, then yes they should. In some respects, private prison companies are providing a welcome challenge to state institutions to perform better. And it’s clear that they’re here to stay: the government is due to make announcements about ‘Titan’ prisons (each to hold 2,500 inmates), and on the future of HMP Belmarsh and Maghull, which will almost certainly involve the private sector. The challenge will be to take the best of what the private sector has brought to prisons, and apply a zero tolerance policy towards the rest.

This was written for Spectator Business