Andrew Haldenby: Grayling's prisons U-turn is biggest retreat so far on public service reform policy

Andrew Haldenby is the Director of the pro-market think tank Reform. Follow Reform on Twitter.

Earlier this year, the Ministry of Justice published data on prison performance for the first time.  It showed that private prisons were outperforming the public sector in regards to drug treatment of prisoners, numbers of suicides and staff sickness absence amongst other things.

In May 2012, two Cambridge academics revealed in the largest survey of its kind that public sector prison workers themselves recognised the benefits of competition with the private sector.  One senior manager said: “I think [privatisation has] been really helpful in raising our game, and it’s been a wake-up call in terms of suddenly realising that … this may not be a job for life, that we’ve actually got to deliver and if we don’t there’s people over there who will do it instead, and I think that’s been generally good.”

This superior performance fully justified the Ministry’s support for competition between prisons, continuing to allow private prisons to enter the market as has been the case for twenty years.  Only last month the Ministry told the Justice Select Committee that it is “committed to further competition in offender services to drive down the cost of prisons and other offender services and to maximise our ability to reduce re-offending.”  In 2011, in his competition framework for prisons and other offender services, Kenneth Clarke had given the clearest commitment of any Minister to competition in public services.

And this approach was of course consistent with the Government’s overall wish to open up public services.  In its key policy statement, the Open Public Services White Paper (July 2011), it said that it would “switch the default” for services like prisons “from one where the state provides the service itself to one where the state commissions the service from a range of diverse providers”.   This would bring a “host of benefits”.

This makes it all the more remarkable that the Ministry has made a dramatic U-turn today and set its face against competition between prisons.  It has set out what Chris Grayling called a “new approach”.   It said that its key way to improve prisons will now be to work with prisons in the public sector and apply an efficiency “benchmark” to improve them.  It has ended a competition for three prisons which now stay in the public sector by default.  It will move another back from the private sector to the public sector.  For the time being competition including the private sector will now be limited to very minor services, such as helping prisoners prepare for release right at the end of their sentences.

The Ministry said that this does not “rule out” future competitions but even so this “new approach” clearly downgrades its importance.  Opponents of competition have issued heartfelt thanks.

It is hard to know what the Government’s policy to public services now amounts to.  Launching the Open Public Services White Paper, the Prime Minister said that he would not “repeat the mistakes of his predecessors… blocking reform, wasting opportunities and wasting time”.    Today’s announcement is a clear block to reform. Equally he said that the centralisation of public services had been tried with good intentions but had been “incredibly damaging”, “frustrating” and had delivered “not good enough results”.  Centralisation is reinforced today.

Perhaps the errors of G4S over its Olympic contract played a part in Ministers’ decision.  But that was just one contract against the many thousands that have been run in this country and indeed across the world.  Speaking for Reform in September, Bernard Hogan-Howe, the Commissioner of the Metropolitan Police, said that the private sector should not be ruled out of public services simply because of that one example.

Perhaps the debacle of the West Coast Main Line had something to do with it.  But that was an error by officials, not by the private sector.  In any case prison competition has now been running successfully for two decades.  The process of issuing contracts is reliable and respected by the market.

The market may not be so respectful of this latest decision.  To open public services, Ministers need new companies and new investors willing to get involved in public services.   Those people are already uncertain because of the Government’s mixed messages.  Today they are confronted with the biggest retreat from public service reform so far.  That is the long-term loss to set against whatever short-term gain Ministers feel that they have achieved.