Understanding the Public Services Industy

Public Services Industry Review
Box 3.2: An example of implementing PFI: Prison Services in the UK
The UK was one of the first countries to create a market for prison services, beginning
in 1991 by contracting out the management of new prison centres. Subsequently
private sector involvement was extended to include the design, build and financing of
new prisons and, more recently, the market testing of underperforming public sector
prisons 26 .
Increasing conviction rates and changing sentencing practices meant that a
programme of prison construction was needed. This created a clear pipeline of future
demand which was critical in attracting providers into the UK market.
In common with their public sector counterparts, most new PFI prisons experienced
difficulties when first opened, but subsequently improved. The NAO reviewed PFI
prison performance in 2003 and found that with one exception PFI prisons performed
well relative to comparable public prisons 27 . The latest official review of prison
performance puts 9 out of the 11 private prisons as meeting or exceeding the majority
of their targets, a comparable level of performance to the public sector 28 .
Beneath these aggregate figures there are systematic differences in performance, with
private prisons generally scoring better than public prisons in areas such as staff –
prisoner relations, but worse on issues such as safety and security.
More broadly the introduction of market testing for failing prisons and the creation
of a parallel pool of alternative suppliers has helped spur improvements in the
performance of public sector prisons, although evidence of sharing of best practice is
harder to come by.
In terms of the international market for prison services, providers have made clear that
the experience they built up in the UK has been crucial in their success in overseas
markets, in particular in bringing a new model of provision to the table and helping to
reshape the market. These foreign contracts have also allowed them to sustain
in-house expertise during periods when the UK market stopped expanding.
Are there particular benefits associated with provider type?
3.34 The common stereotypes associated with public, private and third sector delivery
are not borne out by the limited evidence that specifically compares the non-cost
elements of provision across provider type. The National Consumer Council study
(2007) discussed above showed users ranked the third sector highest in the delivery
of employment services and the private sector highest for domiciliary care for older
34
26 Market testing essentially involves putting out the management of an existing prison to competitive tender with bids
invited from both the in-house team and outside suppliers.
27 National Audit Office (2003).
28 Office for National Commissioning (2008).