Public Policy: Using Market-Based Approaches - Department for ...

Public Policy: Using Market-Based Approaches
whom the public sector has had to compete for the management of markettested
prisons. To date, there have been eight contracts for which the public and
private sector have competed directly. The introduction of performance testing
for failing prisons has also provided an indirect competitive stimulus for good
performance in the public sector, and is only possible because an alternative
market of private sector suppliers now exists.
That the public sector has become more efficient as a result is evidenced by:
● its ability to win back two management contracts, Buckley Hall and
Blakenhurst, from incumbent private sector contractors. That this is
attributable to the improved efficiency of the public sector rather than the
poor performance of private suppliers is demonstrated by the fact that both
prisons received good reports from the Prison Inspectorate shortly before the
contracts were re-tendered and lost. In the case of Buckley Hall, the report
went as far as concluding that it was ‘... a thoroughly good prison: in terms of
outcomes for prisoners, Buckley Hall was outperforming the majority of
Prison Service establishments fulfilling similar roles’; 111 and
● the fact that the prison population has increased more than proportionately
with the Prison Service budget. In the 1980s, it was the increase in prisoner
population that gave rise to the very concerns about over-crowding and poor
conditions that led to the involvement of the private sector in the first place.
Recent increases in prison population, however, appear to have been
absorbed without any significant adverse impact on performance. This
outcome is unlikely to reflect economies of scale, as the CBI report observes:
‘One would expect there would have been some scale economies
associated with overcrowding and yet the two contract prisons with the
biggest increases in overcrowding, HMP Blakenhurst and HMP Doncaster,
had larger increases in cost per place and smaller falls in cost per prisoner
than the other two contract prisons. If there were scale economies
associated with overcrowding, they cannot have been significant.’ 112
Overall Assessment
The overall evidence suggests that the procurement of prison services has been
successful. The anticipated benefits of competition appear to have been realised,
without suffering from any major potential detriments. In particular, the
supporting performance-measurement process, combined with an extensive
monitoring process, appears to have been sufficient to maintain quality in the
majority of private prisons, although there have been exceptions.
This success has not come without significant investment of time and resources.
Each competition requires four or five internal staff at a cost of around £250k to
111 HM Chief Inspector of Prisons for England and Wales, ‘Annual Report 1999-2000’, p.25.
112 CBI (2003) Op.Cit. p.17.
108