Birmingham Prison Crisis: Labour call for all further privatisations to be halted

Labour has called on the Government to halt all further outsourcing of Government contracts and privatisations until an investigation takes place into why they are failing so badly.

This comes after the collapse of privately run Birmingham Prison, Carillion and East Coast Rail.

The failure of outsourcing contracts at Tory-run Barnet Council, which are now being brought back in house, is another example of Tory privatisation failure.

John McDonnell MP, Labour’s Shadow Chancellor, said:

“Tory privatisation is now putting the public in danger.

“Birmingham Prison, Carillion and East Coast Rail have all collapsed because of failed Tory privatisation.

“This has to be a wake-up call and a turning point in how our public services are run so we can protect the public instead of private profit.”

Ends

Notes to editors

• ·       Barnet Council to bring services back in-house from Capita http://www.hamhigh.co.uk/news/politics/barnet-council-to-put-an-end-to-outsourcing-1-5587503

• ·       Ministry of Justice outsourcing failures. Probation:

• ·       In 2014, the Tories split up probation services into a publicly-run National Probation Service (NPS) and 21 privately-operated Community Rehabilitation Companies (CRCs).

MoJ, Transforming Rehabilitation, May 2013, https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/228744/8619.pdf

• ·       Earlier this year the PAC released a report warning that the overhaul of the probation service could become a “contracting catastrophe” because the majority of companies monitoring offenders are forecasting financial losses, despite up to £342m more of taxpayers’ money being provided by the MoJ. It adds that 19 of the 21 Community Rehabilitation Companies have failed to meet their targets for cutting frequency of reoffending and that overall the performance of CRCs has been “woeful”.

The Independent, 21 March 2018, https://www.independent.co.uk/news/uk/home-news/probation-privatisation-contracting-disaster-transforming-rehabilitation-public-accounts-committee-a8265701.html 

• ·       The NAO estimates the value of contracts is £2.1bn, the original value of contracts put out to tender by the MoJ totaled £6.5bn. The NAO said that volumes of activity CRCs are paid for are well below the levels expected when the contracts were let, while the number of offenders supervised has increased. Now the MoJ is paying more than contractual obliged to CRCs in order to keep them afloat despite not meeting targets.

NAO, Investigation into changes to Community Rehabilitation Company contracts, 19 December 2017,https://www.nao.org.uk/report/investigation-into-changes-to-community-rehabilitation-company-contracts/

• ·       Interserve, the largest private probation provider, issued two profit warnings last autumn after the stock value of the company fell by 80% in 2017.

BBC News, 19 October 2017, https://www.bbc.co.uk/news/business-41677677 

• ·       The Chief Inspector said the Tories have created a ‘two-tier and fragmented’ system in which private companies are performing significantly worse than the public sector. While the PAC found there were "significant barriers" to encouraging innovative practice in rehabilitation in CRCs.

The Guardian, 14 December 2017, https://www.theguardian.com/society/2017/dec/14/private-probation-firms-criticised-supervising-offenders-phone

• ·       In 2017 two private companies that between them provide 50% of probation services in England and Wales, Interserve Justice and MTCnovo, said they may quit because they are not making enough money from their contracts; worth more than £150million a year.

Justice Select Committee, Transforming Rehabilitation, Oral Evidence, 28 March 2017, https://www.parliament.uk/business/committees/committees-a-z/commons-select/justice-committee/inquiries/parliament-2015/transforming-rehabilitation-16-17/publications/

• ·     In July last year, the Government announced it had adjusted the payment mechanism for CRCs, but would not say how much extra this would cost.

Sam Gyimah, Hansard, WMS HCWS81, 19 July 2017, http://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2017-07-19/HCWS81/

• ·       In September 2017, it was revealed that £37.15m was paid to CRCs above their agreed contracts in 2016/17.

Sam Gyimah, Hansard, Written Answer 8401, 15 September 2017, http://www.parliament.uk/business/publications/written-questions-answers-statements/written-question/Commons/2017-09-04/8401/

• In June 2018, the Justice Select Committee released a scathing report on the Govt’s part-privatisation of the probation services this week. The "Transforming Rehabilitation" project, introduced by Chris Grayling when he was justice secretary, aimed to reduce reoffending rates. But the Justice Select Committee said that programme had left the system in a "mess", with staff morale at an "all-time low" and support for prisoners leaving jail "wholly inadequate".

“A new state body, the National Probation Service (NPS), was set up to supervise high-risk offenders, with 21 Community Rehabilitation Companies (CRCs) supervising low and medium-risk offenders.

“The "Transforming Rehabilitation" project, introduced by Chris Grayling when he was justice secretary, aimed to reduce reoffending rates.

“But the Justice Select Committee said that programme had left the system in a "mess", with staff morale at an "all-time low" and support for prisoners leaving jail "wholly inadequate".

22 June 2018, https://www.bbc.co.uk/news/uk-44568810

• This came just a week after it was revealed that the CRCs’ contracts are set to be cut short, with ministers looking to terminate the contracts in 2020, two years early, after concluding that they are unlikely to work; a bailout totalling £500m. The MoJ has said all options are on the table.

“Ministers are looking to terminate the contracts in 2020, two years early, after concluding that they are unlikely to work. The decision was made after it was disclosed that some offenders were monitored with one brief telephone call every six weeks.”

14 June 2018, https://www.thetimes.co.uk/article/probation-firms-contracts-will-be-ripped-up-37q5lw8k2

Electronic tagging

• ·       In July 2017, the MoJ awarded G4S a £25m contract for the electronic tagging of offenders despite an ongoing SFO investigation which saw the company pay over £100m back to the taxpayer. Days later, the NAO found that the MoJ had failed to achieve value for money while the PAC recently said the e-tagging system had been a "catastrophic" waste of taxpayers' money and accused the MoJ of moving ahead without clear evidence that it could be achieved.

City AM, 9 July 2017, http://www.cityam.com/268098/g4s-wins-another-tagging-contract-ministry-justice-despite

• ·     Just days later, the NAO released a report which found that the MoJ had failed to achieve value for money with its management of the new generation electronic monitoring programme.

NAO, The new generation electronic monitoring programme, 12 July 2017, https://www.nao.org.uk/report/the-new-generation-electronic-monitoring-programme/

Prison maintenance contracts

• ·       In 2014, the MoJ chose Carillion as its preferred bidder for prison maintenance contracts worth £200m. It received £99.5m from 2015, including £39.8m in 2017 alone. Carillion’s poor performance has been repeatedly highlighted in inspection reports. And ministers have been aware of the failings since 2016.

14 November 2014, http://www.constructionenquirer.com/2014/11/18/amey-and-carillion-land-prison-upkeep-deals/

• ·       It’s not just Carillion. Amey failed to complete 2,000 maintenance jobs at HMP Liverpool, the backlog has more than doubled in the three years since contracting-out.

28 January 2018, https://www.bbc.co.uk/news/uk-england-merseyside-42808651

• ·       The MoJ set up a publicly owned maintenance company to carry out Carillion’s work. Senior officials even suggested that performance could improve as a result of more direct management.

26 January 2018, https://www.gov.uk/government/news/ministry-of-justice-launches-new-facilities-management-company

• ·       The outsourcing of assessments for Personal Independent Payments (PIP) and Employment and Support Allowance (ESA) has led to:

• o   Nearly 300,000 claimants, six per cent of all those assessed, only receiving the correct award after challenging the decision.
• o   A breakdown in trust among disabled people, many of whom are concerned assessments are not being delivered fairly.
• o   Contractors failing to meet any key target on levels of unacceptable reports in any single period, with almost a third of PIP assessments considered not up to scratch.

• ·       The Work and Pensions Select Committee said that the Government continues to support outsourcing despite quality targets being “universally missed”. The same Report urged the Government to question whether assessments should now be “delivered in house”.

“Large sums of money have been paid to contractors despite quality targets having been universally missed. The Government has also spent hundreds of millions of pounds more checking and defending the Department’s decisions.”

“The Department will need to consider whether the market is capable of delivering assessments at the required level and of rebuilding claimant trust. If it cannot—as already floundering market interest may suggest—the Department may well conclude assessments are better delivered in house.”

Work and Pensions Select Committee, ‘PIP and ESA assessments’, 7 February 2018

https://publications.parliament.uk/pa/cm201719/cmselect/cmworpen/829/829.pdf

• ·       In May 2018, the East Coast franchise collapsed. 17 May 2018, https://www.ft.com/content/42103d5c-592b-11e8-bdb7-f6677d2e1ce8

• ·       The collapse of Carillion had a huge impact on local authorities.

16 January 2018, https://www.lgcplus.com/politics-and-policy/service-reform/revealed-impact-of-carillion-collapse-on-local-government/7022825.article

• ·       In August 2015, NHS England entered into a £330 million, seven-year contract with Capita for primary care support services. An NAO report said that there were “a backlog of medical records building up”, late payments to NHS staff and 87 women were incorrectly informed they were no longer part of a cervical screening programme.

“According to a recent report by the National Audit Office, problems with Capita’s performance emerged within a year of the contract beginning, with a backlog of medical records building up, and late payments to providers such as GPs, opticians and dentists. 87 women were incorrectly informed they were no longer part of a cervical screening programme.”

25 July 2018, https://www.parliament.uk/business/committees/committees-a-z/commons-select/public-accounts-committee/inquiries/parliament-2017/nhs-contract-capita-17-19/  

• ·       For the last six years of its contract, Capita has delivered just £2.73m of savings against a Ministry of Defence target of £104.3m.

“The FTSE 250 company delivered just £2.73m of savings against a Ministry of Defence target of £104.3m for the last six years of the contract”

19 January 2018, https://www.ft.com/content/cec26e36-fd0b-11e7-9b32-d7d59aace167

• In June Capita was awarded a new contract from the MoD to run UK military fire and rescue services, estimated to be worth £500m over 10 years, despite being given the highest possible risk rating by an internal Ministry of Defence assessment, and a government report concluding that the current contract with Capita is “underperforming significantly below initial projections”.

“Capita scored 10 out of 10 for risk in a document prepared for the MoD. One indicates the lowest probability of distress and 10 the highest.

“The risk assessment document was updated on 7 June, according to the Financial Times. On Tuesday Capita confirmed it had been selected for the contract, which is estimated to be worth about £500m over 10 years and involves the running of about 70 military fire stations worldwide.”

19 June 2018, https://www.theguardian.com/business/2018/jun/19/capita-awarded-mod-contract-despite-having-highest-risk-rating

• In November 2017, MPs on the International Development Committee raised concerns about DFID funding going towards private education providers in Africa such as Bridge International Academies, when these schools are not accessible for the poorest and most marginalised children.

“There is a lack of evidence to support spending aid money on private education providers, said MPs on the international development committee (IDC).

“In its report, the committee cited concerns that private schools are not accessible to the poorest and most marginalised children.”

21 November 2017, https://www.theguardian.com/global-development/2017/nov/21/aid-private-schools-funding-poorest-children-mps-development-committee