UK privatises first prison amidst £1bn of contract awards

Birmingham Prison has become the first penal institution to be transferred from the public to the private sector. The Ministry of Justice awarded 15-year operating contracts for three UK prisons yesterday worth a combined £1bn.

In a move that could signal a wave of privatisations, the UK’s Ministry of Justice has for the first time transferred an existing public prison – Birmingham Prison – to be run by a private sector company.

Birmingham Prison has been awarded to private security firm G4S, the Ministry of Justice announced yesterday, amidst two other prison contracts awarded to the private sector.

G4S will also run Featherstone 2 Prison, under construction on the outskirts of Wolverhampton, while security firm Serco had its contract to operate Doncaster Prison renewed. Serco has been running Doncaster since it opened in 1994. The three, 15-year management contracts are worth a combined £1 billion (€1.2 billion; $1.6 billion).

The UK has been contracting the operation of newly built prisons to the private sector for nearly 20 years. But Birmingham made the headlines, and drew angry fire from unions, because it marks the first time a brownfield prison has been awarded to the private sector, signalling that similar deals might follow.

Kenneth Clarke, UK secretary of state for justice, seemed to hint as much in a released statement:

“Today’s announcement shows that competition has a significant role to play in delivering value for money, better outcomes and broader reforms. I encourage providers from any sector to rise to the challenge.”

The Ministry of Justice said the awards will deliver savings of £216 million over the lifetime of the contracts, with Featherstone 2 to cost £31 million less than originally expected. 

Doncaster Prison will also serve as a pilot for the Ministry’s new payment by results scheme. Under the scheme, “10 percent of the contract price will only be payable if the operator reduces the one-year reconviction rates of offenders discharged from the prison by five percentage points,” the Ministry said.