Select Committee on Public Accounts Forty-Ninth Report



Since 1995, the Prison Service has signed nine Private Finance Initiative (PFI) contracts for the design, construction, financing and operation of new prisons. Seven of these prisons are now operational (Figure 1). They account for about 5% of the prison estate and hold 5,000 prisoners, around 7% of the total prison population. Two other prisons that were built and financed conventionally by the public sector are run by private companies under management-only contracts. A further five prisons, two of which had previously been operated by the private sector, are now run by local management teams under service level agreements, following successful in-house bids.

Figure 1: PFI prisons, privately managed prisons, and publicly managed prisons under service level agreements

Source: C&AG's Report

The success of in-house management teams in bidding against the private sector has been seen as an example of how performance has improved to the point that the Prison Service can now compete successfully on operating costs. However, to date there has been little available information on how the operational performance of PFI prisons compares with other prisons or whether the use of the PFI has brought wider benefits to the Prison Service.

On the basis of a Report[1] by the Comptroller and Auditor General we took evidence from the Home Office, the Prison Service and two of the four contractors who run PFI and privately managed prisons (Group 4 Falck and Premier Custodial Group). We examined the extent to which good practice is shared between PFI and public prisons, and how the operational performance of PFI and public prisons is measured and managed.

1   C&AG's Report, The operational performance of PFI prisons (HC 700, Session 2002-03) Back

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