Inside Britain's Private Prisons Crisis
With low margins, a monopoly customer and volatile users, Britain's private jails are a tough business to run. Has the system reached breaking point?
Few would choose to spend a day out at HMP Rye Hill, despite its bucolic location in open country close to the Oxford canal, south of Rugby. The category B prison isn't dramatically daunting in the way Dartmoor or Alcatraz are. Bland and low rise, it was built in 2001 and could pass for a low-cost, minor university campus if it weren't for the tall fences and miles of curled barbed wire. Nobody has escaped from Rye Hill since 2002 when a pair doing 10 years each made off hidden in the back of a delivery lorry. But that is about as close to Porridge as Rye Hill gets.
Since 2014, Rye Hill has exclusively housed sex offenders and there are currently 664 inmates (its operational capacity is 625). The prison's eight wings are named after celebrated rugby players: Beaumont, Carling, Davies, Edwards and so on. What makes Rye Hill additionally unusual is that it is run for profit. One of 14 private prisons out of a total estate of 124, Rye Hill makes an undisclosed margin for G4S, the global security outfit which built it under the Private Finance Initiative (PFI).
Once inside and relieved of all accessories except a notebook and pencil, one of the first things one notices is how old many of the inmates are. There are plenty of walking sticks and a few wheelchairs. The Crown Prosecution Service and the courts are currently processing large numbers of historic sex abuse cases - those involving Rolf Harris and Stuart Hall being two prominent examples - and lengthy custodial sentences are the norm. Twenty per cent of those inside are serving a life sentence. The oldest inmate is 92 and doing a seven-year stretch.
Also immediately apparent is the high proportion of prisoners with either a learning disability or suffering from poor mental health. Several arms I observed were covered with self-inflicted scars and G4S acknowledges that incidents of self-harm are up by one third over the last year. They have even had prisoners attempting to eat their own flesh. Everyone - staff and prisoners included - is dreading the impending introduction of the Ministry of Justice-imposed smoking ban.
I spoke at length to one inmate in his single cell. He was polite and quietly spoken and said he was just about coping at the beginning of a long sentence.
It's prison etiquette not to ask what an offender is in for unless the information is offered voluntarily. However, it did not surprise when Googling his name later to read the headline, 'Sex monster caged for over 25 years after catalogue of depravity.' His victims were both under the age of 13.
But that isn't unusual - 68% of Rye Hill's population have committed offences against children. The bleakest statistic of all at Rye Hill is that only 23% of the prisoners ever receive a visit from the outside. Such is the nature of their offences that they are ostracised not just by broader society but also very frequently by their own families themselves.
There are a number of specialist psychologists based here conducting sex offender treatment programmes. There is an extensive garden to maintain and prisoners also make hairnets for the catering industry and horse riders, plus parts for electrical suppliers.
Rye Hill's director - they don't call them governors in the private sector - is Richard Stedman. After joining from the public sector, he is the youngest head of a prison in the UK and one of G4S's rising stars. He admits his is a taxing and often unpleasant job, very closely monitored by two on-site Ministry of Justice officials: 'In terms of keeping your sanity you have to focus on the small victories,' he says. 'Dealing with self-harm on a daily basis, getting 664 of the most complex people in society through a day safely where nobody is hurt - we should celebrate that every day. It's not easy.'
G4S has suffered quite a battering, financially and reputationally, in recent months and years. First there was the disaster with the 2012 Olympics when it took on the security contract for the main sites and was, at the last minute, forced to call in the army to assist having failed to recruit enough security guards. A foul-up which cost it £88m, acres of bad press and its then-CEO Nick Buckles his job. Then, together with rival Serco, it was found to have charged HMG to tag offenders who were either dead or already in jail. G4S had to repay £109m and the Serious Fraud Office is still deliberating about whether to prosecute.
Then before Christmas last year its staff lost control of HMP Birmingham, which it runs. During 12 hours of violent havoc, four wings were taken over, fires started and medical supplies ransacked. In March, one of G4S's young prison officers at HMP Oakhill was savagely beaten by a group of teenage inmates. The attack left the 21-year-old in a coma after he attempted to stop one of his assailants climbing a fence.
There are easier ways to make a living. The riot at Birmingham has probably cost G4S more than £2m once the 'Tornado Team' riot squad has been paid for, all the locks changed and the whole place rewired because they flooded the electrics.
There are three companies operating private prisons in the UK: G4S, Serco and Sodexo. All are struggling with the same fundamental problems. The whole prison estate is hopelessly overcrowded, housing 84,874 inmates today, a figure which has risen twofold from 44,975 in 1990. In December 2016, 80 out of the 124 total were past 100% capacity and 18 more were past 95% capacity. Last year saw the highest recorded number of suicides in English and Welsh prisons - more than 100 - and there has been a rise of one third in assaults on officers. But it seems we just can't stop locking more and more people up.
At the same time, austerity has taken its toll on staff numbers: in 2000 there was one officer for every 2.9 prisoners; now it's one for every 5.3. New recruits are currently being urgently sought. A recent BBC Panorama undercover expose of HMP Northumberland, run by Sodexo, showed an institution out of control with widespread drug taking and prisoners calling the shots.
(Incidentally, the suggestion that most of these new psychoactive substances, such as 'Spice', are regularly flown over the walls by drone is mythical. Far more common routes of entry are via visiting family members or corrupt prison officers.) Private prisons are a dysfunctional marketplace containing unhappy customers and providers. It doesn't work for any 'stakeholders', even the users.
Contracting out prisons to the private sector began back in the Thatcher era. Julian Le Vay, the former finance director of the prison service, recalls that a free-market ideology for the provision of criminal justice services was inspired by the example of the United States. 'In 1990 one of our biggest prisons in Manchester (Strangeways) had been completely taken over by prisoners and was held by them for a month while they slowly demolished it and gave the authorities the benefit of their views. Why? Well, there were tens of thousands of prisoners locked up 23 hours a day in overcrowded cells with only a bucket in the corner for a toilet.
'The rather weak management of that time allowed a powerful and anarchic and reactionary trade union (the Prison Officers Association) to effectively take decisions in prisons particularly on staffing. So even some liberal reformers were persuaded it might be better to let the private sector show what it could do because the public sector seemed incapable.'
After initial resistance while in opposition, New Labour took on the concept with alacrity after 1997. The private sector built prisons in half the time at half the cost. By use of the PFI, the huge capital costs were spread over the contract life, 'like putting your new car on a credit card'. Le Vay acknowledges that it's a very odd market that contains three companies whose customer is also their main competitor. No new provider has emerged for the last 20 years. Bidding for contracts is sporadic and costs half a million a time. Contracts are massively detailed containing, for example, hefty fines for each time a door is left unlocked.
It results, says Le Vay, in a 'rather unhealthy degree of co-dependency between the two ... one chief executive put it to me that HMG is "the customer from hell". Slow, indecisive, often rather unclear what it really wants, no long-term plan at all and liable to cancel everything as soon as you get your bid going. Out of 14 market tests - that's where the government offered an existing prison for competition - 11 were cancelled in mid-bid.' There is no true market that could bring further innovation because there is no competition. So reform is down to the customer, but although the MOJ is buying a service with which it's consistently dissatisfied, it is too timid to try anything really new.
Serco's high-profile CEO Rupert Soames was parachuted in from Aggreko, to help the outsourcer recover from a tail-spin of scandals, which had caused its share price to plummet. Soames's grandfather Winston Churchill, once a home secretary, had something to say about prisons, namely that 'the treatment of criminals is the mark and measure of the stored-up strength of a nation'. It remains in the Serco custody officer training manual.
'It's also the mark and measure of society to stand up against those who would have us believe that prison should be a really cruel and horrible experience,' notes Soames in a comment which is almost certainly aimed at the Ministry of Justice's newspaper of forced choice The Daily Mail. 'As a service it is something that is profoundly worthwhile to do. Another Churchill quote was made during the war when he said that there is no finer investment than putting milk into babies. And I would say there is no better investment than to stop people who have gone to prison coming back in again.'
People have been arguing about both the morality and efficacy of imprisonment for as long as society has been locking its miscreants up. To top all this off, one of the main justifications for imprisoning individuals in the first place - to attempt to rehabilitate them - is failing. The reoffending rate after release stands at 48% after one year (the rate is an even higher 60% among those serving short terms) - suggesting that they are not receiving Churchillian milk in sufficient volumes. So what does Soames think has gone wrong?
'There are in many places completely unacceptable levels of violence, which might have something to do with the fact that the population has gone from 40,000 to 80,000 in recent years. The comparison between some of the prisons we run and those in the public sector are chalk and cheese. The public sector is burdened with some incredibly old Victorian prisons, which could be run far more cheaply if you blew them up and built new ones. They are gradually being closed and replaced with modern buildings.'
Four new Titan or super prisons costing £1.3bn are, indeed, on the way but Soames has yet to be asked to bid. Indeed, the last contract issued was for Northumberland Prison which Sodexo won in 2013. The most recent new prison - just opened in Wrexham - was given to the public sector without any competition. So, with no growth via new contracts for a long while, isn't it now a very unattractive business in which he finds himself? 'Well, we see the world in a global context. We have a large business in prisons, not only here but also in Australia. We've just won the biggest contract we've ever been awarded for £1.6bn to run and operate a new prison in Australia. You're right, it's a difficult business because government is a monopoly buyer. They run their own prisons so they know how much it costs them. They are a very knowledgeable buyer. Margins on the whole are very low, but it is a business that we feel comfortable doing.' He says his margin across the board is 2.5%, which is far lower than the 20% that the private sector made in the early years.
There are examples of fresher, more enlightened thinking within the prison service, a number of which have been introduced by the private sector. At G4S's Parc Prison near Bridgend in South Wales - the second largest jail in the country, housing nearly 1,700 offenders - I meet Jonathan Gilbert in cell number 36 on Block T4. Gilbert is a disbarred solicitor doing 12 years for a complex mortgage fraud. He is held on the experimental Family Intervention Unit, where prisoners are encouraged to maintain family bonds, which both help with their rehabilitation and lessen the damage done to the children of offenders while their fathers are inside.
Gilbert has a total of six kids - three older daughters, and three young sons from a second marriage. 'My boys come every weekend, and as well as that we have lounge visits,' Gilbert explains. 'The also come in the week for homework club. My wife picks them up from school.' Does that make his long sentence easier to cope with? 'It's been invaluable. We've done scouts together. Last summer, I did a Roald Dahl creative writing project. Two days together - it was brilliant. It's the hardest thing imaginable but it gets us through that month as a family. It's kept us close.'
And to those keen on the concept of punishment who may think this too cushy, Gilbert says: 'This is punishment. I'm being punished for what I did. You are stripped back. (He did several months in the grim state-run Wandsworth prison at the outset of his sentence complete with its damp, rats and cockroaches.) The process strips the core of your existence. But this helps restore pride in yourself. I'm doing a master's degree now. I messed up and I need to man up and make my family proud now.'
When he gets out, Gilbert probably won't offend again. But he's in the minority. Prisons palpably don't work. Whether they are run by the state or the likes of G4S, Serco and Sodexo, beyond keeping criminals away from the rest of us, they simply don't do what they are supposed to do: reduce the vast cost to society of habitual reoffending.
The most telling statistic of all is our rate of incarceration in the UK. In England and Wales we lock up 146 people per 100,000 of the population. In Germany that figure is 78. (In the United States the rate is an extraordinary 693 but few would advocate aping the US when it comes to prison.) The annual cost of keeping a prisoner inside is £33,291, a little less than the school fees for Eton.
When asked what he thought about rising prisoner numbers, Jerry Petherick, the head of G4S's prison business, said: 'Is that necessary? No. I think it is inexplicable as to the need. I have seen sentences going up and up.' When he was a young prison officer he thought 'blimey' when encountering an inmate who had been given 12 years. 'Now we have recommendations of 30 years plus.'
So we are embarking on building yet more prisons, but one wonders what technology and the surveillance society might offer as a cheaper and even more effective alternative to incarceration. Why, for example, could offenders not be fitted with some sort of ankle tag featuring a sort of reverse Foursquare checker, which would emit a signal stating 'I haven't checked into ...' This is no facetious comment, because the best that can be said for prisons currently is that they are keeping certain malfunctioning and anti-social individuals off the streets for a period before they are released only to go and get into trouble again.
Meanwhile, Jonathan Gilbert declines to count down the days before his release. 'I don't count days any more. My wife and I are counting the seasons. We felt good when it was 1 March. I can just see the Vale of Glamorgan from my cell window. And the trees are just coming into leaf.'
Matthew Gwyther
Few would choose to spend a day out at HMP Rye Hill, despite its bucolic location in open country close to the Oxford canal, south of Rugby. The category B prison isn't dramatically daunting in the way Dartmoor or Alcatraz are. Bland and low rise, it was built in 2001 and could pass for a low-cost, minor university campus if it weren't for the tall fences and miles of curled barbed wire. Nobody has escaped from Rye Hill since 2002 when a pair doing 10 years each made off hidden in the back of a delivery lorry. But that is about as close to Porridge as Rye Hill gets.
Since 2014, Rye Hill has exclusively housed sex offenders and there are currently 664 inmates (its operational capacity is 625). The prison's eight wings are named after celebrated rugby players: Beaumont, Carling, Davies, Edwards and so on. What makes Rye Hill additionally unusual is that it is run for profit. One of 14 private prisons out of a total estate of 124, Rye Hill makes an undisclosed margin for G4S, the global security outfit which built it under the Private Finance Initiative (PFI).
Once inside and relieved of all accessories except a notebook and pencil, one of the first things one notices is how old many of the inmates are. There are plenty of walking sticks and a few wheelchairs. The Crown Prosecution Service and the courts are currently processing large numbers of historic sex abuse cases - those involving Rolf Harris and Stuart Hall being two prominent examples - and lengthy custodial sentences are the norm. Twenty per cent of those inside are serving a life sentence. The oldest inmate is 92 and doing a seven-year stretch.
Also immediately apparent is the high proportion of prisoners with either a learning disability or suffering from poor mental health. Several arms I observed were covered with self-inflicted scars and G4S acknowledges that incidents of self-harm are up by one third over the last year. They have even had prisoners attempting to eat their own flesh. Everyone - staff and prisoners included - is dreading the impending introduction of the Ministry of Justice-imposed smoking ban.
I spoke at length to one inmate in his single cell. He was polite and quietly spoken and said he was just about coping at the beginning of a long sentence.
It's prison etiquette not to ask what an offender is in for unless the information is offered voluntarily. However, it did not surprise when Googling his name later to read the headline, 'Sex monster caged for over 25 years after catalogue of depravity.' His victims were both under the age of 13.
But that isn't unusual - 68% of Rye Hill's population have committed offences against children. The bleakest statistic of all at Rye Hill is that only 23% of the prisoners ever receive a visit from the outside. Such is the nature of their offences that they are ostracised not just by broader society but also very frequently by their own families themselves.
There are a number of specialist psychologists based here conducting sex offender treatment programmes. There is an extensive garden to maintain and prisoners also make hairnets for the catering industry and horse riders, plus parts for electrical suppliers.
Rye Hill's director - they don't call them governors in the private sector - is Richard Stedman. After joining from the public sector, he is the youngest head of a prison in the UK and one of G4S's rising stars. He admits his is a taxing and often unpleasant job, very closely monitored by two on-site Ministry of Justice officials: 'In terms of keeping your sanity you have to focus on the small victories,' he says. 'Dealing with self-harm on a daily basis, getting 664 of the most complex people in society through a day safely where nobody is hurt - we should celebrate that every day. It's not easy.'
G4S has suffered quite a battering, financially and reputationally, in recent months and years. First there was the disaster with the 2012 Olympics when it took on the security contract for the main sites and was, at the last minute, forced to call in the army to assist having failed to recruit enough security guards. A foul-up which cost it £88m, acres of bad press and its then-CEO Nick Buckles his job. Then, together with rival Serco, it was found to have charged HMG to tag offenders who were either dead or already in jail. G4S had to repay £109m and the Serious Fraud Office is still deliberating about whether to prosecute.
Then before Christmas last year its staff lost control of HMP Birmingham, which it runs. During 12 hours of violent havoc, four wings were taken over, fires started and medical supplies ransacked. In March, one of G4S's young prison officers at HMP Oakhill was savagely beaten by a group of teenage inmates. The attack left the 21-year-old in a coma after he attempted to stop one of his assailants climbing a fence.
There are easier ways to make a living. The riot at Birmingham has probably cost G4S more than £2m once the 'Tornado Team' riot squad has been paid for, all the locks changed and the whole place rewired because they flooded the electrics.
There are three companies operating private prisons in the UK: G4S, Serco and Sodexo. All are struggling with the same fundamental problems. The whole prison estate is hopelessly overcrowded, housing 84,874 inmates today, a figure which has risen twofold from 44,975 in 1990. In December 2016, 80 out of the 124 total were past 100% capacity and 18 more were past 95% capacity. Last year saw the highest recorded number of suicides in English and Welsh prisons - more than 100 - and there has been a rise of one third in assaults on officers. But it seems we just can't stop locking more and more people up.
At the same time, austerity has taken its toll on staff numbers: in 2000 there was one officer for every 2.9 prisoners; now it's one for every 5.3. New recruits are currently being urgently sought. A recent BBC Panorama undercover expose of HMP Northumberland, run by Sodexo, showed an institution out of control with widespread drug taking and prisoners calling the shots.
(Incidentally, the suggestion that most of these new psychoactive substances, such as 'Spice', are regularly flown over the walls by drone is mythical. Far more common routes of entry are via visiting family members or corrupt prison officers.) Private prisons are a dysfunctional marketplace containing unhappy customers and providers. It doesn't work for any 'stakeholders', even the users.
Contracting out prisons to the private sector began back in the Thatcher era. Julian Le Vay, the former finance director of the prison service, recalls that a free-market ideology for the provision of criminal justice services was inspired by the example of the United States. 'In 1990 one of our biggest prisons in Manchester (Strangeways) had been completely taken over by prisoners and was held by them for a month while they slowly demolished it and gave the authorities the benefit of their views. Why? Well, there were tens of thousands of prisoners locked up 23 hours a day in overcrowded cells with only a bucket in the corner for a toilet.
'The rather weak management of that time allowed a powerful and anarchic and reactionary trade union (the Prison Officers Association) to effectively take decisions in prisons particularly on staffing. So even some liberal reformers were persuaded it might be better to let the private sector show what it could do because the public sector seemed incapable.'
After initial resistance while in opposition, New Labour took on the concept with alacrity after 1997. The private sector built prisons in half the time at half the cost. By use of the PFI, the huge capital costs were spread over the contract life, 'like putting your new car on a credit card'. Le Vay acknowledges that it's a very odd market that contains three companies whose customer is also their main competitor. No new provider has emerged for the last 20 years. Bidding for contracts is sporadic and costs half a million a time. Contracts are massively detailed containing, for example, hefty fines for each time a door is left unlocked.
It results, says Le Vay, in a 'rather unhealthy degree of co-dependency between the two ... one chief executive put it to me that HMG is "the customer from hell". Slow, indecisive, often rather unclear what it really wants, no long-term plan at all and liable to cancel everything as soon as you get your bid going. Out of 14 market tests - that's where the government offered an existing prison for competition - 11 were cancelled in mid-bid.' There is no true market that could bring further innovation because there is no competition. So reform is down to the customer, but although the MOJ is buying a service with which it's consistently dissatisfied, it is too timid to try anything really new.
Serco's high-profile CEO Rupert Soames was parachuted in from Aggreko, to help the outsourcer recover from a tail-spin of scandals, which had caused its share price to plummet. Soames's grandfather Winston Churchill, once a home secretary, had something to say about prisons, namely that 'the treatment of criminals is the mark and measure of the stored-up strength of a nation'. It remains in the Serco custody officer training manual.
'It's also the mark and measure of society to stand up against those who would have us believe that prison should be a really cruel and horrible experience,' notes Soames in a comment which is almost certainly aimed at the Ministry of Justice's newspaper of forced choice The Daily Mail. 'As a service it is something that is profoundly worthwhile to do. Another Churchill quote was made during the war when he said that there is no finer investment than putting milk into babies. And I would say there is no better investment than to stop people who have gone to prison coming back in again.'
People have been arguing about both the morality and efficacy of imprisonment for as long as society has been locking its miscreants up. To top all this off, one of the main justifications for imprisoning individuals in the first place - to attempt to rehabilitate them - is failing. The reoffending rate after release stands at 48% after one year (the rate is an even higher 60% among those serving short terms) - suggesting that they are not receiving Churchillian milk in sufficient volumes. So what does Soames think has gone wrong?
'There are in many places completely unacceptable levels of violence, which might have something to do with the fact that the population has gone from 40,000 to 80,000 in recent years. The comparison between some of the prisons we run and those in the public sector are chalk and cheese. The public sector is burdened with some incredibly old Victorian prisons, which could be run far more cheaply if you blew them up and built new ones. They are gradually being closed and replaced with modern buildings.'
Four new Titan or super prisons costing £1.3bn are, indeed, on the way but Soames has yet to be asked to bid. Indeed, the last contract issued was for Northumberland Prison which Sodexo won in 2013. The most recent new prison - just opened in Wrexham - was given to the public sector without any competition. So, with no growth via new contracts for a long while, isn't it now a very unattractive business in which he finds himself? 'Well, we see the world in a global context. We have a large business in prisons, not only here but also in Australia. We've just won the biggest contract we've ever been awarded for £1.6bn to run and operate a new prison in Australia. You're right, it's a difficult business because government is a monopoly buyer. They run their own prisons so they know how much it costs them. They are a very knowledgeable buyer. Margins on the whole are very low, but it is a business that we feel comfortable doing.' He says his margin across the board is 2.5%, which is far lower than the 20% that the private sector made in the early years.
There are examples of fresher, more enlightened thinking within the prison service, a number of which have been introduced by the private sector. At G4S's Parc Prison near Bridgend in South Wales - the second largest jail in the country, housing nearly 1,700 offenders - I meet Jonathan Gilbert in cell number 36 on Block T4. Gilbert is a disbarred solicitor doing 12 years for a complex mortgage fraud. He is held on the experimental Family Intervention Unit, where prisoners are encouraged to maintain family bonds, which both help with their rehabilitation and lessen the damage done to the children of offenders while their fathers are inside.
Gilbert has a total of six kids - three older daughters, and three young sons from a second marriage. 'My boys come every weekend, and as well as that we have lounge visits,' Gilbert explains. 'The also come in the week for homework club. My wife picks them up from school.' Does that make his long sentence easier to cope with? 'It's been invaluable. We've done scouts together. Last summer, I did a Roald Dahl creative writing project. Two days together - it was brilliant. It's the hardest thing imaginable but it gets us through that month as a family. It's kept us close.'
And to those keen on the concept of punishment who may think this too cushy, Gilbert says: 'This is punishment. I'm being punished for what I did. You are stripped back. (He did several months in the grim state-run Wandsworth prison at the outset of his sentence complete with its damp, rats and cockroaches.) The process strips the core of your existence. But this helps restore pride in yourself. I'm doing a master's degree now. I messed up and I need to man up and make my family proud now.'
When he gets out, Gilbert probably won't offend again. But he's in the minority. Prisons palpably don't work. Whether they are run by the state or the likes of G4S, Serco and Sodexo, beyond keeping criminals away from the rest of us, they simply don't do what they are supposed to do: reduce the vast cost to society of habitual reoffending.
The most telling statistic of all is our rate of incarceration in the UK. In England and Wales we lock up 146 people per 100,000 of the population. In Germany that figure is 78. (In the United States the rate is an extraordinary 693 but few would advocate aping the US when it comes to prison.) The annual cost of keeping a prisoner inside is £33,291, a little less than the school fees for Eton.
When asked what he thought about rising prisoner numbers, Jerry Petherick, the head of G4S's prison business, said: 'Is that necessary? No. I think it is inexplicable as to the need. I have seen sentences going up and up.' When he was a young prison officer he thought 'blimey' when encountering an inmate who had been given 12 years. 'Now we have recommendations of 30 years plus.'
So we are embarking on building yet more prisons, but one wonders what technology and the surveillance society might offer as a cheaper and even more effective alternative to incarceration. Why, for example, could offenders not be fitted with some sort of ankle tag featuring a sort of reverse Foursquare checker, which would emit a signal stating 'I haven't checked into ...' This is no facetious comment, because the best that can be said for prisons currently is that they are keeping certain malfunctioning and anti-social individuals off the streets for a period before they are released only to go and get into trouble again.
Meanwhile, Jonathan Gilbert declines to count down the days before his release. 'I don't count days any more. My wife and I are counting the seasons. We felt good when it was 1 March. I can just see the Vale of Glamorgan from my cell window. And the trees are just coming into leaf.'
