THE firm at the centre of the Olympics security shambles today lost its contract to run a jail in Yorkshire and failed to win any further prison contracts it was bidding for, the Ministry of Justice has said.
G4S, which failed to provide enough guards for the London 2012 games, will stop running the Wolds prison in East Yorkshire and it will return to the public sector from next year.
Competitions to run Northumberland prison and the South Yorkshire group of jails - Lindholme, Hatfield and Moorland - will now move to the final stage, with contracts likely to be awarded next spring, the MoJ added.
The competition process for the four prisons “produced a compelling package of reforms for delivering cost reduction, improvements to regimes and a working prisons model in these prisons”, the MoJ said.
The competition process will continue for these with the three remaining bidders, Sodexo, Serco and MTC/Amey.
But this was not the case for the Wolds prison in East Yorkshire, which is currently run by G4S; Coldingley prison in Surrey; Onley in Northamptonshire, or Durham jail, the MoJ said.
The ministry also said it has found “further and faster ways of securing future cost reductions”, with all public sector prisons “obliged to make additional efficiency savings”.
Collective savings will also be made by putting services such as maintenance and resettlement services out to competition, the MoJ said.
Overall these changes should save £450 million over the next six years, the MoJ estimated.
Justice Secretary Chris Grayling said: “The cost of running our prisons is too high and must be reduced.
“We can do this by being more innovative and efficient, and without compromising public safety.
“That is why I have decided to take a new approach to how we compete prison services and reduce unit costs across the prison estate that will lead to better value for the tax-payer, linked to more effective services to reduce reoffending.
“This is a challenge the public sector must rise to. The approach I am announcing today does not rule out further prison-by-prison competitions in the future.”
The Wolds prison, a category C training prison holding up to 395 men, has been run by G4S since it opened in 1992.
But it will return to the public sector at the end of the current contract in July 2013, the MoJ said.
Prison inspectors found the performance of the Wolds prison deteriorated in 2010, with concerns over “the availability of drugs, a lack of staff confidence in confronting poor behaviour, weaknesses in the promotion of diversity and limited work and training provision”.
Reporting on its latest inspection in June, Chief Inspector of Prisons Nick Hardwick warned that while there were some improvements, “many of our previous concerns still needed to be addressed effectively”.
He also found “the third of single cells that had been doubled up to hold two prisoners were too cramped, lacked sufficient furniture and had poorly screened toilets”.
Overall, it was a “mixed report” and the prison found itself “on the cusp of potentially significant change, with competitive tenders for the management of the prison signalling uncertainty about its future”.
A G4S spokeswoman said: “We are disappointed by today’s announcements.
“As the leading private provider of prison management in the UK, we have 20 years of experience of running prisons for the Ministry of Justice.
“Our performance across all six prisons we run has been to a high standard with every aspect of performance either meeting or exceeding the key performance indicators applied by the MoJ.
“We look forward to discussing the contract award decision with the MoJ within the next few days to determine why we were unsuccessful.”
G4S shares were down 5% after the announcement.
Six contracts to run nine prisons, including eight currently run by the public sector, were put up for competition “to balance the need to increase efficiency” and fulfil the Government’s plans for a “rehabilitation revolution”.
Two contracts to run five of these - Acklington and Castington, which have since formed Northumberland prison, and the three in South Yorkshire - will proceed to the next stage of the competition with an announcement expected next spring.
Three others - Durham, Onley and Coldingley - will remain in the public sector and the Wolds will return to the public sector after G4S lost its contract after running the jail for 20 years.
Frances Crook, chief executive of the Howard League for Penal Reform, said the Government’s decision to hand over prisons to the private sector was “a mistake of Olympic proportions”.
She also called for details of how the bidding process is being decided to be made public.
“The Government will seek to deflect criticism of its prison privatisation programme by excluding G4S from the next stage of the bidding process, but the principle of awarding lucrative contracts to private companies running prisons on the cheap remains unchallenged,” Ms Crook said.
“Something as important as taking away someone’s freedom should only be done by the state, answerable to taxpayers, rather than by international private security firms, answerable only to their shareholders.”
She went on: “Running prisons for profit also means these multinationals cash in on others’ misery, making more money out of increased levels of crime and a greater number of people being held in overcrowded cells.
“Private firms are often much better at winning contracts than delivering the goods, but the criteria for these decisions have not been made public.
“This is concerning, as the Department for Transport’s bungling of the West Coast Main Line contract only came to light after Virgin Trains took legal action.”
Ms Crook added: “I am writing to the chief executive of the National Offender Management Service (Noms) to request the details of how the bidding process is being decided.”
Any further prison sell-offs should be stopped and an independent review is urgently required, the Public and Commercial Services union said.
Mark Serwotka, its general secretary, said: “The privatisation of our prison service ought to be a national scandal and that this has happened without any public debate is shameful.
“It is morally reprehensible that companies are profiting from locking people up and we urgently need an independent review to look at the impact on our communities, staff and prisoners.”
The Prison Officers’ Association (POA) said the move to privatise the jails was a “disgraceful decision”.
“These decisions are based on a flawed ideology and not on cost and provision of services,” a POA spokeswoman said.
“Private good, public bad, is an abrogation of responsibility by our elected representatives.
“The incarceration of the guilty and occasionally the innocent has to be the responsibility of the state.
“There can be no place for profit out of misery in a civilised society.”
She added: “Prison staff now face an anxious and uncertain future.”
But only five of the nine sites put out to competition by the Government will be transferred to the private sector.
Elfyn Llwyd, chairman of the Justice Unions Parliamentary Group, said the decision to “rush this matter through without regard for the rights of the staff who have loyally served the prison service for so long” was “deeply disturbing”.
“It is also disappointing that given that private prisons are underperforming, that they should seek to continue with this exercise.
“Running prisons never has and never will be like running a business and it’s high time this Government realised that one of the main purposes of imprisonment is the rehabilitation of offenders.”
John McDonnell, the group’s secretary, added: “The Government are bulldozing through the wholesale privatisation of our prisons to cut costs.
“Cost cutting to make profits for these private companies will open up real safety risks to the community.”
The group also called for Mr Grayling to appear before the House of Commons to explain the decision.
Juliet Lyon, director of the Prison Reform Trust, said: “On the evidence of deteriorating conditions at the Wolds, Britain’s first private jail, it looks like trusting G4S to run the prison was a risk too far for justice ministers.
“Now four other prisons will remain in the public service only by shouldering an almost impossible burden of cuts.”
She went on: “By restricting bidding to three private companies for the lucrative contract to run a further four prisons, ministers are pinning their hopes on market forces and multi-nationals to bail out the prison system but, if this increases vested interest, drives down quality and standards and leaves a bigger bill for the taxpayer, it won’t have been a risk worth taking.”