Clarke plans to close two jails and privatise eight more

Eight jails will be transferred from the public sector under plans to privatise wide sections of the prison system.

Kenneth Clarke, the Justice Secretary, invited private firms to bid to run jails in Yorkshire, Northumberland, County Durham, Northamptonshire and Surrey. The moves are designed to save money and improve efficiency, but critics warn they could undermine efforts to rehabilitate offenders.

Mr Clarke has promised to find savings of £2bn from his £8.7bn budget over the next four years.

Birmingham prison will be transferred to a private company in October, with the loss of more than 100 jobs. The contract to run one of the country's largest jails was won by the company G4S, which beat a rival bid from the public sector.

New "for sale" notices are being hung over: Lindholme, Moorland and Hatfield prisons in Yorkshire; Acklington and Castington in Northumberland; Durham prison; Onley in Northamptonshire; and Coldingley in Surrey. The Prison Service will be invited to bid, but private firms are likely to win contracts.

A ninth prison, the Wolds, in Yorkshire, is also being put out to tender. It is already run by G4S, which is nearing the end of its contract.

The move could nearly double the number of jails in England and Wales run by private firms from 11 to 20.

Mr Clarke also announced that Latchmere House prison in west London and Brockhill prison in the west Midlands are to shut in September with the loss of 377 prison places. The closures are expected to save £11.4m a year. Juliet Lyon, director of the Prison Reform Trust, said: "A practical concern is that a tendering exercise on this scale, together with massive budgetary cuts, will deflect existing services from the essential job of managing prisoners and working to reduce reoffending."