Group 4 stripped of contract to run private prison

Group 4 yesterday became the first company to be stripped of its contract to run a privatised prison.

Group 4 yesterday became the first company to be stripped of its contract to run a privatised prison.

The decision by the Home Office minister, Paul Boateng, to take Buckley Hall prison in Rochdale, Greater Manchester, into the public sector is believed to be the first example of renationalisation by this Government. Group 4 said it was "astonished" by the move.

Mr Boateng did not say why the contract had been taken from Group 4 but said an in-house team from the Prison Service had submitted a superior bid for the 10-year contract, which begins next year.

He said he had not lost faith in privately run prisons and, in a parallel announcement, revealed that all jails in England and Wales will be privatised if they under-perform.

Until now, private security companies, including Securicor, Group 4 and Premier Prisons, have only been invited to manage seven new prisons out of the 135 jails in England and Wales. In future, some of the oldest and most famous prison names in the country, like Wormwood Scrubs, Pentonville, Parkhurst and Dartmoor, could pass into private hands if they fail to meet standards.

Group 4 still has control of two other prisons, Wolds in Lincolnshire and Altcourse, Liverpool. The company's executive vice-president, Jim Harrower, said the loss of Buckley Hall, which Group 4 has run since it opened five years ago, was a "tremendous blow" to staff. The 385-prisoner, low-security jail, recently received a "thoroughly good report" from Sir David Ramsbotham, the Chief Inspector of Prisons.

The Prison Service said the 200 staff at the prison are expected to be retained and will be paid extra wages after six months when they are placed on the same salary scale as other public-sector jail staff.

The director-general of the Prison Service, Martin Narey, said prisons that were seen to be failing would be given a single warning. If they continued to fall short of required standards, they would be offered to the private sector, with no opportunity for an in-house Prison Service bid to run the jail.

The move to subject all failing prisons to private management shows that Labour is more than ever committed to a contracting-out policy which it criticised in opposition. Mr Boateng said: "I intend that there will be competition for any public-sector prison which consistently fails to live up to the standards of custody and care which I and the director-general require." He wanted to use the "public and private-sector mix" to "drive up standards".

The development follows a series of damning reports by the Chief Inspector of Prisons, who recently recommended prison chiefs to consider privatising Wormwood Scrubs.

Controversially, Mr Boateng also announced yesterday that Doncaster prison is to remain in the control of the private firm Premier Prisons, despite criticisms of its record.