My Lords, the Ministry of Justice has supported the Cabinet Office-led review into outsourcing. In February 2019, the Government published three new documents: guidance on financial distress, a revised supplier code of conduct and The Outsourcing Playbook. The playbook applies to all outsourcing decisions, but with a focus on complex outsourcing.
I am sure the Minister will agree that the underlying drive for privatisation of public services was public choice economics, which said that the concept of public interest and public service was not a strong motivating factor and that the profit motive was the only one. Behavioural economics has now accepted that there are other psychological motivations, including, in the words of economists themselves, “inequity aversion”, “fairness” and even “altruism”. Therefore, is it not correct that, in dealing with probation or rehabilitation in prisons—two obvious areas where outsourcing has got into trouble—factors other than the profit motive need to be given a great deal more importance, and that this undermines some of the principles of outsourcing?
My Lords, it is not simply a case of seeking to have profit trumped by public service. There are areas where it is entirely appropriate to involve the third sector in the provision of some of these services and those related to them. Examples include the work provided by the third sector in prison education and offender well-being programmes.
My Lords, recent research by the Guardian shows that private prisons are disproportionately more violent than public ones, with almost 50% more assaults. Official figures show that private prisons are also more likely to be overcrowded. The third piece in this puzzle is staffing; understaffing, combined with overcrowding, often leads to more violence. Regrettably, the Government apparently will not reveal staffing levels in private prisons. Why? Does the Minister agree that we need an independent inquiry into why private prisons are more violent?
My Lords, violence in the prison system is extremely regrettable and the Government have been working very hard to address the issues that underpin it, in publicly or privately funded prisons. We continue to monitor some of the worst performing prisons in this context, to ensure that we can achieve improvements in that area as quickly as possible.
My Lords, is it not the case that the Civil Service and Ministers do not have the ability to let contracts in the public sector? What will the Government do to address this problem, which is causing billions of pounds of taxpayers’ money to be wasted?
The noble Lord raises a pertinent point. One of the objectives of the recent publications is to ensure that there is sufficient expertise to review and consider such contracts. Examples are: the need for pilots when the Government are outsourcing a service for the first time; the production of assessments of should-be costs; the need to produce resolution planning information lest a private contractor fail; the need to publish key performance indicators so that we have an objective means of determining the delivery of these services; and the requirement for the Civil Service and the Government to understand financial distress guidance when entering into these contracts. These are all being addressed in the light of the recent work done in the Cabinet Office.
My Lords, can the noble and learned Lord assure us that in future contracts, in view of the failures there have been, far more attention will be given to specifying requirements for service providers in terms of the numbers and professional qualifications of the personnel involved in delivering those services?
My Lords, of course we will carefully review the ability of any proposed private contractor to deliver the services they are being contracted to provide. I shall not go into the minute detail of that examination but, as I say, it will include the need, first of all, to identify key performance indicators and ensure that they are adhered to.
My Lords, when talking about privatisation, it is not just about the Prison Service; we also have to look at the probation service. The Question mentions “the principles of government”. Surely, a pragmatic, sensible approach is better than the expensive ideological approach taken by Chris Grayling to the probation service. May I ask the Government to look at what works rather than at what is in the Government’s best interest, which has clearly been dangerous to offenders and victims alike?
We are concerned to secure the best interests of all those affected by the provision of services, whether public or private. Probation service delivery is driven not by ideology but by a recognition that often in these areas a mixed-economy approach works best, not just financially but more broadly in terms of the quality of delivery.