Private probation companies given extra £170m as government scraps ‘catastrophic’ contracts

Private probation companies are being bailed out for a second time as the government prepares to scrap “catastrophic” contracts two years early.

Ministers were accused of slipping an eight-week consultation on dramatic reforms “through the back door” just days after the start of parliament’s summer break.

Proposals would see 21 community rehabilitation companies (CRCs), which have been accused of putting public safety at risk with multiple failings, slashed to 11 within two years.

Offender management will be taken back under public control in Wales but not in England, where new contracts will introduce minimum standards for supervision, community sentences and rehabilitation services.

David Gauke, the justice secretary, said he wanted to create a “probation service that protects the public, commands the confidence of the courts and ultimately reduces reoffending”.

“We are taking decisive action now to improve the delivery of probation services in England and Wales,” he added.

“I am confident that the proposals set out in this consultation will play a major role in helping us to achieve this aim.”

Until the current agreements end in 2020, CRCs will be given another £170m to cover huge losses, following a previous cash injection of £342m amid warnings they could collapse.

The boost is made up of £115m in waived penalties for failed reoffending targets, a £46m investment for offenders leaving prison and £9m in payments to “correct underpayments”.

The government insisted it has actually saved the taxpayer some £300m because it initially had budgeted to pay firms £2.5bn by 2020 and had only spent £2.2bn.

But the reforms mark a major climbdown from the Tories’ widely-opposed Transforming Rehabilitation programme, which split services between new CRCs and the publicly owned National Probation Service.

Richard Burgon MP, Labour’s shadow justice secretary, said the programme amounted to an “ideological experiment that has been a costly failure”.

“This decision to throw more good money after bad and the government’s recommitment to a privately run probation service shows that the Conservatives have run out of all ideas on how to fix their broken system,” he added. “Delaying this announcement until parliament closed for the summer is a tacit admission by the government that its probation policies can’t withstand the slightest scrutiny.”

The Napo union, which represents probation workers, said the government was offering a “further bailout for failure” and vowed to continue fighting for they system to be brought back under public ownership.

Ian Lawrence, the general secretary, told The Independent: “These companies should have been dismissed for failure ... we’re very sceptical about the impact of these so-called reforms.

“These things should already be underway, we’ve had any number of reports saying all of this before.

“It’s a disgrace that the minister has not brought this in front of parliament and slipped it in through the back door.”

Mr Gauke insisted the consultation had been started as early as possible amid ongoing negotiations with CRCs over cancelling their contracts.

He stopped short of directly criticising his predecessor Chris Grayling, who had been blamed for ploughing ahead with privatisation in defiance of warnings that have since come to fruition.

Mr Gauke said the original overhaul had been “ambitious and innovative” and achieved “some successes”, including supporting an extra 40,000 offenders a year, but acknowledged fundamental flaws with the original contacts.

They paid CRCs by results, rather than the services provided, abolished minimum standards and hinged budgets on incorrect future crime predictions.

But a rise in violence, sex attacks and other serious offences left fewer low and medium risk offenders for CRCs to deal with, while judges have been increasingly reluctant to hand out the community sentences they deliver.

The companies are said to welcome the reforms and will be entering new bids that will be considered against both the value they offer and their previous performance.

Mr Gauke laid part of the blame for huge losses on the firms themselves for underbidding the first time round, adding: “My heart doesn’t bleed for them, it was their misjudgement.”

A wave of damning inspections have found that the programme had created a two-tier system putting public safety at risk, while leaving released prisoners homeless and unemployed.

CRCs were only intended to supervise low or medium-risk offenders, while the public sector NPS was charged with dangerous criminals, but an inspection found that they were letting criminals commit violent offences while supposedly under their supervision.

HM Inspectorate of Probation revealed that thousands of offenders living in the community were being managed only by a brief phone call every few weeks – a method that will be banned under the new proposals.

CRCs were also charged with implementing community sentences, but one report found convicts being made to carry out “meaningless” unpaid work like moving mud from one pile to another in graveyards, or turning up to placements and finding no one there.

While the firms are meant to ensure prisoners are freed with accommodation, employment and financial support, the Justice Committee said many were being kicked out of jails homeless and with just £46 to last for several weeks.

In a separate probe, the Public Accounts Committee warned of a looming “contracting catastrophe” that raised fears of another Carillion-style collapse.

MPs warned that the Government’s attempt to “spend its way out of difficulty” by agreeing to £342m extra funding for CRCs was not working.

The government consultation is asking for submissions on how to rehabilitate prisoners more effectively, prepare them for release, improve education and training, and increase judges’ confidence in CRCs’ community sentences.

It was launched as new figures showed self-harm and violent attacks hitting record levels in prisons across England and Wales, despite repeated warning jails are at crisis-point.

Mr Gauke, who worked as a solicitor before becoming a Tory MP, has repeatedly stated his ambition for alternative punishments to be used instead of short prison sentences, but there has been no change to judges’ guidelines to make it a reality.

“I am very keen to ensure that the justice system focuses on rehabilitation,” he said. “If we want to reduce crime, we need to reduce reoffending and one of the key aspects of that is the probation system.”

Dame Glenys Stacey, HM chief inspector of probation, welcomed the consultation, adding: “We can see already that there is much to welcome in these proposals, and we are pleased to see that our inspection evidence and findings and our wider advice have had significant influence and impact.”