The Justice Secretary Ken Clarke tonight admitted his department’s plans to double the number of prisoners working in the UK could jeopardise the job prospects of the law abiding.

Mr Clarke said he was “anxious to guard against” normal British businesses being undercut by firms employing prisoners and conceded it would be “a very serious downside” if prison work programmes started “replacing job opportunities for law abiding people”, and promised safeguards to prevent it.

Mr Clarke was speaking after The Independent today revealed details of the Government plans to get nearly 20,000 prisoners working within ten years. Prisoners are not paid the minimum wage and unions have launched an investigation into whether the expansion in undercutting the labour market.

But in an interview for the BBC Mr Clarke said this was something the department had been working to prevent.

“Of course that would be the biggest fear, and it’s been one of the things I’ve been most anxious to guard against since we started,” he said.

“We’ve been doing this for the best part of two years and I’m surprised the POA [Prison Officer’s Association] are suddenly getting uneasy about it. We’ve got a code of practice which we’ve agreed with the CBI, we’ve been discussing it with the TUC - I can’t get them to sign it, but I don’t think there’s anything wrong with it from their point of view - to ensure that we're not going in for price competition with honest local employers or any other employers outside the prison.

“It would be a very serious downside if we started replacing job opportunities for law abiding people, and we’ve been conscious of that all the way through.

"We are going to price those things that are produced and prison and sold on the basis that they are not going in for price competition outside. It isn’t actually much cheaper to produce goods or services in prisons, because you've got all the security, the constraints of going in and out of a prison. Although we don’t pay the prisoners the minimum wage, normally you can’t start undercutting British businesses outside.

“For that reason, however, we’ve just tried to ensure in our code of practice that we will not price on a basis that threatens honest businesses, and of course, that will be vetted by ourselves and by the CBI, who are totally supportive of what we’re doing. It’s the best way of getting more of our prisoners to stop being criminals and to stop committing further offences.