Thanks to a government U-turn sharp enough to make a teenage joyrider proud, the free market's involvement in incarceration is proliferating. Within days of taking office, Home Secretary Straw sanctioned two new private finance prison deals.

On 2 May 1997, there were six prisons run by the private sector. But if Norman Stanley Fletcher was tried and convicted today, the jovial Porridge comedy character would stand a one in 11 chance of being sent down to a private slammer.

Today, 12 out of 130 UK adult and young offenders prisons are run by the private sector. That figure will rise over the next five years.

Ministers are currently poring over a report by Pat Carter, a non-executive board member of the Prison Service. Conclusions will be drawn within weeks, the Home Office said.

Carter's report includes a call for a semi-privatisation of Britain's jails, which should be run, he argues, akin to the Treasury's controversial plans for the London Underground.In effect, the facilities and prison buildings would be in the hands of the private sector and would be split from the custodial operation. The Home Office confirmed that this was one of the alternatives Ministers were currently considering.

Observers fear this untried formula will waste money and drive down prison workforce pay and conditions. Last December, Martin Narey, the Director-General of the Prison Service, suggested that some of the 37 old and outdated jails could be sold to property developers and the proceeds used to build new prisons on derelict city centre land.

Given New Labour's public borrowing phobia, its love affair with big business and its mistrust of the public sector, new jails will inevitably be privately built and managed under the PFI.

For critics, this raises uncomfortable issues. In the eight years since the private sector has run jails, the prison population has leapt 20,000 to 65,000. By 2005, it is projected that there could be 92,000 people locked up in England and Wales.

Professor Allyson Pollock, an expert on the public sector at University College London, said: 'The private sector needs prison numbers to increase in order to make a return. More prisons means bigger potential profits. But the debate as to whether prison actually works is swept under the carpet.'

A director of Premier Prison Services, a joint venture between controversial US security giant Wackenhut and quoted facilities management outfit Serco, and Britain's biggest operator of private prisons, said: 'As a citizen I would not like to see that many people locked up. But as we're in the business, I'd like to play our part in this.'

Companies in the lucrative business are ensuring that they play their part in prison policy. Private-sector firms sponsor academics and researchers help ing to formulate government penal and criminal justice policy.

A number of private security firms have in the last two years sponsored policy-making conferences hosted by leading academic institutions. In addition, Group 4, which became a national joke when seven prisoners in its charge escaped in 1993, contributes £25,000 to help fund research by the Institute for Public Policy Research - the think tank at the vanguard of the Government's Third Way initiatives.

Stephen Nathan, editor of Prison Privatisation Report International, said: 'The increasing influence of the private sector in the criminal justice system means shareholders' interests come first. Who shapes criminal justice policy? Is it professionals, politicians and the public? Or is it Group 4 shareholders?'

A senior IPPR official confirmed that Group 4 had helped fund IPPR research. But he stressed that Group 4 had neither contributed funds nor evidence to its report into PFI, due out in May.

Since the Thatcher government allowed the private sector into prisons following lobbying by companies and the Adam Smith Institute, its performance hasn't exactly pulled up any trees. All of the four contractually managed prisons have had major difficulties and two have returned to Prison Service management. In two recent cases, Prison Service bids were considered of better quality and value for money than the private sector.

Doncaster, a Premier-managed jail, had the highest rate of prisoner self-harm in England and Wales for three years in succession until 1999. No figures are available for 2000. Even so, a Premier director last week described the jail, dubbed 'Doncatraz', as 'a flagship - definitely a market leader'.

Defenders of privatisation say competition has forced the Prison Service to adopt a more commercial approach. This is hard to deny. But there is no evidence that private jails have reduced reoffending rates. Peter Robinson, senior economist at the IPPR, said prison PFI offers the public a better deal than those for hospitals and schools. This seems a moot point.

Carillion and Group 4, the consortium that financed, designed, built and runs Altcourse prison in Liverpool, made an extra £13m from a refinancing package, it emerged last year. Last June, the National Audit Office disclosed that Carillion and Group 4 raised their expected rate of return on the deal by 75 per cent once the project was running. Refinancing gave them a £14m gain, of which the Prison Service received only £1m.

Peter Gershon, head of the Office of Government Commerce, and Sir Steve Robson, then second permanent secretary at the Treasury, warned private sector consortiums last summer that they risked 'killing the goose that lays the golden egg' if they did not share windfall profits with the public sector.

Wholesale privatisation would be too disruptive - but no matter who wins the next election, prisons will increasingly be run by the private sector.

The captive market

Privately managed prisons



(Prison Service still owns the buildings)

Wolds, Humberside UK's first privately run remand prison - which cost £38m - opened in 1992. Run by Group 4. Wolds' contract is being retendered against a Prison Service bid.

Doncaster, South Yorkshire 'Doncatraz' had the highest rate of prisoner self-harm in England for three years to 1999. It was the first UK prison to be run by Wackenhut, the controversial private US security firm. Wackenhut, in partnership with Serco, go under the Premier Prisons banner, which has a recently renewed £66m contract.

Still public



Blakenhurst, Worcestershire In August the Prison Service will take back into public control this controversial jail run by UK Detention Services, owned 100 per cent by French firm Sodexho Alliance. It has been dogged by poor staffing levels and concern over its suicide rate. Premier and Securicor bid for it unsuccessfully.

Manchester Now renamed, this publicly controlled prison was rebuilt following the notorious Strangeways riot in 1990, which marked a watershed in British penal policy. Bid to get private sector involvement recently failed when the Prison Service tender was deemed better than UKDS.

(Financed, designed, built and operated by the private sector)

Lowdham Grange, Nottingham Premier was fined £83,000 for failures at Lowdham, including assaults on staff, inadequate responses to prisoners' complaints, indiscipline and the discovery of drugs. The Chief Inspector of Prisons found that staff morale had never been worse.

Altcourse, Liverpool Said to be the jewel in the PFI prison crown in a recent Chief Inspector of Prisons report. But the same report suggested that cell design offered the potential for prisoners to hang themselves.

Parc, Bridgend First PFI prison run by Securicor. Serious operational problems. Fined £809,213. Received Prison Service managerial attention. Lost three directors.

Ashfield, Bristol Run by Premier and opened in late 1999, this £30m jail was Britain's first young offenders' institute. Home to 400 inmates. Replaced Pucklechurch Remand Centre, which was burnt down in rioting in 1990. Yet to be inspected.

Kilmarnock, Scotland Contract awarded by Scottish Prison Service. Another Premier facility. Scottish Chief Inspector says this is the most violent Scottish jail and more has to be done to tackle bad behaviour.

Forest Bank, Salford UKDS opened this jail early last year. Suffers from staff shortages.

Rye Hill, Warwickshire Group 4 and Carillion have just opened this prison.

Dovegate, East Staffs Premier jail to open this summer.

Ashford, Middx PFI contract to be announced.

Peterborough PFI contract to be announced.

Research: Prison Privatisation Report International