The monitoring of offenders in the community faces another shake-up after disastrous reforms introduced by Chris Grayling forced the government to bail out failing private probation companies by more than half a billion pounds.

David Gauke, the justice secretary, has announced that eight private firms that run 21 “community rehabilitation companies” (CRCs) in England and Wales are to have their contracts terminated in 2020, two years earlier than agreed.

Offenders may no longer face a minimum 12 months’ supervision on release from prison or once their licence expires; and probation officers will have to meet a minimum requirement of offering monthly face-to-face contact with their clients under proposals announced on Friday and put out to consultation.

The probation sector in England and Wales was overhauled in 2014 by Grayling, who ignored significant warnings from within the Ministry of Justice and broke up existing probation trusts, replacing them with a public sector service dealing with high-risk offenders and the CRCs that manage low-to-medium risk offenders.

Labour branded Grayling’s reforms an “ideological experiment” and a “costly failure”. While Gauke defended the changes as “ambitious”, he accepted that improvements were needed and the government had to “learn from the experience” of the past three years.

Under Gauke’s proposals, the number of CRCs operating in England and Wales will be reduced to 11, with 10 new probation regions to be formed in England plus an additional region in Wales.



But despite significant problems identified with the provision of services by the private companies, the government insists that the sector has a role to play and will be putting contracts out to tender for the overhauled framework proposed for 2020 onwards.

“I am very keen to ensure that the justice system focuses on rehabilitation,” Gauke said. “We need to reduce crime, we need to reduce reoffending. One of the key aspects of that is how we deal with the probation system.”

Discussing Grayling’s so-called transforming rehabilitation reforms, he added: “It was an ambitious and innovative reform.

“With the experience of the last three years or so, it seems to me there are some clear lessons that need to be learned in improving the system. But I don’t favour excluding the private sector from this at all.”

The most recent intervention to save the flagging providers will cost the taxpayer £170m. This includes the waiver of £115m in penalties owed by CRCs for failing to meet targets under Grayling’s “payment by results” system, an extra £46m over two years to shore up the “through the gate” services provided to prisoners on release and a further £9m to correct underpayments.

The government has already had to hand over an extra £342m to the CRCs, bringing the total additional cost to the taxpayer to more than £500m.

The size of the bailout is an indictment on Grayling’s reforms, which have been criticised by the chief inspector of probation and the cross-party justice committee, which last month branded the overhaul a “mess”.

Gauke’s announcement comes at the end of a parliamentary term in which Grayling faced a no-confidence motion in parliament over his ability to carry out his current role as transport secretary, following the rail timetable fiasco. MPs narrowly backed him in a vote on the motion, although few of his fellow Tories rallied to his defence.

This week, Grayling said he was “not a specialist in rail matters” and “I don’t run the railways” in a select committee hearing on the rail timetabling fiasco.

Under Grayling’s reforms, the CRCs did not earn as much as expected for a range of reasons. A rise in violence against the person and sexual offences meant a greater number of offenders were being allocated to the National Probation Service – which deals with high-risk offenders – rather than the CRCs.

And while the number of reoffenders declined, the frequency of reoffending has increased which has impacted the CRCs’ “payment by results” income. It was originally thought that the department would spend up to £3.7bn on CRC contracts that ran until 2022. The MoJ now expects the total spend to be up to £2.2bn up to 2020.

Frances Crook, chief executive of the Howard League for Penal Reform, said: “Handing over more cash in the meantime to abject private companies – whose contracts are being cut short because they have failed to deliver what was promised – is throwing good money after bad.”

Among proposals put out to consultation are plans to introduce minimum standards specifying the form and frequency of contact between offenders and their responsible officer. This comes after probation inspectors discovered tens of thousands of offenders were being supervised by telephone calls every six weeks instead of face-to-face meetings.

Richard Burgon, the shadow justice secretary, said: “This announcement is further evidence that the Conservatives’ decision to outsource whole swathes of probation to the private sector has created an unprecedented crisis in the system. This ideological experiment has been a costly failure”