Competing for convicts?

State-run prisons suffer from the familiar problems of other public-sector institutions that face no competition: inadequate supply, poor quality and high cost. All too often, prisons are schools for crime. Many of them suffer from serious problems associated with over-crowding, poor sanitation, violence, drugs and sexual assault. Prison wardens have become a powerful vested interest, exerting undue influence over prison policy.

To solve these problems, remove the state monopoly in prison provision and allow the private sector to build and run new prisons.

In the United States there is a thriving market in the provision and operation of private prisons. Around 30 of the 50 states in the US now make use of private prisons.

Several private companies compete for prison contracts. Correctional Services Corporation, which became a public quoted company in February 1994, is one of the largest. It manages jails and detention facilities in 19 states as well as in Puerto Rico. The company has three divisions: adult, juvenile and community corrections. In 1994 CSC formed an alliance with the French company, Sodexho. Together they operate prisons in the United Kingdom and Australia. CSC is one of Wall Street’s top performing stocks.

Another leading US firm in this rapidly developing market is Wackenhut Corrections Corporation, founded in 1984. It currently manages 55 prisons, not just in the UK, US and Australia, but in Puerto Rico, South Africa, Canada, and New Zealand. In the UK, the company operates the immigration detention centre at Gatwick airport and manages four prisons in a joint venture with Serco.

In the UK, competition was introduced gradually. The first private remand prison, the Wolds, operated by Group 4 Remand Services, opened in 1992. A second prison for convicted adults was opened in May 1993 in Redditch, run by UK Detention Services. Meanwhile, the Prison Service was established as an agency in April 1993, giving it greater managerial freedom.

Competition works. The new privately built and operated prisons have established new standards in efficiency, facilities, and prisoner welfare and training. In the UK, the Inspector of Prisons, an independent watchdog, consistently reports that standards of care are higher, and problems (such as assaults and disorder) are lower, than in government-run prisons, while in private prisons, inmates spend more of their time, more purposefully, outside their cells.

Despite all this, the average cost of public-sector jails in the UK was 15 per cent higher than private jails in 1998 – though market testing has helped to reduce this gap.

Private prison providers also do more rehabilitation work with their inmates. Prison industries flourish, for example. In 1999, Corrections Corporation of America became the first US prison service, public or private, to win a national accreditation sponsorship for its vocational trades courses. Offenders who participate in this programme enjoy a much wider choice of jobs once they are released, reducing their chances of returning to crime (and its costs to society). The company is planning to expand its training programmes in prisons in Colorado, Florida, Georgia and Oklahoma.

Whereas it took 15 to 20 years to build new prisons in US states, private prisons have been built in 6 to 9 months. In the UK it used to take ten to twelve years to build a prison: private companies have demonstrated their ability to build jails in less than 9 months.

Though not perfect, the fact is that overall, private prisons perform better on every key measure. Privately built and managed prisons offer a much better chance of addressing offenders’ core problems, treating them humanely (and at lower cost), and making them fit to make a positive contribution to society.