Ken Clarke's decision to award the security firm G4S the contract to run the 1,400-place Birmingham prison, announced in the House of Commons, has reignited the debate about the role of the private sector in our prisons. The UK already has the most privatised prison system in Europe. In England and Wales, nearly 10,000 prisoners (11.6% of the total prisoner population) are held in private prisons. This is a higher proportion than in the US, where the figure is around 9%. The privatisation of HMP Birmingham and the new private Featherstone 2 will take the total number of private prisons in England and Wales from 11 to 13, holding up to 14% of the total prison population.

No one is going to argue with an aim to reduce unacceptably high rates of reoffending, but will a move to privatise more prisons achieve this? By unleashing the forces of competition the government hopes to bring about a more efficient and effective justice. Good relations between prisoners and staff, staff and managers are critical to the health of any prison system. It would be a poor outcome if tensions led to a breakdown in these relations and a deterioration in conditions.

Since the first private jail was ushered in in 1992 by Ken Clarke, then as home secretary, the results have been mixed – some private prisons have proved innovative and successful while others have been criticised for their high staff turnover, tendency to cut corners and weaknesses in security.

According to the National Audit Office, the relative inexperience of staff means that some private prisons can struggle to create a safe environment for prisoners. Private prison contracts in England and Wales are shared between just three companies: Serco, Sodexo and G4S. Overall the costs of private prisons per place are higher than public prisons for most types of establishment. Despite this, the average ratio of prison staff to prisoners is usually lower in private prisons, and staff generally receive a lower level of basic pay than their public sector colleagues.

At a time when government is committed to reducing any unnecessary use of imprisonment, and shrinking prison numbers back to an unavoidable minimum, is it sensible to open up to market forces and risk growing vested interest? In business terms surely the aim is to shrink, not expand, the market.

In America, private prison contractors have been major contributors to public policy organisations that have successfully advanced tough-on-crime legislation and promoted free-market principles. Private companies in the US have on occasions sought to manipulate the legal system directly. In the kids for cash scandal, Mid-Atlantic Youth Services Corp, a private prison company, was reported to have been found guilty of paying two judges $2.6m to send 2,000 children to their prisons. Less vivid as an example – but still a matter of concern – in the UK was the resistance voiced by some private contractors, on grounds of cost, to the inclusion of prisons within the ambit of the Corporate Manslaughter Act.

Privatisation raises ethical questions about the nature and role of imprisonment in our society. Loss of liberty is the most extreme form of punishment we have. It has to be well regulated and managed and must meet exacting standards. People in prison should always be treated with decency and respect and arrangements for commissioning and contracting must ensure proper oversight and full accountability.

While privatisation could help improve prison management and curb any remaining restrictive practices, it may not prove a panacea to the problems of our overcrowded, usually invisible and too often ineffective prison system.