Faced with a rising prison population in the late 1980s the Conservative government saw prison privatisation as the most cost effective solution to the crisis, it was also part of the government’s determination to promote private enterprise and extend the free market into public services.

In 1986 the Parliamentary Home Affairs Select Committee concluded that the principal advantages of contracting-out prison building and management to the private sector were that:

•   It relieves the taxpayer of the immediate burden of having to pay for their initial capital cost
•   It dramatically accelerates their building
•   It produces greatly enhanced architectural efficiency and excellence.

The select committee proposed that as an experiment the Home Office should enable private sector companies to tender for the construction and management of prisons (Home Affairs Select Committee, 1987). However, it did not recommend how extensive this should be or give a time frame and no evaluation process was set out.

Following a tendering process in which the public sector was barred from participating, Group 4 was awarded a contract to manage HMP Wolds, a newly constructed 320-bed prison for unsentenced male prisoners that opened in April 1992. The prison had a number of initial problems and there was genuine cause for concern about aspects of the regime in its early stages.

The Conservative government, however, pressed on without a full evaluation and in 1993 announced that all new prisons would be privately built and operated under the private finance initiative. It was not deterred when Home Office commissioned research which evaluated the Wolds concluded in 1996 that:

..similar, and some might argue, better achievements are to be found in some new public sector prisons, showing that the private sector has no exclusive claim on innovation or imaginative management able to deliver high quality regimes… (Bottomley et al, 1996).

During the Conservatives’ time in office, as well as the Wolds, a further three prisons (Doncaster, Blakenhurst and Buckley Hall) were opened that had been built with public funds but were privately managed. The Conservatives also commissioned the private sector to build and run two more prisons, Parc and Altcourse.

The Labour Party vehemently opposed the Conservatives’ policy on private prisons, but within a week of being elected in 1997, it made a dramatic U-turn. On 8 May 1997 Jack Straw announced:

If there are contracts in the pipeline and the only way of getting the [new prison] accommodation in place very quickly is by signing those contracts, then I will sign those contracts.

In a speech to the Prison Officers Association the following year Straw announced that all new prisons would be privately built and run (Nathan, 2003).

Under Labour seven more PFI prisons were opened. The coalition government has agreed to build a new 800 place prison in east London.