21/02/2013 03:11 GMT | Updated 22/04/2013 06:12 BST

The Case for Private Prisons

This government has made competition a corner stone of its public service reform agenda.

As David Cameron said in 2011, "We will create a new presumption...that public services should be open to a range of providers competing to offer a better service". Nowhere has this had more impact than in the Ministry of Justice where the coalition government has set out its intention to open up all services, from prisons to probation to rehabilitation, to competition.

Governments of all parties have used the private sector in the management of prisons to drive better performance since 1992. These two decades gives us a more robust and long term evidence base about the relative performance of the public and private sectors than we have in any other public service.

However, in November last year the Ministry of Justice performed a u-turn. Now the government's "new approach" limits the role of private companies to smaller contracts, such as for rehabilitation services and facilities management. Public sector prisons will see the momentum of competitive market pressures replaced with an "efficiency benchmark" instead.

The government's own statistics show that reducing the scope of competition in prisons is the wrong call. New Reform analysis of official Ministry of Justice figures show that private prisons are more effective at preventing prisoners from committing further crimes and they perform better than comparable public sector institutions on most official performance measures, from operational effectiveness to relationships between staff and prisoners.

Evidence suggests that this delivers benefits across both public and private prisons as competitive pressures incentivise improved outcomes in more cost-effective solutions. Whether public or private, the best providers must be allowed to set the pace of innovation.

The private sector has delivered these more efficient, better and cheaper prisons through freedom from national workforce regulations as Reform has showed in 'It Can Be Done'. Market facing pay and adaptable staffing arrangements in prisons have not only reduced cost considerably, but also improved staff prisoner relationships and internal cultures within prisons. With personnel costs typically making up at least two-thirds of prison expenditure, these freedoms are essential for achieving more for less in prisons.

The government needs to build on these achievements in privately run prisons by expanding not limiting competition. Market testing prisons would allow the best providers to take over delivery to improve quality and drive down costs. Fixed term contracts would ensure both more meaningful accountability and a more effective focus on outputs across the board.

Put simply, the government cannot afford to close the doors to competition. Contracting prisons has delivered better services at a lower price; the current financial challenge means this transformation in service delivery is more important now than ever.

Twenty years of private prisons has created an effective market which is ready to grow. Only by opening up prison services to greater competition will the government advance the "rehabilitation revolution" which Ministers want to deliver.