The contract awarded to private operator Reliance to move Scottish prisoners between prisons and courts was based on huge underestimates in costs, claims Britain’s leading statistician.
Cambridge Professor Sheila Bird, vice-president of the Royal Statistical Society, said the much trumpeted cost of the contract of £126m over seven years, delivering a £20m saving, could be out by tens of millions of pounds, and said the new Government needs to make public the details of the contract negotiated by the previous Executive.
Reliance won the contract to oversee prisoner movement in 2003 and began operations in April 2004. It was quickly dogged by a series of escapes and other mishaps, for which it suffered significant financial penalties.
Bird said the initial contract, which is shrouded in secrecy, did not make projections for the cost of increased prisoner movements over the life of the contract, and with the Scottish prison population rising steadily, prisoner movements are also rising.
“The delays in revealing escalated costs and the failure to adequately project changes in prisoner movement since 2003/04 mean that the much vaunted cost of £126m over seven years for Scotland’s prisoner escort needs to be seriously reworked.
“They didn’t make formal projections of prisoner movement numbers. If escorts go up, then the price goes up. They didn’t project the prisoner movement so we can’t project the costs,” she said.
Bird said that a visit to inspect Reliance headquarters in 2005 revealed the existence of extra pay bands for the movement of prisoners in excess of what had been established in the original contract. These pay bands would be used to calculate extra payments in years when Reliance moved more prisoners than the original contract allowed for; however, the details of these extra payments have not been made public.
“During my visit, I learned about higher per-movement pay bands in the Reliance contract. These come into force retrospectively if, within a financial year, prisoner movements per month have exceeded a higher movement threshold in at least six months of that year.
“Reliance was looking forward to a balancing payment for 2005/06 of at least half a million pounds because prisoner movements were comfortably exceeding this workload-related threshold for backpay. However, with ten prisoners at large between December 2005 and March 2006, Reliance’s balancing payment was nearer £300,000,” she said.
Bird, who used Freedom of Information legislation to uncover some of her figures, said that the original figure of £126m over seven years also does not allow for inflation.
Using the year 2005/06, Reliance’s first year of full operation, as an example, Bird said:
“Actual costs at 2005/06 prices should not be compared with the £126m over seven years figure calculated at 2003/04 prices, because after two years inflation at 3.5 per cent inflation, it rises to £135m over seven years, even if the number of prisoner escorts stayed the same over the seven years. But of course, it matters how prisoner escorts were expected to alter over the contract seven years. Amazingly, this was not projected.”
Bird says that the Reliance contract demonstrates the need for all contracts for private operators that undertake public services to be completely open to inspection.
“Scotland’s new Justice Minister now needs proper projections to be made against which public outlay on, and performance of, privatised prisoners’ escorts can be audited in each financial year from 2007/08 to 2011/12. We also need the table of pay bands released to the public so we can see what is paid compared to what they originally estimated,” she said.
A spokesman for Reliance said: “Reliance did not frame the contract so it is not a matter for us to comment on, however, it is widely recognised that there has been a big increase in prisoner volumes which has resulted in some increase in costs. But it is widely recognised that Reliance continues to provide tremendous value for money.”
The revelations about spending over-runs on the contract are likely to interest the SNP Government, which has stated its antipathy to the privatisation of government services, especially in the justice sector.
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