Wolds Prison: Management Contract (Hansard, 5 July 1994)

The Minister of State, Home Office (Earl Ferrers)
Yes, my Lords.

§ Lord Harris of Greenwich
My Lords, I thank the noble Earl for that informative reply. Is he aware that the chief executive of the prison agency told the Public Accounts Committee of the other place that in terms of this contract the Home Office has been forced to pay for gas, electricity, water and acts of vandalism, as a result of which Group 4 will receive nearly £30 million rather than £21.5 million, as specified in the contract? Is not that a rather strange story?

Earl Ferrers
My Lords, all sorts of curious things happen in the course of contracts. The contract was given to Group 4 in competition with a number of other organisations. Group 4 acquired the contract and as far as I know it has been adhered to.

§ Lord Harris of Greenwich
My Lords, will the noble Earl be good enough to answer my specific point? Why were gas, electricity and water charges excluded from the contract? Was it a mistake? I assume that it was. If not, can the noble Earl explain why the charges were excluded from the terms of the contract?

Earl Ferrers
My Lords, I cannot give the noble Lord an answer because I do not know what the motivations were when the contract was first drawn up. However, if it was drawn up on the basis that those charges should be excluded, then they would be paid for by the Home Office. If in future contracts it is decided to include those charges, then future contracts will say so.

§ Lord McIntosh of Haringey
My Lords, it is not simply a matter of comparison between one bidder and another for the contract. It is a question of choosing between privatising and not privatising prisons. If the contract documentation is drawn up on an inconsistent basis so that a comparison cannot be made when deciding whether or not to privatise surely that is an issue of public policy, as the Public Accounts Committee recognises. It is not good enough for the Minister to say in reply that all sorts of curious things happen with contracts.

Earl Ferrers
My Lords, I do not believe I said that all sorts of curious things happen with contracts. I said that all sorts of curious things happen. That is perfectly true. Twenty-seven companies bid for the contract; eight were considered by a panel; five gave presentations and three were short-listed. I have no doubt that the question of whether or not gas and electricity were included in the contract is de minimis compared with the totality of the competitive contracts.

§ Lord McIntosh of Haringey
My Lords, I can hardly allege that the Minister is wilfully not answering my question. However, he has not understood my point. The issue is not simply the contrast between those bidding for the contract; it is whether or not the contract documents allow a proper comparison to be made between those prisons that are privatised and those that are not. In his answer the Minister simply referred to the differences between the different bidders. On what basis is it possible to make a satisfactory judgment between running the Wolds prison on a contracted-out basis and running it on a not contracted-out basis since the Government pay the water, gas and electricity charges in both cases? That is the issue.

Earl Ferrers
My Lords, the Wolds prison was intended to be a contracted-out prison because we wanted outside contractors to bring in outside expertise. It was decided that the prison service would not be a party because we wanted outside contractors in. They all bid on the same basis.

§ Lord Richard
My Lords, is the Minister telling the House that his description of £8.5 million as de minimis represents the policy of the Government? Is not that the amount by which the contract was varied because 1136 nobody appears to have included the charges in the first place? That is not de minimis; it is a large sum of money.

Earl Ferrers
My Lords, my point was that it was decided that the Wolds prison should be a contracted-out prison and should not be part of the directly managed prison estate. The contracts went out and all the bidders bid against the same contract. Therefore, whether or not the contract included electricity and gas, all those who bid, bid against the same contract.

§ Lord Dean of Beswick
My Lords, can the Minister say why, if it was decided that the prison should be contracted out, the prison service was deliberately prevented from putting in a bid? Is it because it may have won the contract and that would have been against the Government's policy? The Minister said that in the final analysis three companies were interviewed or in negotiation. Were they informed that the heating and lighting costs would not be part of the prime tender that was submitted? If so, it was not a level playing field. Was any part of the contract let by negotiation rather than by open tender? Once negotiations come in, excluding this and including that, the department is at liberty to pick the company it wants even if it is not the best.

Earl Ferrers
My Lords, it was decided that the Wolds should be used as a test area for the introduction of new ideas and approaches. It was an opportunity to introduce many of the proposals put forward by the noble and learned Lord, Lord Woolf. That is why it was decided that the contract should be given to outside contractors. As I said earlier, 27 companies submitted tenders and they were all considered. The company chosen was the one it was felt offered the best value for money.

§ Lord Dean of Beswick
My Lords, the Minister said: "tested". Tested against what?

Earl Ferrers
My Lords, as I tried to explain to the noble Lord, it was decided that the Wolds should be a contracted-out prison because we wanted to bring new ideas, thoughts and processes into the system. It is the first prison that is purely a remand prison and that is why it was decided that it should be contracted out.

§ Lord Monkswell
My Lords, are the Government saying that the effective management of the Wolds establishment will be best carried out when the people in control can ignore energy costs and usage and the costs and difficulties incurred as a result of vandalism? Are the Government aware that the Wolds houses a number of human beings and therefore their standard of living in terms of energy consumption will be significant? Living conditions as a result of vandalism or its containment will also be significant. Do not the Government think that the effective management of the Wolds establishment as a whole will be better undertaken where the managers in charge take responsibility for energy and vandalism?

Earl Ferrers
My Lords, I do not agree with the premise of the noble Lord's question. The contractors 1137 do have regard to vandalism. I remind the noble Lord of what Her Majesty's Chief Inspector of Prisons said. He produced a very good report. He gave praise for the staff attitudes, for their relationships with the prisoners, for the amount of time out of cells which the prisoners have, for the civilised meal times which they have, for the good quality food and for the opportunity for visits. All those are plus points. They are for those people who are put on remand and who have not yet been sentenced by the courts. That is why they have to be kept in the way in which they are kept.

§ Lord Harris of Greenwich
My Lords, the noble Earl has indicated what he described as the plus points identified by the Chief Inspector of Prisons in his report on the Wolds. Does he also recall that there were one or two minus points in the report, particularly with regard to the level of drug abuse taking place at the Wolds? Perhaps I may come to the second point; namely, the costs involved. The Government spend a great deal of time telling us about the desirability of achieving value for money. How can we be obtaining value for money when the taxpayer is having to pay £30 million to Group 4 rather than the £21.5 million specified in the contract? Is that not a clear indication that there has been serious negligence in the drawing up of the contract?

Earl Ferrers
My Lords, I do not think so at all. If the contract excludes electricity and gas, then the contract is that much smaller. If the contract includes electricity and gas, the contract is that much the bigger. The totality is the same.