Large parts of prison service will be run by private sector as government attempts to cut public sector costs

Britain’s new-build prison programme will be run by the private sector as part of a range of measures to save public cash, the government has announced.

Outlining the ways in which it will try to reduce public sector costs as part of yesterday’s budget, the government pledged to privatise large parts of the country’s jail service.

The chancellor Alistair Darling has promised to cut this year’s borrowing total of £175bn, followed by £173bn in 2010/11, to £97bn in 2013/14. The savings will come from a mixture of public sector “efficiencies” and a reduction in capital expenditure, combined with a cash boost from a higher level of income tax for the highest earners.

The Public Value Programme, published yesterday, says the government will “ensure that over the next three years, the National Offender Management Service will run a competition for the management of five existing prisons and that all new-build prisons will be built and managed by the private sector.”

The news follows fears in the industry that the government’s ambitious prison-building programme would be scaled back as pressures to reduce public spending mount. Procurement of high-profile projects such as Featherstone, Belmarsh and Maghull have been beset by delays and the Ministry of Justice has pledged to cut programme costs by 10-20%.

The procurement route for the government’s three proposed Titan prisons has never been made clear. Last year, the government hinted the projects would be PFI but more recently there had been speculation they would be delivered under the prison framework.

The government is due to publish a response to the consultation on the planned 2,500-person prisons in coming weeks.