July 27, 2018 / 9:39 AM / in 25 days

UK government to cancel private probation service contracts early

LONDON (Reuters) - Britain said on Friday it would terminate contracts with private companies including Interserve (IRV.L) and Sodexo (EXHO.PA) from running probation services in England and Wales, admitting they have not delivered the expected benefits.

Justice Secretary David Gauke said the contracts, which pay out for services largely based on whether offenders reoffend, will end two years early in 2020. No compensation payments will be made to contract holders.

The ministry expects the total spend of the contracts to be up to 2.2 billion pounds over the life of the contracts, including a 170 million pound stabilisation package.

It had originally envisaged a spend of up to 3.7 billion pounds on contracts due to run until 2022.

The partial privatisation of the probation service in 2015 by the then justice secretary Chris Grayling was strongly criticised at the time.

The reforms saw so called Community Rehabilitation Companies (CRCs) take over probation services for lower level criminals.

“While CRCs have reduced the overall number of people reoffending, it is clear that probation providers have faced significant challenges,” said the ministry.

“Unforeseen changes in the types of offenders coming to the courts and the sentences they receive have substantially reduced CRC income and affected the quality of frontline services.”

The UK government’s shift on the probation service marks the latest sign of strain in cases where it has outsourced public services to the private sector.

Carillion, the construction company collapsed in January, while the East Coast railway was renationalised in May.

The Justice Ministry said it plans to work with the private sector to design new and improved contracts for probation services.

Reporting by James Davey; editing by Kate Holton

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