22 March 2018

The Public Accounts Committee has warned that the government's privatised probation service programme - run by so-called Community Rehabilitation Companies (CRC) - could be approaching a "contracting catastrophe" with an impact reminiscent of the collapse of Carillion.

After investigating the progress of the Ministry of Justice's (MoJ) privatisation scheme, the Committee reported that the quality of probation services is suffering, most CRCs forecast financial losses, yet the government is intent on ploughing even more money into the failed system.

Despite a government bailout package of £342 million, 14 of 21 CRCs expect to suffer losses - and one provider, Interserve, has already issued two profit warnings. Against a background of substandard services provided by CRCs, the government could not explain what it expected to get back from this investment.

The scheme has been running for over three years and is contracted for seven years, but the volumes of work paid for has dramatically declined so the CRCs have not invested in the services and, as a result, the quality of provision has suffered. 19 CRCs have not met reoffending targets.

In 2017, the MoJ was forced to adjust its contracts after it "pushed through its reforms too quickly and failed to anticipate foreseeable consequences", the Committee said.

Meg Hillier, Committee Chair, said: "The so-called ‘rehabilitation revolution’ is showing worrying signs of becoming a contracting catastrophe.

"This combination of poor performance and financial instability is neither acceptable nor sustainable. Yet the government’s attempt to spend its way out of difficulty clearly isn’t working.

"It must act now to limit taxpayers’ exposure to risk and give this flagship strategy a fighting chance of delivering what it promised."