THIS month’s damning report by government watchdog the National Audit Office into the privatisation of probation exposes Chris Grayling’s vandalism on a vital public service. 

The Audit Office normally uses very measured language, but in the case of Grayling’s privatisation it says: “The ministry set itself up to fail.”

The report also shows why so many other privatisations go bad. Probation services try steer ex-offenders out of crime and into jobs and housing — they are a kind of crime-fighting social work. 

Under then justice minister Grayling’s 2015 “rehabilitation revolution” the formerly publicly run service was split in two.  

The most dangerous ex-offenders are monitored by the still public National Probation Service (NPS). The rest are supervised by 21 regional privatised “community rehabilitation companies” (CRCs), run by big contractors like French catering company Sodexo, dubious US prison firm MTC or by Working Links and Interserve, which have both gone bust.

It was a huge privatisation. The Tories had to drastically reduce the contracts after dismal performance. But even in this reduced form the government expects to pay the probation privatisers £2.3 billion between 2015 and 2020. 

Around 250,000 ex-offenders are under supervision at any one time.

Grayling promised there would be a “greater use of competition to drive value and ensure taxpayers’ money is invested in services that work.” 

He said the “revolution will be built around the principle of payment by results” which could get the “best outcome” and “innovation.”

But instead the firms delivered poor services and demanded — and were given — extra payments and bailouts worth around £500 million. As the Audit Office shows, the market did not make things better, because it wasn’t really a free market.  

It says: “The ministry’s chosen commercial approach proved to be inappropriate given the nature of probation services. 

“The ministry designed outcome-based contracts with payment by results to encourage [private probation firms] to innovate. 

“However, the role of probation services in protecting the public and delivering sentences handed down by the courts meant that the ministry had a low risk appetite for failure, which did not sit well with its desire for innovation.”

What that means is that the private firms didn’t have to try to find new, innovative ways to deliver the service. 

Because probation is a vital public service, the ministry had a “low risk appetite for failure,” so the firms knew that even if they did a bad job, the ministry would always bail them out. 

It is a bit like the “too big to fail” rule that meant the banks could act in a reckless manner, knowing they would always get helped by the state in the end — by handing a vital public service to the private companies, the government put itself at their mercy. 

The ministry didn’t dare press for better value or sack firms that were no good because of the danger the service would be stopped. Any private corporation taking over a vital public service actually ends up with influence over the government, not the other way around. The supposed servant becomes the master. Public monopolies become in effect private monopolies.

In the case of probation, this led to “limited innovation and a lack of progress transforming probation services.” Only two of the 21 regional private probation services “delivered the IT innovation they promised.” 

The only real innovation the firms did introduce — supervising ex-offenders by telephone instead of face to face — has harmed the service and must be phased out. 

The government added extra errors to the basic failure of outsourcing vital services. Grayling said “rapid change” and a “revolution” would bring “the best outcome.” 

However, the Audit Office says “the ministry designed and implemented its reforms too quickly and without sufficient testing,” “there were no completed pilots,” they moved so quickly that the ministry “did not have a good understanding of probation trusts’ delivery models, working practices and governance.” Grayling’s Justice Ministry literally did not know how probation worked.

As with many post-Cameron privatisations, Grayling tried to hide the corporate takeover by promising the “voluntary sector” would be “at [the] forefront of [a] new fight against reoffending.”

In fact the Audit Office says there is only “patchy third-sector involvement” with private probation.

As with many privatisations, there was also fragmentation, the split between the publicly run National Probation Service and the regional “rehabilitation companies” has “introduced new interfaces that are not yet working smoothly.”

It’s a warning for future privatisations: the market does not work in vital public services where the government has “low risk appetite for failure” because corporations can always expect to be bailed out. Rapid change is often based on a lack of “good understanding” of how services work. Promises that the “third sector” will be involved amount to little.

Despite all this the current Justice Secretary is intending to reprivatise all the probation services: they are ending the current contracts early in 2020. But David Gauke just wants to put new contracts out to tender. 

The normally very cautious Audit Office says “the ministry should pause and reflect on whether its proposed approach is both deliverable and consistent with its strategic aims for the probation system.”

“Pause and reflect” on whether it works should apply to probation — and indeed to most privatisations of vital public services. 

Meanwhile Dame Glenys Stacey, the Chief Inspector of Probation, told Radio 4 that “it is as it turns out very difficult to contractualise services such as this” — because complex social services cannot be turned into “performance targets” in a contract. 

Stacey drew the conclusion that this was true in other privatisations, saying: “It is clear that in probation, just as in other spheres, there are contracting risks that are really hard to negate, not just for the Ministry of Justice but across government.” 

If the government wants to control public services, and make them work well, it has to own them. The dream that public services can be delivered better by private corporations is yet again becoming a nightmare.