A REVIEW OF PRISON INDUSTRIES IN ENGLAND AND WALES

CONTENTS

Chapter 1: Introduction

This report contains the findings and recommendations of an internal review of industries in public sector prisons in England and Wales, conducted under the auspices of the Prison Service Headquarters Review Programme.

The Review Team were asked to review the purpose, structures, and processes governing the operation of prison industries, taking into account the findings and recommendations of earlier reviews and the practicalities of working in a prison environment, and to consider the case for improvements in, and reform of, the strategic oversight and management of prison industries.

The Review has examined the rationale and justification for running a prison industries regime and has sought to identify a strategy for prison workshop-based activities that, whilst primarily, contributes to the Service's objective of providing safe, well-ordered establishments by providing prisoners with purposeful and cost-effective out of cell activity, also seeks to improve the employment prospects post release of those imprisoned.

The report identifies a number of changes that have the potential to modernise and improve the way in which prison industries are operated and managed. The suggested framework would increase the contribution of workshop-based activities to:

ii) provide opportunities for prisoners to develop work skills and gain national vocational qualifications; and

iii) the cost-effective production of useful goods for the internal market.

With a full assessment of prisoners' needs on their entry into the Prison Service, along with the correct balance of different workshop based activities and learning and skills centres, there is a real opportunity to promote learning and achievement so as to better equip prisoners to face the challenges of obtaining work on the outside, and coping with the demands of the working environment.

Throughout the course of the review we encountered many committed and enthusiastic staff, at both HQ and in the operational line, with long experience of working in prison industries. They, rightly, hope that some stability and certainty will be brought to an area of business that has been under constant review. We share their hope.

Without question, broad based change in any organisation can be unsettling, but the greater danger lies in not changing, holding steadfast to the status quo. Failure to move beyond “business as usual” in prison industries will leave it stagnant and ineffective at carrying out its mission. That said, we accept that change cannot take place overnight. It needs to be managed carefully, and phased in, in a way that does not interrupt operational priorities.

Those we have met exhibited a keenness to work with the Review Team and to assist in implementing much needed change to help deliver a prison industries regime that supports the operational line in meeting the Prison Service's aim and objectives. We thank them for their assistance and patience in helping us with the issues examined during this Review.

Brian Kinney, Review Team Leader

Jerry Harland, Review Team Member

Michelle Williams, Review Team Member

Yvonne Henry, Review Team Member

30^th June 2003Chapter 2: Summary of Recommendations

2. FC&A, in conjunction with Planning Group, should allocate funds to ESS for the materials budget at the beginning of each financial year based on the average predicted prisoner population for that year. (Page 57)

3. The raw materials budget and the funds currently retained by ESS for purchasing finished goods should be separated. The method of distributing funds for the latter should be considered by FC&A. (Page 57)

4. Full hard charging based on the cost of materials and a financial incentive for production should be introduced for the internal market, on a phased basis, with clothing & textiles being charged first, followed by the rest in the following year. (Page 55)

5. An internal Industries Management Board with representatives drawn from the operational line should be established to govern the operation of industries. (Page 28)

6. An Industries Advisory Sub-Group should be set up with membership comprised of non-executive members from private sector industry, and representatives from within prison industries, to ensure that prison industries keep in line with developments in the modern labour market. (Page 28)

7. The Policy Section of ESS should manage the Make or Buy process taking into consideration:

- support of prison industries strategy;

- total cost of manufacturing compared to the purchase price; and

- the cost of providing alternative occupation for prisoners; (Page 62)

8. The Industries Management Board should approve a standardised template that prioritises and weighs the relevant factors for the Make or Buy decision. Where a decision is proposed that might result in a reduction in prisoner industry places, e.g. to buy in, this decision should be endorsed by the Industries Management Board. (Page 62)

9. Where a decision is taken for the Service to make a product its purchase by establishments should be mandatory, thereby ensuring that prison workshops have a continuous supply of work. (Page 62)

10. The Head of ESS should take responsibility for ensuring that adequate stock levels are maintained at Branston. (Page 73)

11. The Head of ESS should immediately form a small team to look at all stock levels and monthly usages with a view to reducing the number of items that are currently held at Branston. This team should ensure that where stock levels are likely or identified to drop below the recommended levels remedial action should be taken at an early stage, whether by moving production to another establishment/workshop or by making the decision to “buy in”. (Page 73)

12. ESS should compile and monitor all large industries equipment items, and from this database and other information should constantly plan for a modernisation and replacement programme. (Page 76)

13. When new or replacement equipment is allocated to establishments it should be accompanied by an analysis of the installation and expected annual maintenance costs. (Page 76)

14. The proposed policy team for ESS should draw up a requirement of management information that could be used by ESS to monitor workshop performance and assess capacity levels. This information is not available at present in a credible and complete form. This must be a priority. (Page 68)

15. With the exception of short term operational exigencies, proposals to close prison workshops must be submitted to the Industries Management Board for a decision. (Page 28)

16. A balanced or weighted scorecard approach should be developed for monitoring the performance of prison industries. This should be worked up with close involvement of Planning Group, and should include consideration of how management information should be collected, shared and acted upon. (Page79)

17. Consideration should be given to using prisoners in a more constructive manner in workshops, eg administrative and statistical tasks, and in warehousing functions such as storekeeping and forklift truck driving. (Page 23)

18. An audit should be carried out (by a small team drawn from ESS staff) to establish the accuracy of the FY2002/3 IPP submissions. The IPP submissions should be compared to the outturns both in terms of regime figures as well as the financial figures. If, as the team suspects, the figures are not robust, the instructions on completing IPP9s should be reviewed and the returns for FY2003/4 amended to reflect reality. As these figures are part of the process used in deciding the levels of raw materials budgetary allocations it is essential that they are as accurate as possible, and therefore this is a crucial recommendation. (Page 26)

19. ESS should remind establishments of the need to ensure that quotes for work follow central guidelines. ESS should ensure that the guidance on pricing for work is reviewed and updated. (Page 26)

20. A small policy team should be established within ESS and be responsible for the following issues:-

21. The reporting line for the policy team should be reassessed six months after the policy team is in place. (Page 33)

22. The proposed Policy Team in ESS should prepare a PS Business Improvement Policy. Each Establishment with industrial workshops should be given the opportunity to introduce any relevant parts of the Policy. Any internal auditing of adherence to the Policy should fall to the local audit team. Updating the Policy should fall to the policy team in ESS but any accreditation to ISO standards should be for an establishment to decide. The establishment would then be responsible for providing any resources necessary for such accreditation including the provision of any additional auditing which would have to be provided externally. (Page 35)

23. The ESS Policy Team should consider whether the PS Business Improvement policy, once completed, should be issued to the Service as a PSO with its attendant mandatory aspects and its requirements to be audited by the Standards Audit Team. The Policy Team will have to weigh up the benefits to prison industries that the policy could bring against the cost of implementation in each establishment. This decision cannot be taken until evidence has been produced that demonstrates the benefits of such a system. (Page 35)

24. The Review Team recommends that a thorough costing exercise be undertaken in conjunction with Estate Management Group immediately with a view to ESS being relocated to Branston at the earliest opportunity. This has the potential for savings of at least c£620k per annum. (Page 39)

25. The central support to industries (ESS) should be redrawn along functional lines. This should improve efficiency both at the centre and in the operational line and allow ESS to look at business opportunities on a “whole Service” basis. Cost savings of £600k are envisaged following its full implementation. (Page 40)

26. Consideration should be given to improving feedback to the field and HQ and in generally promoting examples of good practice, be it at establishment or ESS level. (Page 41)

27. Further work should be undertaken to assess the value of splitting the Engineering team from the remainder of ESS. Subject to the outcome of that review the Engineering team that provides work to the Property Services Group and to Establishment Works Departments could be transferred, along with their workshops and their staffing and material budget to Property Services Group. In this way essential security related work could be given the priority it deserves. (Page 42)

28. Once the move to a new central stores warehouse takes place in early 2004, there should be a comprehensive review of stores and prison logistics. It is the Review Team's opinion that the current arrangements for moving goods around the prison estate could be improved - particularly in relation to the receipt of goods at prison establishment level - and yield much needed savings to the Service. (Page 42)

29. A task force and technical advice team should be set up as part of ESS to provide high quality responsive advice to the field and the rest of Prison Service Headquarters. (Page 44)

30. As part of the implementation process a separate small team should be established to manage a project to introduce hard charging. (Page 55)

31. Engineering and metal work should not be included initially in the hard charging regime, except for those items that may be produced as a consumable good. (Page 55)

32. Consideration should be given to involving transport services in the hard charging, but again this is subject to the further review of logistics and stores. (Page 55)

33. The Service should invest in additional workshops (and machinery) for clothing and textiles in order that a greater proportion of the needs of the Service can be met. If agreed, ESS should take this forward as a matter of priority. (Page 64)

34. Establishments should ensure that Government Accounting rules are followed when manufacturing goods for external sale. (Page 66)

35. A Task Force should be drawn up from within the Directorate of Resettlement to provide support to the operational line in drawing up the regime portion of establishment performance plans as part of the Performance Improvement Programme. (Page 69)

36. A review of Book 340 should be conducted to ensure that all stationery items within the document are still used by the Prison Service, all items are “owned” by part of the organisation, and that the minimum order levels are appropriate. (Page 71)

37. A review of stock levels of printing and stationery held at the Branston central store is conducted with surplus or outdated stock being disposed of. (Page 71)

38. Lightly used forms should be transferred to the Prison Service intranet so that they can be printed off as required. (Page 71)

39. The manufacturing clerk's course should be reintroduced, especially if hard charging is introduced. (Page 75)

40. The reintroduction of an Industrial Managers Conference on at least an eighteen monthly basis should be considered - attendance by representatives from appropriate outside industries would be advantageous. The Head of ESS should chair the conference. (Page 75)

41. The Head of ESS should examine workshop activity where there are particular logistical difficulties. (Page 83)

42. The new Policy Team in ESS should be tasked with devising a system of progression designed to provide prisoners with the skills that will allow them to progress within a workshop whilst addressing their needs. (Page 84)

43. The needs of short term prisoners must not be overlooked when developing workshop strategies. (Page 86)

44. It is recommended that where Governors set up a workshop that employs prisoners in an activity that meets the “restorative justice” agenda, they should recognise that whilst the work may not cover all the costs there is an “added value” that should be accepted. (Page 86)

Chapter 3: Background and Rationale for Change

The Review Team encountered difficulties in obtaining reliable information on the number of prison industries workshops and the number of prisoners employed. However, from the IPP9 figures for 2003/04 submitted by establishments we were able to summarise that industries expects to employ 9,808 prisoners during 2003/04. Table 1 shows a summary of the percentages employed in each type of workshop.

Table 1

2. The materials budget for meeting the needs of the internal market is set at £16.879m for 2003/04, although this budget has regularly been exceeded in previous years. Tables 2 and 3 show the prisoners employed to service the internal market compared to the proportion of this materials cost. It is interesting to note that whilst clothing & textiles employ 46% of prisoners (2,673) it consumes only 33% of the materials costs.

Table 2

Table 3

3. The Review has been conducted as part of the wider Headquarters Review that went under the title “Reinventing the Centre”. The Review Team were invited to undertake a detailed review of the purpose, structure and processes governing the operation of prison industries, taking into account:

4. For the purpose of this review prison industries include prison workshops and contract services activities, but not vocational training workshops, laundries, prison kitchens and land based activities.

5. The team were asked, in particular, to consider the rationale and justification for a prison industries regime, and the case for improvements in, and reform of, the strategic oversight and management of prison industries, and implement actions, including PSMB agreed recommendations from the HQ Change Management Review, to ensure Prison Industries are fit for purpose.

6. Key aspects we have examined include production planning and capacity review procedures; the proposal to introduce hard charging; management information flows; internal and external market decision-making processes; and corporate governance of prison industries. Subject to the outcome of this first phase of the Review and the results of a scoping study into a review of Prison Service logistics being undertaken by the Efficiency and Consultancy Group, the project may go on to a second phase to review the Branston operation and wider transport logistics.

7. The review has also focused on the contribution to prison industries that is made by the HQ Group, Enterprise and Supply Services (ESS): what need there is for that function and how best it can be delivered and where it should be located.

Previous Reviews of Prison Industries

8. We endorse the conclusion of the earlier Le Vay Review of Prison Industries which highlighted profound, long-standing weakness in the management of industries, caused, in part, by the absence of a clear purpose or strategic direction. The result is a predominantly centralised operation which is weak in line and performance management and suffers from no effective system of corporate governance of industries. Inevitably, the whole operation is wasteful of resources. The absence of planned investment in industries, poor performance information, coupled with an uncertainty of the role of the centre, has led to a fragmented operation with, in some cases, local managers at establishment level seeking external work without engaging ESS or assessing the consequences for the Service of closing production workshops.

Implementation: Managing Change

9. In order to ensure that the momentum built up by this and previous Reviews to effecting much needed changes to improve operating procedures and the overall performance of prison industries there is, we believe, a need for a small dedicated team to be set up to manage the change process. This team should be given responsibility for preparing detailed implementation plans for each PSMB endorsed action and for monitoring progress against the agreed deadlines.

Work in prisons

10. Work in prison can be divided into three main types:

(i) work to maintain and service the prison, including cleaning cells and landings, working in the kitchen or laundry, and ground maintenance;

(ii) work for external contractors which is often mundane and repetitive, such as bagging screws, filling mail-shot envelopes and assembling simple electrical components; and

(iii) work for the internal market, including complex and challenging production tasks, such as window frames, furniture, clothing, plastic goods and light engineering.

11. Working in a production or service environment allows prisoners to be out of their cells, earn wages, and interact with others. It is also a means of improving skills to enable them to acquire and cope with work on the outside.

12. This Review has focussed on activities (ii) and (iii) above.

Why Have Prison Industries?

13. A persistent finding of this and earlier reviews of prison industries is that there is no Prison Service Management Board endorsement of the role for prison industries. In effect, prison industries lack a strategic purpose and vision. There is, therefore, an urgent need for a clearly articulated purpose and strategy that will inform proper planning and enable a transparency that does not currently exist. A purpose which would serve as the basis for the creation, shaping and approval for each industrial activity.

14. To enable prison industries to contribute more fully to the Prison Service objectives, which support Home Office Aim 4, of:

“protecting the public by holding those committed by the courts in a safe, decent and healthy environment; and

reducing crime by providing constructive regimes, which address offending behaviour, improve educational and work skills and promote law abiding behaviour in custody and after release”

it is necessary that changes are made to its current structure and that it operates in accordance with a clear strategic policy statement of the purpose of industries.

15. The prisoner population is made up of people with a range of education, skills and work experience. Many prisoners have low skills and educational levels and need to develop basic and key skills to compete in the job market. If we are to succeed in meeting the Prison Service's objectives then it is essential, we believe, that the role of industries should embrace:

Prisoners' Needs: Enhancing Employment Prospects

16. Surveys² at national level point to the critical importance which employers place on an amalgam of adaptability, flexibility and personal skills in considering the employability of job applicants.

17. Employability is about equipping individuals with the necessary skills, knowledge and attitudes to cope with the demands of the working environment. Given the ever changing modern labour market with its downturn in manufacturing and an increase in the service sector what can be achieved in prisons is more about giving prisoners the capability to move self-sufficiently within the labour market, because they have acquired the right combination of knowledge, skills, and attitude rather than necessarily training them for particular jobs. Consequently prisoners on release are in a better position to present a credible application to future employers.

18. Core skills and attitudes such as reliability, communication, response to supervision and team work can be addressed in prison workshops in a way which can be transferred to the modern job market.

The Future

19. Prison Industries need a new start and need to be pointed firmly towards meeting Prison Service objectives. Organisationally there will have to be changes with more responsibility lying within the operational line. However, with that responsibility comes the requirement that meaningful work must be provided and the needs of the internal market must not be ignored.

20. Resettlement is a core function of the Prison Service, but clearly not the only one. Helping prisoners prepare for release, including giving them practical skills that can be used to secure future employment, is particularly important; and therefore what happens to a prisoner in custody will be highly relevant to his or her resettlement.

21. It is clear that vocational skills, education, life skills, employment and maintenance of family links are all vital to re-settling prisoners in the community successfully. Many offenders lack the skills that facilitate finding and retaining employment and many have deficits relating to work skills. These factors include unreliability, poor interpersonal skills at work and poor beliefs and attitudes towards work. These are all issues that can be addressed by prisoners, as it is possible to teach work related skills in the prison setting.

22. Whilst our primary concern was with prison industries, it was evident throughout the course of the Review that prison workshop based activities should not be run in isolation from other actions taken to address re-offending, such as education and other rehabilitative programmes. This report recognises that links across and outside Government are crucial if we are to succeed in providing prisoners with the opportunities to gain skills, knowledge, and positive attitudes towards breaking what for many is a cycle of criminal and anti social activity.

23. The context for working with prisoners to address their offending behaviour and to prepare for effective resettlement must be within safe and secure prisons. This is, after all, a prime concern for those in charge of a prison.

24. A guiding principle adopted by this Review is that any new regime for running prison industries should keep to a minimum detailed prescription and call for excellent, high quality responses from the centre. This is to assist Governors and Area Managers in running prison workshops, in an environment that is different to that found on the outside, as economically and efficiently as possible and with the minimum of intervention from the centre.

25. The remainder of this report addresses each of the suggested areas for change in detail and the recommended courses of action we believe are necessary to revitalise prison industries and the central support services (ESS), and make them fit for purpose.

Chapter 4: A Clear Direction for Prison Industries

4.1 Why have industrial work in Prisons?

26. There are many activities pursued in prison that provide the same kind of advantages (such as time out of cell, social integration, association, a sense of freedom and responsibility) regardless of the type of activity - be it work, vocational training, education, art and crafts and others - and these also apply to industrial workshops. So why choose industrial activities to be part of a prison's regime?

27. The chief reason is that industrial workshops are one of the best means, within prison walls, to reflect real working life. A proportion of the prison population will never have been exposed to real work before, and this may be their first opportunity to gain some transferable employment skills. In order to advance the resettlement agenda prison work needs to be targeted at those who are least likely to want to work. These individuals should be allocated for work, particularly on work initially that requires little training. They should not be ignored if they are difficult, or lack motivation. They should be the target audience of industries, and will benefit most from prison work. They have the potential for most return in terms of reduced re-offending on release.

28. This will call for a greater co-ordinated effort by those working in establishments and will require something akin to a culture change, particularly within the current “production workshops”.

29. Currently work for convicted prisoners at some establishments is not compulsory, and it is often difficult to incentivise work. The staff within workshops can appear to want only the “best” prisoners, and as workshop places are insufficient to meet demand, those that don't want to work (and who would potentially gain the most from working) are less likely to gain a place.

30. Equally, those who want to work and already have a good employment history should not be discouraged from work. It is important to maintain a balanced workforce. Filling workshops with prisoners who don't want to be there will not be conducive to a well run and productive environment.

31. A new “industries” strategy should build on the assessments of need provided by OASys, (see Chapter 6(1)) by using it as a monitoring tool, working with the OASys assessors on sentence planning and monitoring the long term results of workshop activities against that need.

32. Industries can also provide specific work skills, e.g. forklift truck driving and warehousing skills. Ideally establishments would be able to provide training in skills that could directly lead to employment on release. In practice this is difficult to achieve. The investment often required and the time for this large organisation to react to changes in employment trends often means that opportunities come and go before the Prison Service can react (identify, find investment and implement) or that opportunities disappear before long term prisoners are released. Where possible, establishments should build relationships with local employers to meet specific skills shortages, and the Custody to Work Team is tasked with identifying and working towards this goal.

33. It is envisaged that prison work will become an activity that can be built on and monitored for success in much the same way as other interventions. For this to happen the necessary support infrastructure needs to be in place, in terms of appropriate numbers of prison workshop places; local management implementing in full the resettlement agenda; and a culture which is focussed on running prison industries well. This requires all levels of the operation to have information essential to managing effectively - ie to take decisions, identify and anticipate problems and track actual performance.

4.2 Reflecting Work Outside the Prison Wall

34. In order to provide a reflection of working life Prison workshops would, in an ideal world, operate standard working hours of around 36 hours per week. However, operational demands and restrictions preclude this from being achieved across the prison estate.

35. The prison regime should try to reflect the same kind of working week as outside, e.g., time off for domestics should be provided when negotiated with the “employer” (ie the workshop manager or instructional staff), as should part-time working to accommodate learning. Gym, library visits, probation meetings etc should, where possible, be accommodated outside the normal working hours of the workshop.

36. The Review Team considered throughout their visits to establishments that the number of hours individual workshops were open varied too widely. There were a number of examples that the Review Team saw as good practice and others where the working day was too short. Previous reviews of industries had recommended that the working day be increased. We agree. This review was reluctant to fix a figure on the number of hours a workshop should be open as different categories of establishment had different operational restraints - a category A establishment would not be able to open their workshops for the same number of hours as a category D establishment - but the team were anxious that there should be an increase in hours worked especially where workshops were having difficulty keeping up with the increasing internal market demands of the population.

37. Examples of good practice seen by the Review Team were HMP Swaleside, a category B establishment, where one contract services workshop operated throughout the day with lunch and refreshment breaks being provided within the workshop. Non-Prison Service employees staffed this workshop with the only Prison Service support being visits by patrolling officers. Any security issues had been overcome.

38. At HMP Ranby shift working had been introduced with the plastics industry working round the clock - twelve prisoners worked a regular night duty with food being provided during the night. Although there had been staff objections at the beginning these had been overcome and the only additional staffing required was one Operational Support Grade. On the other hand, HMP Dartmoor - another category C establishment - managed just about 4 hours per day in their workshops with the timings of work appearing to be more aligned to the staff's meal breaks and conditions than the requirements of the Resettlement agenda.

Missed Opportunities Within Industries Workshops

39. The Review Team, on their visits to establishments, felt there were a number of missed opportunities in employing suitable prisoners to carry out some of the more administrative and statistical tasks that are currently performed within workshops by either the Instructor or by a member of the administrative staff. Where the prisoner is acting as a supervisor in a production workshop they could perhaps assist with the completion of training records. This is supported by the theme of the document “The Responsible Prisoner” by S. Pryor.

40. The Review Team were extremely reluctant to recommend the introduction of Management Information systems and Performance Measurements that would involve additional staff resources in the collation and transmission of figures to a central source. The experience of the NHS where information gathering has resulted in a substantial increase in the number of staff employed to carry out this task deflected us from following their example. If there is a requirement to manually collect and collate information, consideration should be given to prisoners taking on this non-sensitive responsibility.

41. Currently warehousing, stores keeping, and forklift truck driving are areas where prisoners would be able to gain accredited qualifications that are extremely portable and if provided could help increase the number of prisoners offered employment on release. There are a number of establishments, Category C and D, where, subject to risk assessments and proper supervision, prisoners could be involved in such work.

42. If the Service can employ prisoners within the central store at Branston, albeit after a lengthy period of negotiations, this should be extended to suitable prisoners at more establishments.

43. A number of members of staff, when asked about the possibility of using suitably qualified prisoners for some of these tasks, resorted to stating that “Security” wouldn't like it or that the prisoners could not be trusted. These are excuses that do not always stand up to scrutiny. If the Service is preparing prisoners for release, those near the end of their sentence and trusted for other tasks should be given greater responsibility.

Recommendation

Consideration should be given to using prisoners in a more constructive manner in workshops, eg administrative and statistical tasks, and in warehousing functions such as storekeeping and forklift truck driving.

4.3 A Statement of Purpose for Prison Industries

44. The Prison Service Management Board needs to endorse a purpose for Prison Industries against which future activities can be assessed and evaluated.

45. There is widespread divergence of opinion on the prime purpose of prison industries amongst staff at all levels, ranging from keeping prisoners occupied; providing income for the establishment; advancing the resettlement agenda; and providing goods for the internal market. To provide a clear steer for all staff and prisoners we believe the purpose of industries should be as follows:

46. The desired outcomes from prison industries are:

(ii) to support education, training, and employment (ETE) outcomes on release.

47. In operating prison industries the Service should ensure the continued use of centrally managed internal supply chain arrangements to enable prisoners to be employed as cost efficiently as possible.

Recommendation

To remove confusion over why we have prison industries, and to give them clear direction, the objectives of prison industries must be clearly stated. Early action should be taken to promulgate a Statement of Purpose for prison industries against which future activities can be assessed and evaluated.

4.4 Financial Justification for Prison Industries

48. Each year establishments submit their IPP9s to ESS as part of the Integrated Planning Process showing their estimated costs for each workshop, laundry etc. These figures are then assembled into one planning document by ESS. Although there is serious doubt as to the accuracy of some of these figures, overall they are the only budgetary figures that look at the different specialisms within Prison Industries. The document shows estimated prisoner numbers and hours involved in the workshops, the number of instructors and the raw material costs as estimated by the establishments.

49. Overall the IPP figures for the financial year 2003-04 show that there are 9,808 prisoners employed in 298 Industries workshops working an average of 25 hours per week. There are 822 instructors involved in this work costing some c£22m per annum. There are no figures available for the number of support and managerial grades but their annual cost is estimated to be £3.8m. These figures do not include any ESS costs.

50. It is significant and alarming that different members of the Review Team asked different parts of ESS and RSG for an explanation of the IPP figures and received completely different explanations to the same question, often accompanied by disparaging comments as to the figures accuracy. Some establishments admitted that they did not pay particular attention to their IPP industry submissions and tended to repeat them from year to year.

51. A detailed examination of the IPP figures for 2003/4 reveals some interesting differences between the specialist areas and their monetary value to the Service:-

Clothing and Textiles

52. This specialism works almost exclusively for the Internal Market providing over £12m worth of goods to establishments. It provides employment for 2,673 prisoners at an average of 27.5 hours per week. The figures show an overall annual loss for the industry of £4.8m that equates to c£1,573 per resourced place.

Contract Services Workshops

53. This area works almost exclusively towards meeting external contracts. The level of some of this work is low and has little value apart from keeping prisoners occupied and in instilling the work ethic. Contract Service workshops employ just over 4,000 prisoners at around 24 hours per week and operates at a loss of £7m or £1,631 per resourced place. This is a net loss, after sales figures of £3.7m have been deducted. The scale of the estimated loss of £7m demonstrates that a significant number of the contracts entered into by establishments are at a substantial loss and do not cover even the basic costs.

54. In view of the fact that there are a number of other deficiencies that have been recognised in this area, the Review Team recommend that establishments are reminded of the need to ensure that their pricing mechanism for bidding for work for a industrial workshops and any contract drawn up are robust.

Printing Workshops

55. There are nine establishments with printing workshops employing a total of 201 prisoners working an average of 20 hours per week. The IPP submissions indicate that Printing makes a small surplus of c£38k each year. Recommendations regarding printing are made in the appropriate section.

Financial Conclusions

56. Overall, Prison Industries is expected to operate at a loss of £8.8m this year - this works out at a loss of c£805 per resourced place. If the loss for Contract Service workshops (£7m) is deducted from this figure - the rationale for this is that the other workshops produce materials and products for the Internal Market whilst Contract Service workshops are designed mainly to produce income - it could be advanced that Prison Industries operate at a reduced loss of £1.8m which works out as just over £160 per prisoner per year.

57. The Review Team considered that £160 per prisoner employed in industries seems a reasonable cost for the Service in view of the time prisoners spend in workshops, the work ethic that this work may instil in them and the possibility of their receiving a resettlement outcome on leaving prison. These “added value” areas would not be available if the prisoners were locked up in their rooms.

Recommendations:

Chapter 5: Meeting the Needs of the Prison Service

5.1 Governance of Industries

58. It is apparent that over recent years the current organisation has lost a lot of links with outside industry, though this is now being rectified by the implementation of the Custody to Work strategy. To enable it to function on quasi business lines it is recommended that an Industries Management Board is formed as a decision making body.

59. This Board should be chaired by the Head of Regime Services and consist of three representatives from the operational line that would include an Area Manager, a Governor and an Industrial Manager. The Heads of ESS and ESS Policy should also attend. Others such as Procurement and Estate Planning could be invited on an ad hoc basis.

60. The Board should be charged with ensuring that industries activities best serve the strategy; that commitments and performance targets are being achieved; and that the process at all levels offers best value for money, including the endorsement of “Make or Buy” decisions. Responsibilities would include approving proposals to change the nature of workshop based activities. Any proposed closure of workshops would have to be supported by a business case and submitted to the Board for decision.

61. An Advisory Sub-Group should be set up to include non-executive members from relevant private sector industry to ensure that prison industries keep in line with developments in the modern labour market. We believe this is necessary because we were informed in many instances that specialists within both Establishments and Headquarters were not keeping abreast of advancements in their particular trade. This sub-group need only meet infrequently. The sub-group might usefully be invited to participate in any national conference involving industrial workshop staff.

62. Prison workshops should not be closed at the sole discretion of the Governor. The closure of workshops, perhaps in favour of external work, should be supported by a business case that should address the following changes to workshop's designation. This should address:

63. The business case should be submitted to the proposed Prison Industries Management Board for a decision. A similar process should be adopted for changes to a workshop's designation.

Recommendations:

5.2 Central Support for Industries

64. As part of the review the team has consulted with the field and headquarters staff on the role needed centrally to support prison industries to function according to the strategy. In doing so we have considered what support is necessary starting from a blank canvas, but have taken into consideration the existing and previous structures of central support. We have not sought to determine what currently works and what doesn't but rather have taken an approach asks, “What do we need in order to make this strategy work?”

65. Skills Training and Job placement responsibilities fall under the Custody to Work umbrella. Vocational Training and Education are the responsibility of OLSU. This leaves the strategy and support to the production workshops.

66. At the start of this review the structure of ESS was a simple hierarchical management line with the Head of ESS controlling four teams. Some minor changes, mainly personnel moves, have taken place since then as the new Head of ESS has identified deficiencies in the current structure. The four teams are divided according to specialism - Engineering and Woodwork (inc. Plastics), Clothing and Textiles, Sales and Marketing, and Quality Assurance and Printing. The Head of ESS is graded at Senior Manager B with three teams being led by Senior Manager Ds and the QA/Printing team headed by a Manager E. In all a total of 71 posts, albeit with some vacancies. A profile of current ESS staff showing composition and grades, is at Annex F.

67. The Review Team has identified some anomalies to the structure of the teams such as:

68. The Review Team set up a series of meetings with the ESS teams - in specialist groups and separately with their managers as a group. A number of common concerns were expressed at these meetings.

69. The Review Team were genuinely concerned at the poor morale which was shown by the vast majority of ESS staff.

5.2(a) Drivers for Change

70. There are a number of events happening within Regime Services that make the timing of this review an opportune moment to introduce changes that will allow ESS and Prison Industries to make a “fresh” start within the Service and recoup lost ground.

71. These events are: -

5.2(b) The Structure & Role of ESS

Establishment of a Policy Team

72. Having identified at an early stage in the Review that the current structure of ESS was not working effectively, the Review Team decided that rather than adopt the approach of how to mend or repair the current structure, it would consider what ESS should cover to make its strategy work. It would bear in mind the recommendations of previous reviews that have, in the main, identified the same shortcomings as the current review; it would also adopt the principle that there should be as little prescription from the centre as possible and would recommend a clearer split between policy and operations within ESS.

73. It was felt that this split, where different skills and approaches are needed, would allow the operational side to work towards becoming a “business” focussed organisation under the new Head of ESS. Its main purpose would be to focus on providing an effective central support to the “operational” arm of ESS. A small policy group within the re-brigaded Directorate of Resettlement could develop policy and related issues for Prison Industries, including how it links with other interventions.

74. This team, which should be located with other Directorate of Resettlement policy officers in PSHQ, should be led by a Senior Manager D reporting to the Head of ESS. Our first inclination was that this Manager should report direct to the Head of Regime Services, leaving the Head of ESS to concentrate on operational issues, but we have been persuaded that for now this person should report to the Head of ESS. We recommend that this issue be readdressed by the Head of Regime Services six months after the new ESS structure is in place.

Recommendations:

Quality Assurance and Business Improvement Systems.

75. The justification for the current QA Team and the QA arrangements within Prison Industries are not satisfactory. During visits to establishments and the regional briefings held by the Review Team it became clear that the majority of establishments did not support the current arrangements. The current QA team consists of 3 x Manager Fs reporting to a Manager E who also manages the Printing Production Team.

76. A small number of establishments, 25 with a total of 47 workshops, have been accredited to ISO 9002 since 1994. This is a throwback to the time when a high percentage of Prison Industry work was for the Ministry of Defence or other organisations that insisted that those bidding for the work held ISO 9002 or its then equivalent. This is no longer the case. As an example, HMP Acklington who have been responsible for producing work for the MOD were confident that a PS QA system that was not registered to ISO would be acceptable for them to continue manufacturing for the MOD. They would, however, have to ensure that the standards were being monitored on a regular basis.

77. Accreditation to ISO9002 involves those workshops being audited on three occasions per year - twice by the internal QA team and once by BSI who administer the scheme. At least one establishment saw these audits as yet another interruption to productivity and as they did not perform work for any organisation who required ISO accreditation they saw little point in continuing the process. Each visit by the internal QA team involves a report being produced and copied to Governors and Industrial Managers.

78. Currently the accreditation costs are being met centrally - somewhere in the region of £25k per annum. Regime Services are currently attempting to pass this cost onto establishments and to reduce the number of establishments that require continuing accreditation. This reduction in the number of workshops accredited to the BSI process will take the number of establishments down to 13.

79. The Review Team have accepted the proposition that a Prison Service Quality Assurance or Business Improvement System implemented within workshops could lead to better systems of work than is currently found in a number of establishments. There should be less material wastage, a greater degree of customer satisfaction, and an improvement in the quality of the final product.

80. It was clear from our visits and from our discussions that the majority of establishments did not recognise the need for or indeed want the ISO accreditation. The one exception to this was HMP Kirkham who felt that the funding of the qualification was a price worth paying. They were quite happy to see this devolved.

81. The majority of establishments were of the view that a Prison Service system of Quality Assurance or Business Improvement System, backed up by an advice point in ESS, would be preferable to the current system. They felt that any audit of systems should form part of the local audit process rather than a separate audit by the QA team. The QA or Business Improvement process should be owned by the establishment rather than driven by ESS. This process would support the Service's view of there being less prescription from the centre - this is an ideal area where local decisions as to its relevance and need can be taken.

Recommendations:

Operational Delivery

82. A number of different functions come together under this post. This post is effectively the Head of ESS at Senior Manager B level. The different strands and responsibilities for this post should all aim to provide reliable and highly responsive central support to the operational line.

83. There is a need for a much closer hands-on delivery that links the management of stock levels more closely with production planning. The new “operational arm” would provide the central support to the operational line, primarily supporting the internal market that is anticipated to grow given the expected increases in prison population and the advent of financial credit for producing establishments. Under our proposed new structure for ESS there would be four operational sections reporting to the Head of the Operations, as well as the new Policy Team. These would be arranged according to function rather than, as now, according to specialism (ie woodwork, textiles etc).

Design, Specification & Product Development

84. The Review Team found considerable support within the field to the Service retaining its own dedicated team on design, specification and product development. Although this is a part of the ESS process that could be contracted out we were persuaded that the balance of advantage lies in retaining this as an in-house function.

85. The requirements of the Prison Service dictate that products are of a particular quality and have certain safety features. A team focussed on product development for the Service can build up expertise and, over time, provide the Service with sound advice following lessons learnt on past products. This continuity of product information and in-house experience should not be under estimated. We recommend that a restructured ESS should have a separate team dedicated to design, specification and product development. Again, we would propose that the team has responsibility for products service-wide. By keeping this function in-house the product developers can retain their close links with those responsible for production and planning.

Production Planning

86. It has been clear to the team, both from comments made in the field and from the HQ Groups, that there has been a lack of overall control and thought within ESS in the planning and ordering of work from Industrial Workshops. This has been confirmed in successive reviews of Prison Industries.

87. A team should be set up, reporting to the Head of ESS, which plans and manages capacity for all Prison Industries Workshops. As the Service moves towards each establishment having a Service Level Agreement, it is clear that Prison Industries will have to play their part in making commitments as to the level of production they would expect from each workshop producing goods for the internal market. They will also have to accurately estimate the income that establishments can expect to receive from the internal market.

88. The advent of hard charging will make for some challenging times during the early stages of implementation, as savings realised by Establishments affect current levels of production. There is, however, scope for increased production in a number of areas, particularly clothing and textiles where Prison Industries only produces 60% of the Service's needs with 40% being bought in. There also appears to be a shortage in capacity in Engineering shops, where orders, we have been advised, have not been processed for some months, resulting in the ordering establishment going elsewhere.

Task Force and Technical Advice

89. The task force approach to the provision of expert technical advice to the operational line in respect of the drawing up of the regime section of Performance Improvement plans was recommended to the Review Team by the Area Manager representatives on the Review Steering Group. The Review team have considered this in sections 5.ii (d) and 5.x and agree that it would provide expert advice in a cost effective way.

90. A common concern of staff in the field was the lack of a coherent advice point in ESS. The Review team considered that a technical advice team could be formed at ESS that would be managed by the Head of the Task force. This team would wherever possible answer the query directly but in the event of their not being competent to do so would transfer the query to the correct point.

Contract Support

91. The role of this team would be to provide support to establishments undertaking contract service work with the private sector. Although this review would like to see the reliance on this type of work diminish over time (particularly low skill work), it cannot be ignored in the short term. This is seen as a vital role that is largely neglected within the current service provision. This is reiterated by the recent findings of an Internal Audit Report on Contracting Arrangements with Enterprise Partners. The Report (not yet published) has considered that the current arrangements are deficient and expose the Service to high levels of risk, and have made a number of recommendations to rectify the current arrangements. It is felt that this team would work to provide the appropriate arrangements Internal Audit have recommended from the central support section of Industries, and would work closely with establishments to help them comply with the recommendations.

92. This team would provide a framework for contracts, would see future contracts before they are agreed and signed, and provide advice and support for those in the field undertaking contract service work. It is vital that this process is very efficient. Any hold-up of contracts at a central level could seriously impinge on an establishment's ability to obtain contract work. They would also maintain a database of all contracts undertaken, and monitor the performance of those companies with whom the Service has contracts. This would go someway to mitigate the risks associated with the minority of companies who play one establishment off against another, and those that leave unpaid debts at one establishment before moving on to the next.

93. Work has already begun on improving what has been recognised as an extremely poor service. It is interesting to note that at least one Area Manager (South West) is insisting that there be trained staff in each establishment to ensure that any new contracts are both drawn up correctly and enforceable. The training that is being provided is a start in the right direction but sound advice/guidance from the centre will be still be required for the foreseeable future if all risks are to be mitigated.

Relocation of ESS to Branston

94. The Review Team was extremely concerned to learn of the lack of certainty over responsibility for stock levels at Branston. The Heads of Transport and Stores management at a meeting with the Review Team shared this concern. It was pointed out to the team that being separated from the stores by 150 miles was not an ideal solution. There was a lot to be said for day to day managers being able to physically see stock levels and to react to shortages.

95. Some senior managers within ESS and RSG were of the opinion that distance between the areas was not a major concern as with modern Management Information systems there was no reason why the three areas - including the ESS staff at Corby - could not communicate together in an effective way. This view might be acceptable if the MIS systems were up to date and if staff and managers knew how to use them effectively. As the Review Team has mentioned in other areas, it was extremely difficult to obtain meaningful figures from within ESS.

96. In January 2004 the Prison Service stores are moving to a newly constructed warehouse on the Branston site. Next to this building is a Grade 2 listed office building that is currently empty and is gradually decaying. The Review Team has been told that this building could quite easily be converted into high quality offices that would enable ESS staff, some staff from Corby and the administration element from Branston to be housed together. Other logistics and warehousing companies with operations in the Midlands do not split their operations into three.

97. Although some senior managers dismiss the idea of relocation as too expensive, their views should be considered against the current cost of AMP House - some £750k per annum - and the likely cost of maintaining the unoccupied building at Branston that will be a continuing drain on resources for years to come. We have been advised that the likely cost of relocation, including staff transfer costs could be covered within two years of moving. When asked for his views the Head of ESS saw merit in the idea of relocation as apart from a more efficient operation it would give the new ESS the opportunity to start again in a more joined up arrangement.

98. It is envisaged that realisable cost savings of at least £500k per annum could be made by relocating to Branston. This figure would be increased should other users of AMP House transfer, e.g. PE.

99. There would be further staff cost savings from a relocation to Branston on the local allowance payable, although this would be on a marked time basis for any current staff transferring. This would be in the region of £120,000.

Recommendation

The Review Team recommends that a thorough costing exercise be undertaken in conjunction with Estate Management Group immediately with a view to ESS being relocated to Branston at the earliest opportunity. This has the potential for savings of at least c£620k per annum.

Cost Savings

100. The existing structure of ESS is shown at Annex F, and a proposed structure as described above is at Annex G. The budget for ESS staff for 2003/04 is £2,527,000. The full year costs of those staff currently in post would be £2,054,000, therefore if the current vacancies were not filled there would be a cost saving of £473,000 per annum.

101. The proposed structure would bring about further savings in the region of £600,000 per annum. Table 4 below is a summary of the posts and their grades.

Table 4

102. An estimated total saving if these recommendations and the proposal to move to Branston are accepted is in the region of £1,200,000.

Recommendation

The central support to industries (ESS) should be redrawn along functional lines as depicted at Annex G. This should improve efficiency both at the centre and in the operational line and allow ESS to look at business opportunities on a “whole Service” basis. Cost savings of £600k are envisaged following its full implementation.

ESS - Relationship with the Field

103. On a number of occasions, the Review Team were told by staff in establishments that a major problem with ESS was their inability to communicate with the field. This lack of communication manifested itself in several ways with telephone calls not being answered or return calls not being made. ESS successes were not promulgated to the industries staff in establishments, changes in staff responsibilities were not always made known - in effect ESS did not sell itself well. This, in turn, reinforced perceptions of an ineffective organisation.

104. With a new structure for ESS comes the opportunity for the Head of ESS to review how his teams communicate with the operational line. Consideration should be given to improving feedback to the field and HQ and in generally promoting examples of good practice, be it at establishment or ESS level.

Recommendation

Consideration should be given to improving feedback to the field and HQ and in generally promoting examples of good practice, be it at establishment or ESS level.

5.2(c) Further Considerations

Engineering - Work for Property Services Group

105. The Review team have considered very carefully the position of the team that, in the main, service the needs of Property Services Group and Establishment Works Departments by providing new cell doors, other security furniture, windows and equipment that is required to maintain the fabric of establishments.

106. The team and the work that it commissions, on behalf of Property Services Group can be reactive - e.g. following the incident at Lincoln prison there was an urgent need to provide cell doors. A concern was expressed to the Review Team on more than one occasion that the Engineering team had regularly had to turn this reactive work down or delay it as other commitments had been entered into. This resulted in Property Services Group having to out source their orders. The Review Team considered this unacceptable as the specialist skills for this work lies within the Service and consequently it is clear that this work is appropriate to remain within the Service.

107. It was also clear that the prioritising and scheduling of this work, which makes up over 60% of the Engineering team's work, was perhaps more appropriate in this case to be undertaken by the customer ie Property Services Group. It was clear that had other work not been taken on by the Engineering team, the figure of 60% could have been considerably higher.

108. Further work needs to be done to see if this work can usefully be split from ESS and to discuss with Property Services Group the rationale behind it. Subject to that outcome the Review Team is minded to recommend that this group of staff, their funding, the workshops and the associated raw material budget be transferred to Property Services Group. This would not be the only example where work in a workshop fell under the ownership of part of the Prison Service other than ESS - the breakfast pack operation and vegetable preparation are other examples.

Recommendation

Further work should be undertaken to assess the value of splitting the Engineering team from the remainder of ESS. Subject to the outcome of that review the Engineering team that provides work to the Property Services Group and to Establishment Works Departments could be transferred, along with their workshops and their staffing and material budget to Property Services Group. In this way essential security related work could be given the priority it deserves.

Stores & Transport

109. Subject to the outcome of a separate scoping study into a review of Prison Service logistics being undertaken by the Efficiency and Consultancy Group, this Review is scheduled to review the Store operation and wider transport logistics. This is likely to be delayed until the move to a new warehouse at Branston has taken place, currently planned for early 2004.

Recommendation

Once the move to a new central stores warehouse takes place in early 2004, there should be a comprehensive review of stores and prison logistics. It is the Review Team's opinion that the current arrangements for moving goods around the prison estate could be improved - particularly in relation to the receipt of goods at prison establishment level - and yield much needed savings to the Service.

Regime Services Group Support Services

110. Although excluded from this Review as they serve not only ESS but also other parts of Regime Services Group (RSG) it is recommended that a fresh look is taken at the numbers and grades of remaining RSG support staff. If the changes recommended in this Review are accepted and introduced, an opportunity will present itself to have a fresh look at the numbers and grading of staff in the support services.

5.2(d) Industries Staff Representation in Area Offices

111. The Review Team considered and sought views on the proposal that some staff, currently based in ESS, should be moved to work in Area Offices, thereby creating Area Industrial Managers. This proposal initially had a number of attractions in that it met the Service's wish for less prescription from the centre and gave more responsibility for Prison Industries to the operational line. However on closer examination the Review Team found a number of disadvantages to this which persuaded them that this was not the optimum path to pursue: -

112. The Review Team have concluded that Area Managers would prefer to have the opportunity to receive high quality and timely advice from a central resource. As part of our proposed restructuring of ESS a Task Force Team should be formed. They could be tasked with answering any calls from the operational line to assist with problems within the workshops - this could be a problem relating to a lack of orders from the internal market, the setting up of a new workshop or the loss of an external contract.

113. One Area Manager, Kent, Surrey and Sussex, has employed an Area Income Generator for their industries. It has been made clear to the post-holder that the post's continuance will be dependent on their continuing to arrange income for the Area in excess of their salary and other costs. Although this has its attractions it must be remembered that the creation of posts such as this should not result in work being taken away from production workshops that provide goods for the internal market. Clearly it is up to Area Managers to decide whether to pursue this option.

Recommendation

A task force and technical advice team should be set up as part of ESS to provide high quality responsive advice to the field and the rest of Prison Service Headquarters.

5.3 Internal Charging

114. Internal charging is a proven method of introducing culture change within organisations to a more cost conscious and business orientated organisation.

115. This review agrees with the recommendations of previous reviews that internal charging should be introduced for goods produced for internal consumption.

116. Benefits:

The perceived benefits that internal charging should bring are:

Dis-benefits

117. There are disadvantages to internal charging that need to be avoided:

Shadow charging

118. The Service currently uses a shadow charging scheme. Shadow charging (or soft charging) was introduced to try to ensure that there was a true reflection in Establishment Cost Per Place including goods produced for, and consumed from the internal market, as an alternative to hard charging. A value for goods consumed or produced is added or credited to each establishment's cost when the cost per place is calculated. This involves a rather laborious process that passes through the hands of Branston, ESS and Planning Group. Each establishment then has the cost per place reported in two figures, one excluding the internal market goods, and one including it.

119. The figures are not widely distributed throughout establishments and area offices and appear to be largely ignored. They are not normally on the agenda between the Area Manager and the Governor, and therefore their importance is not passed down the management chain. It is apparent that key staff within establishments and Area Offices are unaware of the existence of shadow charging. When asked how the system is working at the moment the response is usually a request to explain what shadow charging is, then a statement that they are completely unaware of its existence.

How could shadow charging be made to work?

120. The major downfall of the current system is the lack of recognition and its failure to be included when establishment expenditure is considered. To change this would require an IT solution to include the shadow costs within the current financial management tool (FOCUS). It should be noted that there is a project currently underway to upgrade or replace FOCUS. Any of the potential options for improving the internal charging system will need some degree of upgrade to the IT system that is currently in place, and each of the options will have a varying degree of change needed depending on the system finally chosen.

121. It would also need to be more clearly adopted by the operational line, and particularly by Area Managers, in order for Governors to take notice and respond. That said, shadow charging would not be the best means of addressing fully the issues surrounding the most efficient use of resources (internally produced goods) as it would not introduce the disciplines needed to address wastage and over ordering.

Full hard charging

122. Previous reviews have recommended that hard charging be introduced instead of the current shadow charging system to address the perceived wastage of internally produced goods. There has been much talk within the Service about introducing hard charging, and yet little progress has been made towards it, in part, it has to be said, because of the sheer number and frequency of reviews that ESS in particular have undergone.

123. Confusion and uncertainty exists within the field because little communication has been issued on this subject. Some believe that it has already been introduced in areas other than where it has.

124. The principles of hard charging are fairly well known and accepted. The details are less clear and are surrounded by much confusion. Should the full cost of producing the item be passed onto the consumer? How does one account for the different cost of producing items between establishments? Do we include overheads? Will there be a compulsory purchase requirement?

125. There is also a desire to reward establishments producing goods in a small financial way. It is thought that hard charging would provide a means to this, the intention is to partially offset the drive by establishments to close workshops producing for the internal market in favour of external contracts that might attract some income.

126. It is suggested that a percentage be added to the price to provide this “bit extra”, but more consideration will need to be given to look at the different products in the range, and how a percentage figure, applied across all products would impact on both the cost for consuming establishments and the credit given to producing establishments. (ie would a percentage favour certain types of product over others, would the credit for high priced items reflect a high input/skill requirement, or just a high material cost? Would this encourage Governors to want to change designation? High throughput of more valuable (in credit terms) items being seen as better than labour/time intensive items that don't have as good a return).

127. It is important to remember that hard charging is just re-circulating monies already within the Service, no new money will be introduced by the advent of hard charging, and therefore funding for the credit to producing establishments has to be found from within existing budgets.

128. It should be noted that there are some items that are already hard charged. A hard charging scheme has been introduced within catering for single portion packs of breakfast and beverages, from 1 April 2003. It is too early in the process to gain from any lessons learnt. Ad hoc, non-standard printing items are also currently hard charged.

Options for hard charging:

Option 1. Price based on full cost to the Service

129. This would necessitate a full investigation of costs associated with each product and specialty.

130. From an accounting perspective this is theoretically the correct way to proceed. How can we price a product without knowing its full cost? However in this circumstance the price doesn't have as important a relationship to cost as it does in outside industry where sales against competition are far more important and where productivity levels are far superior.

131. The costs can be broken down as:

Direct: Cost and quantity of materials

Prisoner wages

Instructors' salaries

Overheads in some instances

Equipment maintenance

Indirect: Overheads

Cost of capital depreciation

ESS staff costs

Storage

Transport

Wastage

Procurement costs (for materials and capital)

Disposal of waste

132. Advantages:

133. Disadvantages:

Option 2. Price based on cost of material plus financial incentive for production

134. This option suggests that the price is based on material costs plus a small recognition for production. This would see the material budget that is currently held initially by ESS (and distributed to producing establishments) transferred to consuming establishments. For 2003/4 this amounted to a total of £16.148 m less approximately £3 m held centrally by ESS for bulk materials purchase.

135. Advantages:

136. Disadvantages:

Option 3. Charging above a ceiling (partial hard charging)

137. This would involve establishments only being charged for goods consumed when they exceed a predetermined limit, based as on the allocation of budgets, as below.

138. Advantages:

139. Disadvantages:

Option 4. Do nothing

140. Advantages:

141. Disadvantages:

142. Overall, the Review Team believe that the option that best achieves the benefits with the least amount of impact on accounting practices is option 2.

143. However, the amount of work that is involved in any of these options (apart from “do nothing”) should not be underestimated. It is the view of the Review Team that a small project team consisting of at least 3 staff would require a minimum of 6 months working specifically on hard charging in order to reach a point where partial implementation would be possible.

Options for implementation:

144. Option A. Introduce hard charging for all items produced by

the internal market at one time

145. Advantages:

146. Disadvantages:

147. Option B. Introduce hard charging for some items produced

by the internal market on a phased basis

148. There is an option that hard charging could be introduced on a phased basis if required, rather than as a big bang. This could be achieved by product line. It would not be possible to introduce by Area or such like. In order to work it would need to be introduced across the estate, but could be split, for instance, by introducing in the first year, say, just textiles, then the following year woodwork, plastics or printing.

149. Advantages:

150. Disadvantages:

It is recommended that option B should be introduced.

Timescales

151. It would be ill advised to introduce a change in financial mechanisms part way through the financial year.

152. There is still much to do in order to fully implement and be ready by April 2004. It would be very difficult, at this stage, to be ready for a big bang approach to hard charging by April 2004. It would require a considerable effort in fact to be ready for even a small number of product lines by April 2004.

Implications of Introducing Hard Charging

153. Hard charging should have a significant impact on demand for internally produced goods, that will require very careful and close management by the ESS teams to ensure that workshops are kept occupied to their current level and more. It is vital that ESS staff maintain close links with the central store at Branston throughout the early days of hard charging in order to adequately monitor and react to changes in demand.

154. ESS staff will need to closely monitor demand and stocks and be ready to react to changes in demand by having researched and made provision in advance for new or alternative products to be produced, in order that workshops are kept working, at least to their existing capacity. There will still be a need to produce some, but it is important that when a drop in demand is apparent, the product lines produced should be carefully examined and where necessary production switched to alternative products that perhaps have had to be purchased in the past.

155. Under hard charging the choice of goods produced is transferred to the consumer and the producers need to follow demand and react to it. The Service as a whole becomes more cost effective and provides better value for money.

156. This should also ensure that the number of products purchased due to insufficient production is reduced, and that production for the internal market is rationalised and the system as a whole works more efficiently.

157. There are further serious implications for the existing materials budget, that it is recommended be transferred to consuming establishments. Currently the budget is only sufficient to cover a prisoner population of 70,000, at a rate of £204 per prisoner. This is insufficient for the current and predicted population. Each year ESS has to bid for funds from the Estate Planning & Development Group to meet the short fall for the increased population. The budget has never been increased to meet increased inflation. Before these funds can be transferred a more permanent arrangement will need to be introduced to deal with the short fall of funds.

Budget Allocations for Consuming Establishments

158. A major concern of Governors is how budgets might be allocated to them at the beginning of the hard charging process, and how this will be calculated.

159. It would be inappropriate to base calculations on previous consumption. This would only serve to reward those establishments that have continually over consumed or overstocked and disadvantage establishments that manage and maintain stock and consumption to an appropriate level.

160. Rather we believe that the budget allocations need to be based on:

161. As the reallocation of budgets to establishments may increase the cost per prisoner place at some establishments, and decrease it at others, the allocation amounts and their effects will need to be well known and publicised.

162. Future increases in prisoner places within establishments will need to include provision for internally produced goods within the business case for the increased population.

163. Extraordinary occurrences that may result in a need for replacement or a large call on internally produced goods (riots, fires etc) will need to be funded separately from a contingency fund.

Extent of Hard Charging

164. Engineering and metal work should, we believe, not be included in the hard charging regime, except for those items that may be produced as a consumable good. The large staircases, prison gates etc would not be included, and this supports the recommendation that the management of this section should be transferred to Property Services Group.

165. Consideration should be given to involving transport services in the hard charging process as an efficiency driver. It would enforce the need to keep vehicles filled to their maximum, and avoid the empty return scenario often reported to the team. It would also ensure that those items now shipped only on a pallet (or stillages) and thus increasing the number of trips needed would no longer happen. Of course, this again would be subject to the further review of stores and logistics.

Quality standards

166. There remains a further piece of work to be completed on quality issues. It is indicated that one of the benefits of hard charging is to ensure quality standards. Producing establishments should only receive credits for producing items that meet a minimum standard.

167. Consuming establishments may (quite rightly) refuse payment for items that may not be fit for purpose. It will therefore have to be decided how these issues would be resolved. It would be inappropriate and contrary to the internal charging principle for a central source to have to meet the cost of items that do not meet a standard.

168. Therefore it will need to be established who is responsible for setting quality standards, who and at what stage checks would be made against the standard. There will need to be a resolution process for products delivered to and rejected by consuming establishments.

Technical Options

169. This Review has not addressed the various financial technical options required to introduce hard charging. A member of FC&A has drafted a separate paper that explores the options on the existing FOCUS system. This piece of work will now need to be updated for the proposed ERP (Enterprise Resource Planning) solution, and will need to be covered within the scope/proof of design.

Recommendations:

5.4 Shortfall in the Materials Budget

170. There is a significant issue surrounding budgetary funding for materials purchase that needs resolution.

171. Currently the budget is only sufficient to cover a prisoner population of 70,000 at £204 per prisoner. This is insufficient for the current and predicted population. The current population is around 73,000, with a predicted population by the end of March 2004 of 81,000. (Based on figures available at the beginning of the Review).

172. Using these figures there is a shortfall of £2.244m for the current financial year.

173. For 2002/03 the initial materials budget allocation was £16.879m, of which £3.355m was held centrally by ESS for bulk materials purchase. The remaining £13.524m was allocated to producing establishments.

174. Whilst the initial ESS budget allocation for 2002/03 was £3.355m, for bulk materials purchase, the outturn expenditure figure was £5.1m. This includes expenditure on trade items that are not made by industries (such as mattresses and pillows) but are essential items that must be provided; purchase of goods where the internal market has not produced enough to satisfy demand (socks, for instance) and the purchase of bulk raw materials that are then issued to producing establishments.

175. It can reasonably be anticipated that an equivalent level of spending will continue to be required this financial year, giving a further shortfall of £1.745m.

176. This brings the total shortfall for 2003/04 to £3.989 million.

177. Currently, in order to meet the needs of the increased prisoner population ESS must approach other Groups such as the Estate Planning and Development Group to identify funds. Other monies are identified throughout the year on an ad hoc basis, often drawn from funds that haven't been spent on other projects.

178. Whilst this situation continues, and funds are usually found from one source or another throughout the year, no responsibility is taken to manage the budget effectively.

179. To resolve this situation FC&A in conjunction with Planning Group should allocate funds to ESS for the materials budget at the beginning of each financial year based on the average predicted prisoner population for that year.

180. We further recommend that the raw materials budget and the funds currently retained by ESS for purchasing finished goods should be separated. An undifferentiated budget does not reflect real life. For such goods a call off contract should be arranged centrally by CPU. The method of distributing these funds to establishments should be considered by FC&A.

Recommendations

5.5 The Make or Buy Process

181. The decision on whether the Service should make or buy certain items has been largely neglected. The Service has continued to make items that have been made historically, with no regular assessments of whether it is cost efficient or appropriate (i.e. to the purpose of industries) that the Service does so. There may be many items that would provide potential training opportunities and cost savings that the Service currently buys that could perhaps be made by the prisoners.

182. Equally, it may no longer be appropriate or cost effective to make some of the items the Prison Service has continued to make. This is particularly relevant where the Service, for one reason or another, has been unable to meet the entire demand for a product and is now in the position of making a proportion of an item and buying a proportion in eg clothing and textiles.

183. It is vital in this decision making process that the entire cost to the Prison Service of making a product is known. There is no consistency over this type of information in the Service at present.

184. Future Make or Buy decisions should be judged against the criteria of:

185. This process, which would be managed by the new Policy Section of ESS (see Chapter 5.ii (b), and endorsed by the Industries Management Board, where necessary, should be applied to all items that could be made internally.

186. A map for the make or buy process follows.

187. Clear guidelines will need to be drawn up as to how to manage this process. For example, the information applicable to Step 1 should include:

These factors will need to be prioritised and weighted to ensure that a well balanced set of workshop regimes results.

188. The steps to be followed at item three differ whether the items are currently made or purchased. For items currently made; specifications will need to be submitted to the Procurement Unit for evaluation of market prices. The current cost figures for production by the Service will need to be gathered and the two costs compared.

189. For items currently purchased; specifications will again need to be submitted to the Procurement Unit for evaluation of market prices. The procurement Unit would need to provide figures on previous demand for the item and an assessment made on how future demand might vary. A process will need to be developed to establish how the product might be made and the cost of materials, capital investment and overheads are calculated.

190. At stage 8, 9 and 10 these considerations will need to be formally assessed within a business case.

191. These guidelines can also be used by Governors when putting together a business case for changing a workshop, or in deciding the future of existing workshops.

192. Where a decision is taken for the Service to make a product its purchase by establishments should be mandatory, thereby ensuring that prison workshops have a continuous supply of work.

Recommendations

- support of prison industries strategy;

- total cost of manufacturing compared to the purchase price;

and

- the cost of providing alternative occupation for prisoners;

5.6 Clothing & Textiles

193. Currently there is a shortfall in production against demand for clothing and textiles of 40%. The current materials budget is funded at a prisoner population of 70,000 with a projected population by March 2004 of 81,000. This is a further shortfall in funds of 17%. Therefore, for this financial year, there is a shortfall of materials funds for C&T alone of nearly 60%.

194. Each year ESS have to make a bid to Estate Planning and Development Group for the additional funds to meet the shortfall relating to the prisoner population. Funds to purchase goods due to shortfall in production are found on an ad hoc basis, mainly from savings or funds earmarked for elsewhere within the Service that have not been utilised.

195. In order to maximise the materials budget ESS have rationalised product lines within the clothing & textiles range, with many products no longer available. This has now reached the stage where further rationalisation could impact adversely on the Decency agenda.

196. It is indefensible that the Service has reached the point that it cannot find enough work or purposeful activity for prisoners (and with the expected continued increases in the prisoner population this will only be further exasperated) whilst it has to find funds to purchase goods it doesn't have the capacity to make.

197. It is clear that to remedy this situation there are two solutions: first, the existing infrastructure should be put to better use. The Service should be maximising the number of prisoners using machines. This could be via shift working, working closely with education departments to establish maximum use of both resources, and ensuring that all places are filled wherever possible. This should see an extension in hours to many of the existing workshops. There are some workshops that currently only work for four hours per day; clearly there is a need to improve the working hours to get maximum efficiency from current resources.

198. Second, the Service should invest in additional workshops for clothing & textiles. It is estimated that with more imaginative use of existing facilities, combined with 20% more machines we could meet the Services clothing and textile needs.

199. This investment, we are advised, could be repaid over a small number of years, given that the funds currently needed to purchase goods would be considerably more than the cost of the materials that will be needed on an ongoing basis. The difference should contribute towards funding for additional instructors where they are needed for new workshops. Additional benefits would be an increased number of prisoners employed and a subsequent increase in the KPI for purposeful activity.

200. Many Governors do not view Textiles/Tailoring favourably, particularly in relation to the resettlement agenda as they do not see it as providing marketable skills. However, from our visits to many establishments the textiles workshops in general appear to be the most productive and well run, with prisoners actively and industriously occupied. Given the relatively low overheads needed, the high prisoner to instructor ratio and large contribution to the needs of the internal market it would be, in the Review Team's view, a missed opportunity, to see these shops closed in preference to other industries or vocational training workshops.

201. There is a large need within the Service for clothing and equipment. Therefore there is a constant supply of work, and textiles are a good and cost effective way of providing work for prisoners, contrary to popular belief. There are some opportunities for training, with quality control and cutters skills required in the outside world. The argument that there are minimal jobs in textiles (that the large textiles production previously present in the UK is gone) for prisoners on release is valid, however it does instil the work ethic, promote team working, individual responsibility and meet the internal needs of the Service.

202. Overall, with all factors considered, clothing and textiles industries provide the Prison Service with excellent value for money.

Recommendation

The Service should invest in additional workshops (and machinery) for clothing and textiles in order that a greater proportion of the needs of the Service can be met. If agreed, ESS should take this forward as a matter of priority.

5.7 Contract Services

203. Currently the practical operation of winning business for contract services and its overall contractual performance is largely fragmented. This is often at the detriment of the internal supply capacity that can eventually lead to a greater overall cost to HMPS.

204. The Integrated Planning Process (IPP) figures for 2003/04 show that contract services work runs at an overall loss to the Prison Service of just over £7 million. This is not acceptable bearing in mind that the total loss for operating prison industries in 2003/04 is estimated to be £8.8 million. Governors are increasingly attracted to the income generated by contract services work yet in total the income from contract service work for 2003/04 is estimated at £3.7 million against costs of £11.2 million. These figures exclude ESS costs, which are substantial. (See Annex E)

205. We have already recommended at section 5.2 (b) that ESS should provide a dedicated central support function to maintain a database of contracts and advice on the risks, both commercially and operationally, to HMPS. The decision to take on contract service work should go through the same process as Make or Buy.

206. Although contract services should continue to have a role to play, particularly where it paves the way for potential prisoner employment on release, we believe that this role should diminish over time as the service concentrates on delivering a greater proportion of the needs of the internal market. If this aim is achieved there would no longer be a requirement for ESS to retain a Sales and Marketing Team.

207. The emphasis of prison industries needs to shift away from a growing tendency to seek external work and income generation, and towards a better functioning supply of goods necessary for the internal market, and perhaps to cater more for the needs of other Government Departments, hospitals, schools, local authorities, and the voluntary sector. This emphasis would support the desire for more restorative justice, as well as continuing to provide the work ethic that supports the resettlement agenda.

5.8 External Sales

208. The Review Team noted that at a number of establishments prison industry workshops were being used to construct items of garden furniture - including garden sheds, items of furniture etc for members of staff. The team suspected that guidelines in the Finance Manual and in Government Accounting were not being adhered to in respect of the charges being made for these goods. Consequences of this practice include not only potential tax implications but also the danger of disciplinary procedures. It is clear that where an establishment wishes to manufacture goods for external sale they must ensure that Government Accountancy rules are fully complied with in respect of the charging for the goods and the receipts of any income.

Recommendation

Establishments should ensure that Government Accounting rules are followed when manufacturing goods for external sale.

5. 9 Management Information Systems

209. Previous reviews have indicated that the existing management information systems relating to prison industries are no longer fit for the purpose intended, and this review would agree with those findings. We have encountered a void of credible information to the extent that ESS could not provide, for example, an accurate figure of the number of industries workshops within the Service. The best estimate passed to us by ESS was drawn from IPP9 submissions that are widely recognised as flawed and incomplete. They do not provide a sound management tool.

210. Clearly there is a need that any recommendations for future replacement or upgrade of systems fit within the Criminal Justice IT strategy, the Prison Service IT strategy, and are compatible with existing or future developments of FOCUS, PRIME and OASys³ as well as meeting the needs of establishments and those charged with monitoring performance, particularly in relation to auditing standards.

211. Future requirements could fall within two of the current large IT projects underway within the Service. The replacement for the FOCUS finance and procurement system (or Enterprise Resource Planning (ERP) system) should encompass the needs that the current IT management information systems within ESS cover. (Ie Stratege, Proact and others) There is also a project in its infancy on replacing the warehousing system at Branston stores. It is possible that the ERP would encompass this requirement.

212. We believe any new system should address the following needs:

- Target production figures for establishments

- Monitoring of production performance to targets

- Tracking of completed stock movements between establishments and central stores

- Monitoring of consumption and supporting the hard charging process

- Potential for bar coding

213. The PRIME project could possibly include solutions to issues that were presented to the Review Team whilst visiting establishments.

214. Currently when prisoners move from one establishment to another it is very rare for their training record to follow them. This is detrimental in a number of ways. Prisoners who have started some accredited training may lose the opportunity to continue with it, and similarly for workshop specific skills training. Most establishments offer some induction period for new prisoners, and often this will be duplicated at every establishment. It would be helpful to know, for instance, whether a prisoner has already completed a health & safety induction within the last few months, and therefore does not necessarily need to have this repeated at the next establishment.

215. By having an electronic record of training resources at all establishments resources will be used more efficiently, it would prevent duplication of effort, and prisoners may be better placed to receive a continuity of training.

216. It is also noted that although form 2055C, the prisoner training record, is available electronically, it is only stored electronically for a short period (not more than 3 months). Where there are litigation issues it is necessary for establishments to keep paper copies of the record as evidence. This negates the use of the IT system and can lead to incomplete electronic records.

217. There are currently many ways in which prisoners pay is calculated, as detailed in section 6.vii of this report. In the majority of cases instructors are required to calculate prisoners pay, and do so using paper, pen and calculator, or simple spreadsheet solutions. In order to calculate pay they need to know which prisoners attended workshops, for how many hours, whether they were in education or other training, and in some cases, whether the workshop met its production goals.

218. This information would contribute to the management information that would enable ESS and industrial workshops to monitor performance.

219. It would be ideal if PRIME could provide a tool to instructors that provided good management information and reduced unnecessary bureaucracy.

220. Basic information on capacity, actual production hours worked, and production performance must be made available. This would then form the basis for the placement of orders. If work is passed to workshops based on unrealistic capabilities then the internal supply chain will continue to fail.

Recommendation

The proposed policy team for ESS should draw up a requirement of management information that could be used by ESS to monitor workshop performance and assess capacity levels. This information is not available at present in a creditable and complete form. This must be a priority.

5.10 Prison Industries and the Performance Improvement

Programme

221. The future shape and performance of Prison Industries must take account of the Performance Improvement Programme currently being undergone by establishments. The number of establishments being managed by Service Level Agreements will increase substantially over the next few years with the eventual aim that all establishments will have gone through at least one of the stages within the programme within the next seven years. Advice and support to teams drawing up the regime element of the Performance Improvement Plans is likely to be sought from the “experts” from Prison Industries. That advice may involve assistance with the setting of financial targets with respect to both income and expenditure relating to the internal market and to external contracts.

222. With the possible advent of hard charging within the internal market and the setting of fixed budgets within the increased number of Service Level Agreements the importance and accuracy of the advice and support given to establishments is crucial.

223. There is a history of inaccuracy in the provision of “expert” advice leading to the setting of Financial targets in respect of income anticipated in respect of external contracts from Prison Workshops. An example of this was when the Manchester bid was being prepared ESS advised that external and some internal contracts would result in income of £762k being accrued by the Establishment. The contract was awarded to the in-house bid. Regrettably the figure of £762k was not achieved and was probably never achievable. The shortfall in income of over £300k then had to be made up from within other areas of the establishment.

224. The Review Team has been persuaded by the operational line that it would be appropriate for a “Task Force” approach to be available where a Governor or Area Manager requires assistance in drawing up a viable regime as part of the Performance Improvement Programme. This would involve a small team, drawn from within the Directorate of Resettlement, who would be able to support the Governor. It would seem right that this coordinated approach would fall under the management of the Head of Regimes Services and include representatives from OLSU (DfES), ESS (inc Laundries), PE and Catering.

225. In view of past experiences it is important that the Task Force is as effective as possible and that a Governor drawing up a performance plan can rely on their views. It is essential that the Head of ESS ensures that their representatives on the Task Force are effective and have demonstrated the necessary competences for the work.

226. It may be that as the pace of the Performance Improvement Project increases there should be at least two of these task forces providing support to the Operational Line.

Recommendation

A Task Force should be drawn up from within the Directorate of Resettlement to provide support to the operational line in drawing up the regime portion of establishment performance plans as part of the Performance Improvement Programme.

5.11 Printing and Stationery

227. A small section, currently part of the Quality Assurance Team, is responsible for the ordering and manufacturing of print requests from establishments. They also act as coordinators for items purchased by establishments under the Performance Recognition Scheme.

228. This section acts as custodians for Book 340 - the Prison Service Catalogue of Forms and Books. This document contains details of a total of 1162 Forms and Books that are “allegedly” in use by the Service and can be ordered from Branston. The Review Team is of the opinion that there needs to be a radical overhaul of Book 340 as with all establishments having access to Quantum computers, there should no longer be a requirement to order any single page A4 forms which are not regularly used by establishments. The Team were pleased to note that work on overhauling Book 340 is now being progressed. However it was disappointing that EDS had only been able to put 46 forms onto the Quantum system as part of the Refresh programme.

229. The Team is also concerned that whilst a number of forms are identified as being “sponsored” by a PSHQ Policy Division, there are a number that are not and are probably out of use. Examples include:-

230. The above examples are only available for order in quantities/multiples of 100. There are numerous other examples of forms/books that are probably not in use anymore or the quantities required to be ordered are too high.

231. The Review Team recognises that it is core prison business for Printing Workshops to print as many internally issued documents as possible for the Service. However it is incumbent on the Printing Team to carry out a comprehensive review of the documents and books contained in Book 340. All stationery items should be actively owned by part of the Organisation and the ownership should be identified within the master document.

232. This review should also look at the minimum order levels that may now be inappropriate. It is alleged that often 100 copies of a single sheet document is the minimum number that can be “picked” at Branston.

233. Stationery items allegedly account for some £1.3m of the stores held at Branston. On visits to establishments the Review Team were told of problems obtaining stationery items from Branston with items being out of stock.

234. An immediate and rigorous review of the printing and stationery holdings at Branston should be conducted with the aim of reducing the stock levels to an acceptable level and ensuring that stocks of the more common documents are printed more regularly and those that are ordered only rarely are only printed when there is a need. Stock should be disposed of where it is clearly not likely to be used.

235. The Review Team visited establishments where printing workshops were used to good effect for both work for the internal market and for outside contracts. This was particularly commendable at HMP Maidstone where printing contracts were regularly won from local hospitals. This contributes to meeting the Restorative Justice agenda, and it was noticeable that the care and attention that went into this work was second to none.

236. The concern the team had was that whilst accepting outside work directly was admirable the small team at ESS was not necessarily made aware of capacity limitations that then applied to those establishments in respect of internal work. The work needs to be balanced with ESS being informed by establishments of outside commitments.

237. The Review Team was glad to learn that the Printing Team had been hard charging establishments for “ad hoc” printing requests for a while. Establishments and HQ Groups are given a quotation for the required work that includes the material costs and the cost of delivery back to the establishment/Unit. Once agreed the work is sourced, with the Establishment/HQ Group being Inter Unit Charged (IUC) on completion.

Recommendations

5.12 Stock Levels and Rationalisation of ESS Products

238. The Review Team made two short visits to the central store at Branston and spoke to the management there regarding levels of stock, as a number of establishments had reported that items made in the internal market were often “out of stock” with little concern being shown as to how and when these orders would be met.

239. It was not surprising that the issue of stock levels caused concern as the Head of ESS told the Review Team that he wanted ESS to have the responsibility for stock levels whereas the Head of Stores at Branston was of the opinion that the responsibility had always rested with ESS. It was apparent therefore that this key responsibility was not being addressed adequately.

240. The Review Team were conscious that a detailed examination of the Stores function is planned to take place at a later stage along with an examination of the logistics function. It was therefore decided not to examine stock levels in depth but a cursory examination revealed:-

241. The Review Team were of the opinion that following the review, a small team should be instructed to take a critical look at stock levels and along with the “make or buy” team should decide which items should be deleted from the Branston stores catalogue. This is particularly critical as the Prison Service is under pressure to reduce its stock levels following a recent NAO report. During the current period when the population within prisons is rising to record numbers it is incumbent on ESS to only produce the products for which there is a market. Further recommendations regarding stationery levels have been made in the section 5.11.

242. It has been reported to the Review Team that when a prisoner moves from one establishment to another on transfer they will only take the clothes that they are wearing at the time. Any other prison supplied kit and clothing that they have in their possession will normally be thrown away. It is extremely rare for any of their possessions to be recycled and used by another prisoner or for them to take these possessions with them to the new establishment. When they arrive at the new establishment they are then issued with completely new kit. With the current rates of “churn” this is particularly wasteful and can lead to a prisoner serving a reasonably short sentence being issued with multiple sets of clothing and kit if they move several times.

243. A concern was expressed by a number of establishments that if they ordered goods from Branston that were not available the ordering/stores system PROACT was not capable of holding on to the orders until stock becomes available. The first the establishment know of the unavailability is when the goods delivery sheet arrives with a nil figure on it. The establishment will then order the goods again and so on until the delivery of goods eventually arrives. There can be a danger that the order can be satisfied twice or even three times, and in fact this regularly occurs. This inconsistency will need to be addressed when new computer systems are introduced.

Recommendations

5.13 Training for Industries Staff

244. During its visits to establishments the Review Team made a point of asking Instructors, Industrial Managers and other Industries staff whether they considered they received suitable and adequate training to enable them to fulfil their roles.

245. Currently there is a two week training course run at PSC Newbold Revel entitled “Instructional Techniques”. Prior to attending that course a new Instructional Officer must have completed the one-week “Prison Awareness” course. There is a welter of other training, delivered locally that is open to staff of all grades to attend eg Diversity Training, Break Away Sessions, Race Relations etc.

246. Most staff involved in industries expressed the view that whilst there was some initial induction training and whilst they attended training within the establishment, there was nothing which was directly related to the function of their workshop, eg they were not kept up to date on the plastics industry if they were involved in a plastics workshop or furniture if they were involved in the manufacture of furniture.

247. Managers within Industries had in the past attended annual conferences for Industrial Managers where there had been considerable networking and where workshops had been arranged to update groups of staff. These had not been arranged for some years and IMs felt isolated and left out, with little opportunity for development or for sharing good practice.

248. Administrative staff had previously attended a three-day manufacturing clerks course, run centrally by Newbold Revel. This course was no longer run with the effect that new staff to the position had no alternative than to sit next to their predecessor to learn the job, always assuming the predecessor was still in post.

249. The Review Team were sympathetic to the training needs of the Industries staff and recommend that the manufacturing clerk's course should be reintroduced, especially if hard charging is introduced.

250. With regard to Instructional Officers and Industrial Managers, the Review Team considered that managers arranging for their staff to receive appropriate training in the relevant industry on an ad hoc basis could meet their developmental needs. Training needs should, of course, be identified in their annual staff appraisals.

Recommendations:

5.14 Value For Money - Making the Most of Capital Investment

251. A major issue within Prison Industries, and at the heart of decisions made by Governors, is the current lack of planned capital investment or a maintenance programme.

252. Issues surrounding capital and maintenance investment in equipment no doubt in part affect governors' plans for industries. A Governor may decide to close an effectively working industry simply because the cost of maintenance is high and there is no planned capital replacement, and by changing the workshop designation there may be cost savings. (For example the closing of greenhouses to save on the amount of gas (heating) used by the establishment.) It is possible that as a piece of equipment nears the end of its serviceable life the maintenance costs begin to outweigh its usefulness, and with no planned replacement on the horizon, and no funds available to the Governor, a decision could be taken to close the industry and turn attention elsewhere.

253. Currently when breakdowns of major pieces of machinery occur, the cost must be met from the Governor's budget, even if the capital expenditure for the equipment has been sourced by ESS or elsewhere. There is no budgetary provision for planned maintenance and therefore costly breakdowns (both in terms of replacement parts and loss of working hours for both prisoners and staff) are not avoided.

254. Although equipment is registered on asset registers, there is no planned replacement programme for equipment as it nears the end of its life. New equipment is purchased on an ad hoc basis when funding becomes available, most often near the end of the financial year. There are no advance plans that take into account impact on staff and prisoners employed and production, future work initiatives and changes in employment opportunities on release etc. Even if funding is only available on an ad hoc basis, this could still be completed in advance so that when funding is identified it can be utilised in the most cost effective way for the service as a whole.

255. The other major issue is the purchase of equipment that is not expensive enough to be classified as capital, particularly sewing machines, and often computers and related IT equipment. We saw many instances of prisoners having to make use of equipment so out of date that the skills acquired were not transferable to jobs on release. (It should be noted however that in terms of IT, the equipment provided for Prison Service staff has only just been upgraded to a modern level, so it is perhaps not surprising that that provided for prisoners is now lagging so far behind.)

256. ESS, we believe, should compile and monitor all large industries equipment items, and from this database and other information should constantly plan for a modernisation and replacement programme. This should include quotes and possibly tenders for at least a few of the pieces of equipment at the top of the list, so that even if funds are available at short notice, they can be made use of in an effective and planned way. We see this function falling within the Production Planning Team in ESS.

257. Consideration should be given to setting aside some capital budget for a modernisation programme. The procedures and guidelines for prioritising need should be clearly set out and should be shared with Governors and Area managers. The prioritisation list should be widely published so that the operational line is aware and has some input in the replacement programme.

258. When new or replacement equipment is allocated to establishments it should be accompanied by an analysis of the installation and expected annual maintenance costs.

Recommendations:

5.15 Monitoring Workshop Performance

259. It cannot be denied that currently there is little measure of prison industries performance or fitness for purpose. There are a number of very good reasons for this. To begin with, no one has previously clearly defined a purpose. Provision or management information is haphazard and unreliable. The IT systems haven't previously been in place to provide a seamless and efficient system. The Annual Planning Process (APP) that used to collect management information was suspended and was laborious, confusing and was very quickly out of date.

260. It was interesting to note on our visits that many workshops were still completing the forms and sending them to ESS where they disappeared into the ether, or told us that they had only just found out that the forms had been withdrawn years ago and they had continued to complete them until recently.

261. There is no doubt that a fresh approach is called for and, with the new IT infrastructure brought about by the Refresh Programme, the time is now right. It is also appropriate to be considering performance monitoring in the context of the future of the whole performance of establishments within an SLA.

262. Measuring performance of workshops is no easy achievement. What do we want to measure, to what purpose? How can we compare a sewing shop making jeans to an engineering workshop welding cell doors? What will we do with the information once we've got it?

263. The aim should be to provide the Service with useful information with which to make appropriate decisions. We need to know which workshops work well, deliver best and achieve our goals. We need to use this information to improve all workshop performance, to share best practice and to continuously improve. However we also want our instructors to spend their time doing what they do well, instruct, not filling in endless forms that mean little to them and from which they see no result.

264. There are a number of options to achieve this aim. All require collection of management information therefore it is vital that to share best practice, improve efficiency and ensure fitness for purpose an efficient means for instructors and managers to provide information is developed. This may be able to be addressed under the PRIME project (see section 5.9) or may require another solution.

265. Further, a clear set of guidelines needs to be developed upon which workshop performance will be measured. This will require careful consideration, particularly when addressing prioritisation. One way of doing this is via a balanced or weighted scorecard system. This is an efficient model for achieving these aims, and is relatively easy to draw up, given the appropriate experience and expertise. It would be wise to use the lessons learnt by Planning Group in drawing up the establishment balanced scorecard in this exercise.

266. It is felt that any system will need to address the factors already identified in 5.5:

267. The priorities may need to be weighted depending on the category of establishment and other factors.

268. It has been suggested that with the new IT infrastructure it would be relatively easy to design a system where workshop instructors/managers could feed information into a spreadsheet, and for that information to then rapidly provide them with a measure of feedback. It could also then consolidate information centrally to guide ESS staff.

269. Other alternatives could be considered. The Service could decide to concentrate on performance in a handful of areas, such as prisoner number and hours (in effect already included within the purposeful activity KPI). However, this would not provide any insight into the quality of activity, and would not necessarily enable the service to work towards the Resettlement agenda.

Recommendation

A balanced or weighted scorecard approach should be developed for monitoring the performance of prison industries. This should be worked up with close involvement of Planning Group, and should include consideration of how management information should be collected, shared and acted upon.

Chapter 6: Meeting the Needs of the Prisoner

6.1 A working Tool: OASys

270. There is a need to ensure that Industries fits well alongside other prison activities and interventions, and that its purpose and outcome measures are defined, shared and understood. The attitudes of Prison staff to work affect prisoners' attitudes. If staff feel that industries are just occupying prisoners' time and provides little other worth, then prisoners are likely to view it in the same way.

271. It is accepted that currently sentence planning within the prison estate is often poor, inconsistent, and in many establishments non-existent or not required. (That is not to discount the few establishments that have developed good sentence planning processes.)

272. OASys is set to revolutionise sentence planning within the Prison Service, introducing a more structured, evidence based process (for which assessors and their supervisors must be trained and qualified) across the service (although initially not to every prisoner and with a rollout time of 18 months, not overnight). It is vital that Industries and activities staff within establishments recognise the advantages that OASys can bring and ensure that there is some industries input in the sentence planning process.

273. Responsibility for implementing sentence planning should then drive the allocation of prisoners to interventions and activities, and this will include workshop allocation.

274. There is a two way process within OASys that workshop instructors will need to be involved in. They should inform the sentence planning process by providing details of what is offered within each workshop, both in terms of accredited qualifications, specific work skills and general work abilities such as health and safety. Instructors will need to inform the OASys assessment process by providing details on how prisoners are performing within their workshops, and by making recommendations to OASys assessors regarding individual prisoners.

275. This will then provide every opportunity to exploit industries for a better chance of reducing reconvictions.

276. Industries can then work alongside other recommended regime interventions, without the risk of conflicting priorities, and eventually could be seen as an intervention in itself.

277. With the initial data coming from OASys, it is not hard to see the influence that industries could have on prisoners' lives and the potential for impact on reconviction rates.

(This is an initial set of data emerging from the Durham Probation Area, April 2003)

Of those convicted to a custodial sentence 73% were unemployed. 42% had never worked or had unstable periods of work or regularly left work without reason.

38% had no skills that would enable reemployment, no vocational qualifications or completed apprenticeships.

20% think work is a waste of time, had no motivation to find employment or to work when in employment.

This attitude and behaviour is also reflected in attitude and school attendance, as 55% have no educational or vocational qualifications at or above GCSE.

(For full information analysis refer to Annex D)

278. Industries can contribute towards improving employment and education possibilities for this set of prisoners perhaps better than a traditional educational training. Given that these prisoners have had poor attendance at school (36%) and poor attitudes to education and training (17%) then perhaps a non-classroom environment is better placed to provide a conducive learning atmosphere.

279. Many establishments have a model of work allocation that is simple. The majority of new prisoners are allocated to a “noddy” workshop initially, where they must prove themselves before they are given the opportunity to work in other, more challenging and rewarding workshops. Does this work to help motivate prisoners with poor motivation or work skills? We don't know. There has been little research found on what effect prison work environments have on prisoners and their abilities to gain employment on release that it is anecdotal and conjecture. It is simply what suits the prison regime and staff, and doesn't necessarily put the prisoners best interests first.

280. This is a chicken and egg scenario. There's little research about what works and what doesn't, so it is difficult to know where to begin. The Review Team therefore doesn't make any sweeping statements regarding closing particular industries in favour of others, but suggests that industries looks to the future by making use of OASys and turns its focus toward the prisoners needs in order to gain employment, without switching away from the existing infrastructure already heavily invested in providing the Service with goods until more is known about what works and what doesn't.

281. The Brunel University report “Prison Work in the Context of Social Exclusion” concludes, “Prisons have good potential for preparing inmates for employment. … They should give much higher priority to inmates' training and to overcoming the present discontinuities and confusion of purpose. These issues would be addressed by: (a) a through scheme of sentence planning incorporating vocational guidance, which involve the inmate, all relevant prison staff (including instructors), and outsiders as appropriate…”

282. With the introduction of OASys comes an opportunity of a business tool that can help identify those who would best benefit from an introduction to working life. Section 4.1 to 4.5 of the OASys assessment addresses:

283. Therefore, those who score highest (have never been employed, have a poor attitude to work, are regularly dismissed etc) are those who should be assigned work places in prison above those who score low and therefore already have a good work ethic, some work skills and commitment to work. OASys will provide a template for sentence planning that should create a new means of working for all establishments. It is vital that the labour allocation process links with sentence planning to ensure that best use is made of OASys.

6.2 Prisoner Categories and Industrial Activities

284. The Review team considered whether different categories of prisoner should be involved in particular types of workshops. eg should all textile workshops be located in Category A and B establishments, should all woodwork shops be in Category C establishments etc. We saw no benefit in this nor in any geographical split whereby, eg all Textile workshops would be based in the North East, all engineering shops in the South etc.

285. The Review Team did however feel that the Head of ESS should examine whether earlier decisions to put particular workshops where there are logistical difficulties with deliveries/collections - eg woodworking activities on the IOW, should be reconsidered. This examination would also allow the Head of ESS to consider whether, where there are logistical problems, an experiment in “semi self-sufficiency” should take place. It does seem pointless for the IOW prisons to transport goods back to Branston for storage when other prisons in the cluster will eventually consume some of these goods. An imaginative use of stores facilities in such an area and in the work loadings for individual workshops could be examined.

Recommendation

The Head of ESS should examine workshop activity where there are particular logistical difficulties.

6.3 Prisoner Progression

286. The Review team on their visit to HMP Littlehey were impressed with one of the large contract service workshops that assembled domestic appliances for visually impaired people. This workshop was run by instructors who had previously worked in industry and they operated the workshop on factory lines, with prisoners able to progress and become supervisors, quality control inspectors etc. Any achievement by a prisoner was recognised with a bonus or a supplemented wage and certification of the skills gained. This workshop was an example of good practice that the review team would like to see adopted in other prisons. We recommend that the new Policy Team in ESS should be tasked with devising a system of progression designed to provide prisoners with the skills that will allow them to progress within a workshop whilst addressing their needs. This could be linked with pay progression.

287. A good example of this was found at HMP & YOI Glenochil in the Scottish Prison Service where a Work Progress Record had been introduced. This had the advantage that it also invites the prisoner to complete a self-assessment of how well he/she is progressing. This would provide a useful starting point for such an exercise.

Recommendation

The new Policy Team in ESS should be tasked with devising a system of progression designed to provide prisoners with the skills that will allow them to progress within a workshop whilst addressing their needs.

6.4 The Prisoner's Working Week

288. The current working week in a Prison Industries workshop can vary from about 20hrs per week - for instance in a high security establishment - to an establishment like HMP Ranby where there is some 24 hour working, an intention to introduce further two shift working and where there is a genuine attempt to mirror the type of working week that a prisoner might encounter if offered employment on release. This is part of their attempt to introduce and reinforce the “work ethic” for those who may never have worked in the past.

289. The Review Team would have liked to recommend a substantial increase in the number of hours that many workshops operate - it does seem odd that a Category C prison such as HMP Dartmoor should have regime hours that are comparable to the High Security Estate rather than with their peers. The Team recognised, however, that the Regime changes that would increase the working week to nearer the norm of those achieved in outside workplaces would involve substantial staffing and industrial relations difficulties and would be better left to when Establishments are planning their Performance Improvement Plans.

6.5 Prisoners with short sentences

290. The Report “Reducing Re-offending By Ex-prisoners” by the Social Exclusion Unit recognised that prisoners serving short sentences were often excluded from the interventions that would enable them to benefit from links with employers, accommodation providers etc.

291. The Review Team considered this category of prisoner and during its visits asked establishment industries staff how short term prisoners could a) work in an industries workshop and b) benefit from any interventions prior to release.

292. The team was concerned that the majority of industries instructors did not want to accept a prisoner with less than two to three months to serve - in some cases this was as high as six months. The arguments given for not accepting them tended to be that with little time left before release, there was no time to train the prisoner as they might move on to a lower category prison for the final weeks of their sentence. It was assumed that they would benefit from Custody to Work and other Probation led initiatives. They might attend some education classes where basic, key or life skills training would be on offer. The process appeared unstructured and to be “someone else's problem”.

293. The team considered the issues and were not persuaded that Prison Industries workshops should ignore this large group of prisoners. It was felt that there were a number of interventions that would benefit this group of prisoners:-

Recommendation

The needs of short term prisoners must not be overlooked when developing workshop strategies.

6.6 Restorative Justice

294. There are currently a number of establishments where work is undertaken in workshops, either for a charity or commercially for organisations that provide services of goods of those in society who are disadvantaged.

295. Examples of this type of work include, HMP Littlehey, where a number of workshops provide employment to prisoners in a) the assembly and repair of Braille machines, where they are the only workers involved in this worldwide and b) the assembly of “talking machines” for the blind ie microwaves, weighing machines etc. The latter workshop was considered particularly impressive as the instructors, recruited from outside industry, had set the workshop up on commercial lines where prisoners filled the role of supervisors, quality control managers etc. Other examples included HMP Manchester where wheelchairs are refurbished and repaired.

296. Although some of these workshops are not productive in terms of producing money for the establishment, there is an added value to the work in that the prisoners can identify that what they are doing will benefit those in society who are most disadvantaged.

Recommendation

It is recommended that where Governors set up a workshop that employs prisoners in an activity that meets the “restorative justice” agenda, they should recognise that whilst the work may not cover all the costs there is an “added value” that should be accepted.

6. 7 Prisoners' Pay (PSO 4460)

297. Currently there is no prescription as to the level of pay that should be paid to prisoners in prison workshops. The figure can vary from c£5.50 to c£45 per week, depending not on regular reviews to fit the pay levels to the regime, but on an apparent historical inactivity and reluctance to change. Often in the case of those at the lower end of the scale, there has been little change to the levels of prisoner pay over recent years.

298. Prisoners pay continues to be a devolved responsibility and it is right for Governors to be able to set the rate of pay which they consider applicable to their regime. However it is important that the level of pay does not act as a disincentive for a prisoner to take a full part in the establishment's regime. The Review Team met a number of groups of prisoners during their visits and were conscious of what appeared to be unacceptable differences in pay levels between neighbouring establishments or between establishments where prisoners regularly transfer on their way towards release.

299. A major complaint from prisoners was that at Establishment X they were able to earn e.g. £15 per week working in an industrial workshop. However as part of their sentence plan they were moved to a lesser category prison and found that they could only earn e.g. £8 per week for similar work at Establishment Y. It was also possible that whilst Establishment X operated a piece-work scheme allowing the prisoner to increase their earnings by increased productivity, establishment Y just paid a flat wage with no opportunity to demonstrate and be recognised for good work.

300. Prisoner Administration Group should be invited to address these concerns.

7. ANNEXES

Terms of Reference

Review of Prison Industries - Methodology

Following the issue of the Project Scope Document the Review Team set up a series of consultation meetings with staff and managers from ESS, staff and managers from a number of establishments and others with an interest in Prison Industries.

2. Visits have been made to the following establishments where Industries staff have been invited to discuss their views on the future strategy of Prison Industries and ESS, and operational issues such as hard opposed to soft charging. Where available Governors have been asked for their opinions.

Friday 7 February Standford Hill and Swaleside

Monday 10 Feb Foston Hall and Sudbury

Thursday 13 Feb Maidstone

Wednesday 19 Feb Wymott

Monday 24 Feb Featherstone

Wednesday 26 Feb Camp Hill and Albany

Monday 3 March Frankland

Tuesday 4 March Durham

Wednesday 5 Mar Ranby

Monday 10 Mar Lindholme

Tuesday 11 Mar Hull

Wednesday 12 Mar Everthorpe

Thursday 13 Mar Coldingley

Monday 24 Mar Channings Wood

Tuesday 25 Mar Dartmoor

Wednesday 9 Apr Littlehey

Monday 12 May and

Thursday 5 June Manchester

Tuesday 13 May Altcourse

3. A visit was made to the Scottish Prison Service over the 12 to 14 February 2003. This involved meetings at their HQ as well as in establishments. In addition to this, the purpose of operating prison industries was the main agenda item at a recent European Forum of prison administrators in Lyon (21 -24 May), in which a member of the Review Team participated.

4. Four regional workshops have been held at Maidstone 18 March, Wymott 21 March, Leeds 1 April and Swindon 4 April. Each Establishment and Area Office was asked to send a representative to one of these events. Over 120 representatives attended and gave their views.

5. Visits to the central store at Branston have been held on Monday 10 February and Monday 16 June.

6. Staff at ESS in AMP House were invited to four functional workshops - held in AMP House on 19 March and 7 April. A further forum was held on Tuesday 8 April for team leaders.

7. A number of one to one interviews with staff from ESS have taken place at AMP House. An Industries Review forum was set up as part of Review of Headquarters forum on the PS Intranet.

8. On 9 April a meeting was held between the Review Team and representatives of Procurement Group including the Head of Procurement, J Cavell and the Head of CPU, P Northern.

9. Between January and March 2003 the Team received advice from Mr. P. Robinson, Senior Consultant, Brian Farrington Ltd. Mr. Robinson had worked on the earlier J. Le Vay review.

10. Three meetings have been held with the PS Unions directly involved in Prison Industries - PCS, PROSPECT. The Prison Officers Association have been invited to meet the Review Team.

11. The Review Team have met twice with the Prison Industries Review steering group that was set up with members of the operational line in attendance - two Area Managers, a Governing Governor and an Area Accountant. This group looked at the progress of the Review and offered advice on any emerging findings.

12. The aim of the Review Team has been to communicate with as many interested staff as possible - this has been achieved with a number of meetings taking place with the Head of ESS.

Review of Prison Industries - Costs of Review

Salary Costs: £110,000

Travel & Subsistence £ 5,540

Conference Costs:

Maidstone £1,506

Leeds £1,577

Swindon £1,425

£ 4,508

Consultancy Costs: £ 23,874

Total: £ 143,921

Education, training and employability needs among those sentenced to custody following PSRs

This paper presents item-by-item data from section 4 of OASys for the set of assessments received from County Durham Probation Area on 27 March 2003. Of the total dataset of 2,771 assessments, some 413 were of acceptable quality and written for PSRs following which custodial sentences were passed. These offenders are contrasted with offenders given non-custodial sentences after their PSRs. All assessments used the OASys Two form.

Section 4 of OASys contains ten numbered items relating to education, training and employability (ETE). Of these, question 1 asks for one of eleven possible employment statuses to be selected, while the remaining questions are scored 0 (no problem), 1 (some problem) or 2 (significant problem) to give a total raw section score between 0 and 18. The section also includes three supplemental parts to question 7, checking problems with reading, writing and literacy, and the standard section-closing items where assessors are asked for their clinical judgements of the links between ETE and offending behaviour and risk of harm.

Item-by-item responses

Table 1 compares responses to question 4.1 for those sentenced to custody and those given any other sentence. It can be seen that those sentenced to custody were more often unemployed, and less often employed full-time.

Table 1

Responses to question 4.1: employment status, by sentence passed

Key: <1 = less than 0.5%, but above zero

Table 2 summarises responses to the scored questions 4.2 to 4.10. Again, this includes a comparison of those given custodial and non-custodial sentences. The two groups tended to differ more on the employment questions than the education and training questions, although there was quite a large difference in responses to the school attendance question (4.6).

There was little difference in responses to the three supplementary questions to 4.7: 11 per cent of those given custody had problems with reading, 13 per cent with writing and 7 per cent with numeracy, compared with 9, 11 and 6 per cent respectively of those not given custody.

Overall measures

Total section scores (i.e. the sum of items 4.2 to 4.10) averaged 8.2 for those sentenced to custody and 6.2 for other offenders. The overall mean section score was 6.6.

The OASys Two summary sheet determines that an ETE criminogenic need is listed when the offender's raw section 4 score is 5 or more. Using this definition, 77 per cent of those given custodial sentences and 60 per cent of other offenders (64 per cent overall) had an ETE criminogenic need.

Assessors considered “education/training/employability issues linked to risk of serious harm, risks to the individual and other risks” for 3.4 per cent (14/408) of those sentenced to custody and 0.8 per cent (13/1551) of other offenders, making 1.4 per cent (27/1959) overall. They considered these issues to be “linked to offending behaviour” for 48 per cent of those sentenced to custody and 29 per cent of other offenders, making 33 per cent overall.

Philip Howard

OASys Central Research Unit

16 May 2003

Table 2

Responses to questions 4.2 to 4.10, by sentence passed

Key: X = answer option not available

IPP Summary 2003/04