By Peter Gould BBC News Online

Britain needs more prisons. Partly to replace our decaying Victorian jails, but also to keep pace with the increasing number of offenders sentenced by the courts.

The prison population in England and Wales currently stands at 71,800. According to one Home Office estimate, that figure could rise to 83,500 by 2008.

In Scotland, which has a separate legal system and its own prison service, there are similar pressures.

For several years now, prison governors have been struggling to cope with the rising numbers. Overcrowding has put the whole system under stress.

So the government, which is encouraging the courts to crack down on repeat offenders, has to build more prisons quickly.

Cost factor

But it is an expensive business, both constructing the jails and running them. The total cost of locking up an offender is around £27,000 a year.

As a way of easing the impact on the public purse, the government has turned to the private sector.

About ten years ago, under a Conservative administration, the first steps were taken by giving security companies contracts to operate a small number of prisons built by the Prison Service.

But two of the four prisons, Buckley Hall and Blakenhurst, have now been taken into the public sector after the contractors faced in-house bids from the Prison Service.

Under a Labour administration, a clear preference has emerged for building new prisons using the Private Finance Initiative. These are the so-called DCMF prisons: they are Designed, Constructed, Managed and Financed by the private sector.

The contracts run for 25 years, at the end of which the building becomes the property of the Prison Service.

Profit motive

For some critics of privatisation, the whole idea of making profits from the incarceration of offenders is repugnant. This, they argue, is one function of the state that should remain a purely public service.

Frances Crook, of the Howard League for Penal Reform, argues that if the state takes away someone's liberty, it is the state that should take responsibility for them.

"Making a profit out of locking people up is morally repugnant," she says.

And concern has been voiced over the size of the profits being made by some of those now in the prison business. Once a new jail has been built, the company can re-negotiate its bank loans, cutting costs and boosting its return.

But for the government, privatisation holds out the promise of cutting capital expenditure and running costs while modernising the prison system.

Stephen Nathan, editor of Prison Privatisation Report International, argues that while it may appear fiscally attractive, there are dire social and economic implications.

"Money which could be allocated to services is creamed off in profits and fees to consultants and advisers," he says.

"The fuse is lit on a financial time bomb."

Union concerns

Other privately constructed prisons, now at the planning stage, are expected to achieve savings of millions of pounds.

But if a company running a prison is anxious to keep down costs, the temptation is to reduce both staffing and salary levels.

Alec Leathwood, of the Prison Service Union, says pay rates in the private sector are "appalling", and his members earn several thousand pounds a year less than officers in state-run prisons.

Prison reformers have expressed concern that the increasing use of electronic surveillance to monitor prisoners is one way of reducing staff numbers.

They warn that it will dehumanise prison life, and make it more difficult to tackle problems such as bullying and self-harm.

The Howard League has drawn attention to the number of suicides in privately-run prisons. Since the first commercially-managed prison opened in April 1992, more than thirty inmates have taken their own lives, usually by hanging.

Market testing

There is also concern that because of commercial confidentiality, the details of the contracts awarded to run the new prisons are not being fully disclosed.

"The shift towards commercialisation is accompanied by an unacceptable decrease in accountability," says the Howard League.

But it is clear that there will be more privately built prisons, and some existing state-owned prisons are being "market tested".

However, when a contract to run the much-criticised Brixton Prison was offered, not a single private bidder came forward, no doubt deterred by the anticipated cost of transforming a failing prison.

But given the enthusiasm of the government for PFI projects, it would be a surprise if the privatisation programme did not continue.

One thing is certain: the rising prison population means we will need more prisons.