Finance Committee, 14 Nov 2006

Meeting date: Tuesday, November 14, 2006

Official Report 276KB pdf

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Custodial Sentences and Weapons (Scotland) Bill: Financial Memorandum

Item 4 is to take evidence on the financial memorandum on the Custodial Sentences and Weapons (Scotland) Bill. I invite our first group of witnesses to the table. We agreed that the bill should be subject to level 3 scrutiny, which means taking oral evidence from an organisation on which costs fall and then from Executive officials. The committee will take evidence today from the Scottish Prison Service and Executive officials. As our timescale for reporting on the bill is relatively tight, we have had to schedule both evidence-taking sessions today, which is not what we would do normally.

I welcome from the Scottish Prison Service: Willie Pretswell, finance and business services director; Rachel Gwyon, director of corporate services; and Eric Murch, director of partnerships and commissioning. I invite the witnesses to make a brief opening statement and then we will move straight to questions.

We welcome the opportunity to present evidence to the committee. Although Tony Cameron sends his apologies for not being able to be here today, he has made a submission to the committee, which is included in members' papers. We have responded to the committee's questionnaire. The key implications of the bill for the prison service relate to the additional prisoner numbers that the bill generates and the subsequent additional obligations that will be placed on the prison service, mainly to do with the risk assessment and management of prisoners, including transportation through our escort contract. That is the main theme. The major issue in our managing those additional obligations will be the phasing of the increases in the prisoner population and our ability to synchronise delivery of any additional resources that will be required in line with that increased prisoner population.

Thank you for that, Willie. The committee agreed that Derek Brownlee and Andrew Arbuckle would be the lead members on the bill so I hand over to Derek Brownlee.

The financial memorandum estimates that there will be between 700 and 1,100 new prisoners on top of the existing projected increase. A whole range of assumptions feed into that figure at paragraph 178 of the financial memorandum. Are you entirely happy with that? Is the range reasonable?

Yes, it is. We have considered the figures, which range up to year 5.

A provision that has been the subject of recent comment concerns the release point after three quarters of a sentence has been served. Was there any analysis of what the increase in prisoner numbers would be if there were no automatic release after 75 per cent or a higher percentage of the sentence had been served, or no release until 100 per cent of the sentence had been served?

As you can imagine, there are a number of ideas floating around as to whether the measures in the bill are the correct ones. A lot of work goes into the modelling, and we did the detailed modelling that you see in the financial memorandum just on the measures in the bill. However, one thing that we considered at an early stage was what would happen if there were no 50 per cent or 75 per cent points and if everyone stayed to the end of their sentence without being risk assessed for a period in the community, and the numbers for that are stark indeed. If everyone stayed to the end of their sentence, over the same timeframe that we were looking at for the 700 to 1,100 extra prisoners, the prisoner population would rise from the current level of just over 7,000 to about 12,000. That is a different scale altogether.

Members will have a number of ideas about which measures in the bill they want to discuss, and the Finance Committee is obviously giving detailed thought to the costs, implications and impact. I just wonder what the arrangements are, either here or in other places, for considering what will happen if changes to the bill produce big changes in impact or cost, and for checking what those changes might be.

I would like some clarity on those numbers. You said that there would be an increase of 5,000 prisoners if there was no provision at all for automatic release in the bill. The financial memorandum calculates an increase in prisoner numbers of between 700 and 1,100 as a result of the bill, but an increase in the prisoner population is projected anyway. If we take the 5,000 figure and subtract the 1,100 additional prisoners estimated as a result of the bill, that leaves 3,900 additional prisoners. Perhaps I should put the question another way. What increase in the prisoner population is expected over the timeframe that we are talking about, excluding the effects of the bill?

The figure is around 500 over the same period, or about 100 a year.

That is useful. An increase in prisoner numbers has an impact on prison spaces and your submission states that a prison houses about 700 inmates, as a rule of thumb. Is that the optimum? Is it the maximum? Why 700? If, for example, there were 1,100 additional prisoners, that number would fill more than one prison if the typical prison size is 700 inmates. Is there any way of squeezing—that is perhaps the wrong phrase—or of increasing the size or scale of prisons that would lead to a consequent reduction in the cost per prisoner serviced, or is 700 a natural limit?

We have tried to give an indication of the resources that would be required to provide the additional prisoner places that we are projecting—the figure of 700 to 1,100. As you said, there are many assumptions behind that estimate, and many different scenarios could play out in terms of how those prisoner places are provided. At this stage, we have no plans for how we could deliver that provision, so we have tried to express it in financial terms in the financial memorandum, rather than presenting it as a fixed way of delivery. We have presented the financial memorandum so as to cover the estimated costs of providing a mixture of places in different ways.

The committee will be aware that we are currently spending about £1.5 million a week on modernising the prison estate. As part of that programme, we are trying to create more efficient, modernised prisons that are fit for purpose and have extra capacity. On existing sites, we are converting the old accommodation into new and providing more places. For example, at the turn of the year, we will be opening new house blocks at two of our development prisons, Polmont and Glenochil, where there will be about 700 new places. At the same time, we will be closing around 300 or 400 places. As we go along, we are putting in extra capacity, but at the moment we have a shortfall in the design capacity as against the prisoner population, and we have a rolling programme of investment.

Over time, the opportunities to build more accommodation—more efficient prisons—on the existing sites will dry up. If that happens, we will need to look at other ways of delivering that accommodation, assuming that there are no factors to offset the impact of the bill on the overall prisoner population. We will need to consider other options such as new prison sites and the cost of delivering those. Nevertheless, we are content that the overall recurring costs of providing 700 to 1,100 new places are covered in the financial figures that we have. Where capital expenditure is incurred, either for traditional investment in existing sites or for a new prison, the figures are in the right ball park.

We have not developed a plan for delivering the extra capacity; we need to consider that in conjunction with the other estate management issues that we have and the timing of the roll-out of the aspects of the bill that would cause the prisoner population to increase. The key issue for us will be the management of any additional demand for our services that arises from the bill in conjunction with the other issues that we have within the prison estate.

Is it fair to say that, although there is the potential to make economies of scale, the main constraints are the prison estate and the physical space that is available to you to deliver the extra capacity?

We are taking on an ambitious development plan for the prison estate. We have concentrated the investment—I mentioned the expenditure of £1.5 million a week—on four key prisons. Remarkably, we are maintaining fully operational prisons on those sites, as we cannot give up the spaces. We have building sites with 200 to 250 contractors working in a live prison environment because we cannot release the sites for full development. That work is going well at the moment, and we are creating more than 2,000 new, modern places through that route. As I said, once we finish the development on those four sites—which we hope to do round about 2008-09—we will look to the next phase of development. If the bill is passed, our development programme will take account of the demands that arise from it.

So, your current development programme aims to deal simply with the pressure that already exists in the system through the increase in prisoner numbers. If the bill did not come into force and nothing else changed, you would still face a projected increase in prisoner numbers. Would the current projections lead to a surplus of places or would you still be under pressure?

The charts that we have provided, along with our business plans, show that, over the next few years, we will try to build up sufficient capacity. We hope to align capacity with the projected prisoner population in a few years' time. That is not taking into account any implications of the bill. The projection is that the prisoner population will continue to increase by about 100 to 200 prisoners per annum. So, in a few years' time, we will have another shortfall of places if the figures fall out as they are projected. That will be addressed in the next phase of the development plan.

You will be aware that we are also under pressure to modernise the prison estate because of the need to raise standards of accommodation and because of some of the issues that we are managing at the moment. The implications of the European convention on human rights for slopping out have been well publicised. That is one of the issues that is associated with the legislation. We are trying to get ahead of the game in making the estate fit for purpose for prisoners and for staff, so that we can carry out the work that the Executive wants us to do on targeting reductions in reoffending and on prisoner behaviour.

Has the Executive given you a commitment to provide you with the resources that you will need to deliver the extra spaces if the bill comes into force?

The Executive has fully funded the current development programme, in terms of both capital investment and the two new prisons that are planned. In June, we awarded a contract for 700 additional places at HMP Addiewell, which is on track to open in late 2008. On the second new prison, we are currently awaiting the outcome of a planning appeal that took place in the summer. We hope to know the outcome of that appeal early in the new year, after which ministers will make a decision that will allow us to proceed with the project. The project has been fully funded.

Assuming that no offsetting measures are taken to reduce the impact of the bill and to address the financial implications that would arise from it, there is an understanding, which is reflected in the bill, that resources would need to be made available to match any net increase in the prisoner population. Regardless of which route is taken to create new places—whether they are additional places on existing sites or new prisons—there will be a lead time for delivering them.

Let me push you a wee bit further on that. You say that there is an understanding that resources would follow. Is that as far as it has gone? Has there been no specific commitment that any costs to the prison service arising from the bill, if it is passed, will definitely be funded?

I would expect that to be factored into the appropriate spending review process. The timing of the bill's roll-out would determine which spending review process that would be part of. I am not sure about the timescale for passing the bill, and there is a separate question of when the various elements of it would be brought into force. That would be considered and, if nothing else changed, we would factor that in on the basis of the submission that we have made to the committee. However, as Rachel Gwyon mentioned, if the bill changed during its passage through Parliament, we would need to revisit the assumptions underlying the projections for the prisoner population, the delivery of spaces and the financial implications. We see the decision on funding being taken through the spending review rather than through the Executive giving a firm commitment at this time.

It might be useful to point out that, if an amendment was passed at stage 2 that had a significant financial implication for the bill, under the agreed procedure there would be a requirement for the Executive to produce a revised financial memorandum. There is a process in place that would kick in to deal with the eventuality that Rachel Gwyon mentioned.

That is helpful.

I have a question on the lead-in time. You say that it takes up to five years to build a new prison. The figures that we have been dealing with take us to year five, with between 700 and 1,100 new spaces required. A further extrapolation increases the figure. I hope that that extrapolation is wrong and that the figure does not continue upwards. There is, surely, a need for you to identify additional requirements eight years down the line. Can you tell us what will be required either through the extension of existing premises or through the building of new premises?

At this stage, we have not defined what that mix is. The easy option would be to say that because the requirement will be additional, we will need new sites and new prisons, but we propose to consider the matter in the context of the other estate management issues that we face and to manage as much as we can within the existing estate.

If we reached our maximum capacity, we would need to look for additional sites, get planning permission and carry those plans through. That would probably have a longer lead time. We indicate a timescale of eight years in our written submission, basically because a lot of assumptions have to be made about how long it would take to identify and purchase sites and get planning permission. Our experience with Low Moss, at Bishopbriggs, shows that such issues are outwith our control. It has taken a number of years even to get to the present position. It is difficult to predict exact timings. If we went forward with such a programme, we would see it as an opportunity to integrate this exercise with the overall estate strategy that is aimed at modernising the entire prison estate.

I recognise that it is a difficult exercise and that many factors could influence it. If that is the timescale from deciding that we need additional capacity to opening the doors—or closing the doors, I suppose—surely it would be prudent to include that in the capital cost of the bill, which will affect the prison population.

It is included in the capital value. We have identified that if there is a requirement to go outwith the existing sites, we will need to acquire some land. We have allocated a non-recurring cost of around £2 million to that. We have identified that the capital requirement would be between £23 million and £160 million, depending on whether 700 or 1,100 additional prisoner places were needed and on whether the vehicle was traditional capital funding or a public-private partnership solution that was off balance sheet. A few assumptions have been made.

We will return to those assumptions with the next panel.

I want to change the subject. One of the duties of the SPS is to provide documentation to the Parole Board for Scotland. You have suggested that the cost of that will not be significant, but one of the bill's aims is to make far more use of parole. Will the additional work not have a financial implication?

A group is examining the four components of the process: the custody part, the community part, the court part and the parole part. We are dealing with the custody part and the parole division is leading on the parole part.

In addition, we have introduced integrated case management, through which much of the information that was traditionally provided to the Parole Board in large volumes of paper will be dealt with. We hope that integrated case management will rationalise the amount of paper and documentation that is required for the process.

What about the financial implications of the extra work?

We covered the part of the process for which the SPS is responsible under the risk management analysis. We will require additional criminal justice social workers to work alongside additional prison officers and additional administration staff. We factored in the cost of that—I think it came out at £5 million to £6 million.

Mr Murch mentioned the four components that are being examined in this area of policy. I take it that that work has fed into the figures that Mr Pretswell gave us on the number of prisoner places that you expect to require in the future. Is that correct?

We did the modelling work on the number of prisoner places that will be needed first. The implementation work is about how we manage the volume of work that we expect, what information the Parole Board and other people will need from us, and what risk management tools the Risk Management Authority will develop for us to build into the integrated case management process. That work is not expected to change the modelling; it is about the implementation, in the light of what we expect to happen.

If a different attitude to policy were adopted—let us say that a more aggressive approach was taken to alternatives to custody for some minor offenders—it might have a material impact on your modelling of prison numbers.

A policy change that sought to keep more people on sentences of less than six months in the community would require a change in primary legislation, for which a separate financial memorandum would have to be prepared. The committee would consider such measures and we could discuss the impact on the projections, so there would be visibility.

We have no more questions for the SPS witnesses. Thank you very much for coming along.

I welcome officials from the Scottish Executive. Jane Richardson is the head of parole and life sentence review division, Brian Cole is from the community justice services branch and Gery McLaughlin is head of the knife crime branch—it must be interesting to have that on your business card.

As before, I invite the officials to make a brief opening statement should they wish to do so. We will then proceed to questions.

I am conscious of the time, so we will keep the presentation short.

As you are aware, the bill has two distinct elements: custodial sentences and weapons. Because my division deals with the existing arrangements for parole and review of life sentence prisoners, we are co-ordinating the custodial sentences aspect of the bill. In addition, we have sponsorship responsibility for the Parole Board for Scotland.

As the financial memorandum tries to explain, the new combined structure approach to sentence management that will apply to sentences of 15 days or over will see sentences being managed from now on as part custody and part in the community. My colleague, Brian Cole, who deals with community and justice services, obviously has a significant role. You have heard from our colleagues in the Scottish Prison Service on the custody element. My colleague Gery McLauglin will do the interesting bit on knives.

The bill is wide ranging, but we are concentrating on its financial costs. You heard us question the previous witnesses about whether we can be sure that we will have the funding and capacity for the increased number of prisoners that will result from the bill. Can you assure us that there will be prison capacity for the additional prisoners?

I believe that my SPS colleagues answered the question about the number of prisoners. The financial memorandum reflects the estimate, on which we worked with our prison colleagues, of an additional 700 to 1,100 prisoner places.

With regard to new facilities, a wide range of costs is given. Towards the end, the financial memorandum states that the cost will range from £25 million up to £162 million. Can you indicate why there is such a wide range?

I will invite my colleague, Mr Cole, to say more about the community services element. As my colleagues from the SPS explained, the variation is because the figures are based on a range of assumptions. The new structure of the sentence will mean that there is a degree of flexibility in the way it is managed. The period of custody imposed by the court can be a minimum of 50 per cent of the sentence, but it can raise that to 75 per cent on the basis of retribution and deterrence—punishment if you will. There is also a variable once the individual is taken into custody, which will depend on the risk they are assessed to present as they work their way through the custody part. The period can range from the minimum imposed by the court up to 75 per cent of the sentence if the case is referred to the Parole Board.

Yes, but I come back to the range of the estimate of the capital cost of new facilities. Can you give us more information on why there is such a range?

In relation to the prison service?

Yes.

I am sorry, but I am not equipped to answer that question more fully than my colleagues from the SPS, who have just answered it. The estimates of capital costs were based on information that we gained from the SPS in discussions held to formulate the overall financial implications.

Can you assure the committee that ministers have confirmed that funding will be made available to implement the bill, regardless of whether the smaller figure or the larger figure of £162 million is required?

Let me just tweak that question slightly. Do you have any information in connection with the spending review that might allow us to take the issue forward? Obviously, the cost issues will need to be dealt with in the future.

I appreciate that. As my colleagues from the Scottish Prison Service said, all the information will be fed into the spending review, which is about to start off.

The only thing I can say by way of assistance is that commitment is given in the financial memorandum that ministers recognise that the facilities and structures will need to be in place before the new arrangements can be brought on stream.

Is there a mechanism that allows that to happen? In other words, will the finance be provided and the mechanisms then be put in place to match up to it, or is it possible that we could be legislating to put in place a system that ministers might decide not to fund?

The two issues go hand in glove. As my SPS colleagues mentioned, an implementation group has already been formed to consider how the structure of the whole system will be put in place. Given that the proposals involve a radical departure from the existing arrangements, the structure will need to be in place before the new arrangements can be implemented. Although the legislative authority will be provided as a result of Parliament eventually considering the bill to be appropriate, we will also need to have in place the structure to support and implement the new arrangements. Obviously, that will include resources.

Why is there such a vast difference between prison costs in the private sector and prison costs in the public sector? Are those differences reflected in the cost of the private prison that is currently being built in West Lothian?

Sorry, I would need to ask my SPS colleagues to answer that. That is not my field of expertise, so I cannot answer the question.

Perhaps we can put that question in correspondence to the Scottish Prison Service.

I want to press you on the recurring costs, for which the table on page 32 of the financial memorandum gives a range of between £37 million and £55 million for the SPS and another range of between £47 million and £65 million. Is the difference between those two sets of figures due to the different recurring costs of private prisons and public prisons?

The total cost to the Scottish Administration is given as between £47 million and £65 million. The next line in the table gives the recurring costs to the SPS for year 5, which are given as a range of between £37 million and £55 million. As my SPS colleagues explained, those figures are based on a number of assumptions, including the varying impact of additional prisoner places and, as the financial memorandum explains, the differences between the various types of funding for those places.

Does the variation in the different types of funding refer to the cost differences between private prisons and public prisons?

I believe that that accounts for part of the difference. If it would be helpful, we could try to set out further details on those figures for the committee.

I am particularly interested in the statement in the financial memorandum that the asset—the prison—returns to the SPS after 25 years. It would be useful to have the comparative costs of a private prison and a public prison over the 25-year period so that we can see the long-term costs of the two options. That would give us a better understanding of the variability of new prison costs rather than the year 1 costs and recurring costs in year 5 that are given in the financial memorandum.

It might be better to put that question in correspondence to the SPS rather than to Executive officials today, although I presume that the SPS has to agree the figures with the Executive.

I suppose that my question is trying to unpick what the variability in the recurring costs is, to find out whether other factors are involved.

I agree that it would be helpful to get that information. Can we deal with that by correspondence? Are people content with that?

Members indicated agreement.

In its submission on the bill, the Parole Board for Scotland says:

"the Financial Memorandum advises that savings of £50,000 will accrue as a result of the Parole Board not being required to consider cases involving the recall to custody of licensees."

It goes on to say that

"That is not correct",

as the savings would be offset by additional work in other areas. What is your comment on that?

We have been in discussion with the Parole Board on a number of fronts, including cost. Perhaps it might be worth saying up front that, in recognition of the pivotal role that the Parole Board will play in the new arrangements, the Scottish ministers have said that they will ensure that the board is properly resourced. Obviously, that commitment was made in the context of the tests of effectiveness, efficiency and best value as well as the overriding consideration of legal competence.

We have discussed with the board the ways in which efficiency savings can be made. The amount of money under discussion is small. Our view is that if the Scottish ministers—as is proposed in the bill—are made responsible for recalling offenders to custody, the board will, quite rightly, as a court-like body, remain the organisation that looks at the individual's re-release. At the moment, the board operates a system under which most of its cases are dealt with on paper in casework meetings. On the day of those meetings, the board splits the membership into two groups, one of which looks at recall, while the other looks at re-release. Given that the board will no longer be required to look at both questions, a smaller number of members will be involved. That is how we arrived at the £50,000 saving.

As I said, we are in discussion with the board on a number of areas, including possible reductions in its workload in relation to the number of tribunals that it has to hold. The board will be fully consulted on any changes that we make, including on the Parole Board rules, which we are in the process of drafting. The board will make a full input to that process.

I have another question on resources. At present, the board relies on the post-sentence reports that are produced by High Court judges. The board is concerned about the proposal to extend that requirement to sheriffs. What recognition is being given to the additional work that will fall to sheriffs in undertaking such report writing?

I mentioned earlier the implementation group. I am happy to say that it has representation from all the organisations that will be involved in setting up the structure and framework for the new arrangements. We have representation from the Sheriffs Association. One of the issues that we will look at is the impact on the judiciary of any information that is required. At the moment, in most indictment cases, the sheriff or the judge would be expected to prepare a report.

My final question relates to the legislation on knives and swords and the role that local authorities will have to play. The bill is supposedly cost neutral for local authorities because they will be given support for their work centrally, but in its submission the Convention of Scottish Local Authorities suggested that although there are precedents for that, the reality is that the costs of the additional work will not be covered. Is the bill really cost neutral for local authorities? Will allowance be made for administrative and background work?

Yes. The arrangements will allow local authorities to cover their direct and administration costs. It will be up to them to set a fee that covers all their costs. My understanding of COSLA's point is that, given that what we are asking for is not terribly significant, it may not amount to whole-person costs. I suppose that that provides a management challenge for local authorities. However, it will be open to them to set a fee that reflects the actual cost of doing the work.

I would like to move on to the supervision element. I do not know whether you have seen COSLA's submission about the relative costs. The financial memorandum suggests £7.45 million for overseeing offenders, but COSLA says that rather than the cost for a low-risk offender being £2,000, as the financial memorandum indicates, the true cost is about £3,500, and that the cost for a high-risk offender is about £5,000. Do you accept that, or are you operating from a different base from where COSLA is coming from?

I should say at the outset that we are in continuing discussion with COSLA and the Association of Directors of Social Work about our respective sets of calculations. It might be useful to provide some information to set the figures in context. The Executive provides local authorities with some £9.3 million of grant for the delivery of throughcare services, both for those who are currently subject to statutory supervision on release and for those who receive voluntary assistance. Slightly more than £2.5 million is in respect of that latter group—those receiving voluntary assistance—and that provision applies to offenders who are released from custody without any statutory supervision. The bill will mean that, henceforth, those offenders will be subject to licence when released, so that £2.5 million or so will be available to be added to the £7.45 million that we have estimated for delivering the services. It is an on-going discussion, but more money is made available for those services than is shown in the financial memorandum.

Later in its evidence, COSLA states:

"Local authority community-based disposals are not currently funded at a level which can realistically achieve the expected reduction in re-offending."

If it has been an on-going discussion, presumably there have been discussions in the past and presumably, to judge from COSLA's evidence, nothing substantive has changed. Will it change if the bill is passed?

The Executive has increased considerably the amount of money it provides for throughcare. As recently as 2002-03, the sum was £2.5 million. This year, it is £9.3 million. The increase shows the Executive's recognition of the greater priority and focus that is given to this area of work.

It would be useful to see those figures on a per-offender basis, to give us a bit more context.

As there are no further questions, I thank the witnesses for coming along today. I should let members know that the report on the bill will be taken on 28 November.

Meeting closed at 12:33.