Reid Reveals Buy-To-Let Jails
John Reid is to beg the public to buy shares in new prisons after failing to secure funding from the Treasury. The unprecedented move would see investors paying for the urgently needed cells, before renting them to the Home Secretary to lock up criminals.
Mr Reid promised 8,000 new cells in the summer – at a cost of £1.5 billion – but has since failed to secure enough cash from Gordon Brown to build them.
Shadow Home Secretary David Davis said: ‘This is a consequence of the Labour Government’s failure to address the chronic lack of capacity in our prisons despite warnings over the years.
‘This has been compounded by the Treasury’s miserly approach towards the Home Office which has actually seen its budget frozen.
‘As a result we see John Reid reduced to begging the public to stump up even more of their cash to pay to deal with Labour’s failure.’ Mr Reid’s plan, currently being considered by officials, lays bare his desperation to find extra cash.
He appeared to have struck a deal with the Chancellor to pay for the new jails in July, when he published an action plan to ‘rebalance’ the criminal justice system.
But it has since turned out to be nothing more than an agreement the money could be found from ‘somewhere’ – not that it would be handed over by the Treasury.
Effectively, Mr Brown was agreeing the prisons could be built, but not that he would pay for them.
Whitehall insiders say Mr Reid is slashing as much money as possible from existing budgets, while telling officials to dream up more inventive ways of raising new investment.
This has led to the plan for ‘buytolet’ cells. Under the plan, the public would be asked to pump its money into Real Estate Investments Trusts.
These would provide the funds needed to build the prison, which would then be rented to the Government.
The Home Office would pay a fixedsum for using the cells which – over a number of years – would guarantee shareholders a profit. They would also receive an annual rental income.
A source told Building magazine: ‘The public could buy a share in a prison REIT, taking advantage of the steady rental income.’
Of the 8,000 planned places, 4,000 will be housed on existing prison sites. The remainder will be in three new prisons, containing around 1,300 spaces each.
Liverpool is understood to have been identified as a location for one of the prisons.
The latest figures released by the Home Office showed the full scale of the crisis facing Mr Reid, who already has more than 100 convicts housed in police cells because prisons are full.
Two thirds of the 125 male prisons are operating above their ‘certified normal accommodation’ – the optimum level at which governors believe they can provide a proper regime or rehabilitation and training for convicted criminals.
The most overcrowded jail is Shrewsbury, with 340 inmates against a CNA figure of just 179.
A Home Office spokesman said the Government had not carried out an ‘evaluation’ of how REITs would work, but added: ‘We are always ready to look at innovative ideas that could help us to build places more quickly and cost effectively.’