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Saturday, November 3, 2012

Gulag Britain

It amazes me every time I hear the Thatcherite stalwart Kenneth Clark described as a "liberal". It just goes to show how far to the right the UK political spectrum must have shifted if a right-wing windbag like Ken Clarke appears liberal compared to the new breed of rabidly right-wing Tory politicians.

The only reason I can see for this absurd redefinition of Clarke as a liberal was his widely publicised "rehabilitation revolution" and his statement that "locking people up for the sake of it is a waste of public funds". On the surface, the idea that the justice system should attempt to rehabilitate prisoners in order to turn them away from the life of crime sounds like a liberal idea, especially when it is being presented by a Tory, a party normally noted for their lock 'em up and bring back the death penalty attitudes. However, on closer examination, Clarke's "rehabilitation revolution" is clearly just another Tory scheme to grub immense private sector profits out of the public purse.

This absurd caricature of Ken Clarke the liberal is best summed up by a quote from the foul mouthed reactionary Rod Liddle written in December 2010:
"I’m getting a little weary of watching Ken Clarke smirking at various bunches of skaghead offenders and telling them he wants them out of prison, pronto, so that they can stab your wife and crap on your living room carpet."
To see Clarke taking such flack from a right-wing fanatic like Liddle is quite ridiculous. During his time as justice secretary he slashed legal aid in an attempt to price the poor out of the justice system and set about devising ways to generate profits from "the prison sector". Hardly the actions of a leftie liberal.

When Clarke's tenure as Justice Secretary was ended by David Cameron's in his 2012 cabinet reshuffle, it was widely reported as part of an effort to "shift the government to the right", however Clarke retains his place in cabinet, as "Minister without Portfolio" and his prison profiteering schemes remain in place too.

The BBC, in their typically understated way described Clarke's prison plans as a scheme to "pay private firms and voluntary groups according to how many prisoners they rehabilitate", without the slightest mention of the fact that the plans actually involve allowing private sector firms to use prison labour in order to cut their costs, a scheme that could actually be referred to as "Gulag Britain" rather than the "rehabilitation revolution".

Under Clarke's plans, the old Prison Industries Unit has been re-branded as One3One Solutions, as an effort to prime it for privatisation. Under Clarke's scheme, the objective is to get 20,000 prisoners working in the private sector and generating profits of £130 million by 2021. The beneficiaries of such schemes are the private sector organisations that get a supply of labour at way below the minimum wage. Typical salaries in the prison labour industry are well below £1 per hour.

On the One3One Solutions website, the Chief Executive Michelle Jarman-Howe describes the service they provide as: 
“We are open for business. This enterprise provides exciting opportunities for your business and your future. Our ambitions to develop these unique opportunities into really exciting business relationships. We can provide you with a competitive and flexible service. I am confident that you will be pleased with the results."
Of course she is confident that companies will be pleased with the results, given that the "competitive and flexible service" she is talking up, is nothing but a scheme to provide virtually free labour to corporate interests at the taxpayers' expense.

The right-wing CBI have roared their approval of schemes to provide British industry with a virtually costless labour source. The head of the CBI John Cridland is quoted on the One3One website as saying:
"The CBI fully supports One3One Solutions and the initiative to bring more commercial work opportunities into prisons."

It is hardly surprising that the private sector fully supports this scheme, it will, after all, allow them to boost their profits by eliminating labour costs. It will also give business owners a very strong bargaining position when it comes to inflicting pay cuts and attacking labour rights. If their employees won't comply, the owners can begin openly contemplating the replacement of their labour force with prisoners.

It seems that very little attention has been paid to the economic effects of such free-labour schemes. Steve Gillan, general secretary of the Prison Officers Association, said that allowing companies to employ prisoners at such low wages is both "exploitative" of prisoners and risks damaging the wider economy.
"We have concerns about simply using prisoners as 'cheap labour' for companies to cut their costs... Many prison are based in parts of the country which are very deprived and there is a real risk that companies will choose to go for the cheapest option and outsource work to prison."
The One3One website boasts that they are already involved in several industries. The products and services page implores us to "check out" some of the industries they are involved in, then lists; machining, sheet metal work, powder coating, welding and fabrication, assembly,  printing, woodwork, textiles and laundry.

Has nobody thought that allowing companies to source their labour in prisons might have a detrimental effect on the labour market in these sectors? What hope of a job has an experienced printer, sheet metal worker or laundry worker got, if they live near a prison that provides labourers that cost only £3-4 a day in wages?

Is it not easy to see that such schemes create a perverse incentive for employers to sack their workforce and replace them with virtually free labour? In fact, wouldn't it be against their commercial interests not to take advantage of such a cost cutting scheme?

Well for anyone that thinks that this is unlikely, that no private sector organisation could possibly be so cynical, there is a growing body of evidence that this is exactly what is happening. There are dozens of companies already taking advantage of the One3One prison labour schemes, many of which have laid off many paid full time employees in the recent past, then taken on virtually free prison workers, paid for at the taxpayers' expense. Here are just a few examples of companies cashing in on "Gulag Britain":
DHL
According to the One3One website the global distribution company now employs over 800 UK based prisoners to receive orders, pick, pack and ship. Meanwhile they have been shutting distribution centres, laying off hundreds of paid staff across the country (including 330 jobs in Droitwich, 200 job losses in Swindon and further job losses in Scunthorpe and Corby), and slashing wages across their distribution network prompting strike action. This is how Chris Taylor, DHL General Account Manager describes the scheme on the One3One Solutions website: "Once you are through the prison door we like to create an environment identical to any DHL workplace".
Going Green
A Cardiff based loft insulation and solar panel instillation company that laid off 17 workers at their call centre and replaced them with prisoners from Prescoed prison at an hourly rate of just 40p an hour.

Speedy Hire
A tool hire company that sacked 800 workers and shut down 75 depots in 2010. Since then they have increased the size of their prison contract to service and repair the tools they hire out, paying Erlestoke, Garth and Pentonville prisons £114,012 for the services of around 100 prisoners during the 2010-11 financial year.

Calpac
A food packaging company which increased their contract with Kirkham prison from £34,321 in 2010 to £154,267 in 2011. The company payroll showed that the highest-paid prison job is an office manager at just £1 an hour. The company payroll also showed that many of the prisoners work overtime, taking them up to 60 hours a week. Mike Perry, a director of Calpac, is quoted by One3one saying: "The costs of setting up a business within a prison are considerably lower."
Aside from the issue of labour rights, has nobody considered that allowing one company to employ prisoners at minimal cost gives them a huge unfair advantage in the market, especially in labour intensive sectors? Is it really in the best interests of the British economy to drive certain businesses to bankruptcy because they can't compete with other companies in their sector that use prisoners at a tiny fraction of the minimum wage to drive down their labour costs?

Has nobody thought of the wider economic impact of allowing a labour force of 20,000 to undermine the pay and conditions of existing workers? It should be obvious that every worker that is put out a job to be replaced by a prison labourer represents a fall in aggregate demand, since workers have a much higher marginal propensity to consume than corporate executives and shareholders getting rich on their zero-labour cost business model.

The first and most obvious conclusion from "Gulag Britain" is that this is yet another demonstration of the Tory contempt for the whole concept of labour rights. This is exactly the same kind of exercise as Workfare, allowing selected private sector interests to bypass the minimum wage and undermine labour rights, all paid for at the taxpayers' expense.

"Gulag Britain" doesn't just demonstrate contempt for labour rights, it is also a crystal clear demonstration of Tory contempt for the taxpayer. It costs an average of £38,000 a year to keep someone in prison. Simply hiring these prisoners out, without expecting the beneficiaries to contribute towards the cost of keeping them in jail is absurd. These companies should not just be paying a few quid a day in cigarette money to the prisoners. Any shortfall between what they pay the prisoners and the minimum wage should go towards the cost of running the prisons. This would have two positive impacts, it would cut the taxpayer burden of maintaining the prison in question and it would prevent the companies in question from gaining an unfair labour cost advantages over their competitors.

A third conclusion is that this is yet another example of Tory economic illiteracy. They didn't bother to carry out any evidence based analysis before expanding this scheme. It is an ideological experiment supported by a feeble justification narrative built on resentment (why should prisoners laze around doing nothing whilst you work hard?) aimed at squeezing private sector profits out of the prison system. It is absolutely criminal that no analysis was done to consider negative economic impacts such as rising unemployment, falling aggregate demand and unfair competition between companies with paid workforces and those using prisoners provided by One3One Solutions.

Returning to where I started; my final conclusion is that if you still believe that Ken Clarke is some kind of cigar smoking hippy liberal after reading about "Gulag Britain", you must be as dementedly right-wing as the noxious Rod Liddle.


Credit: The information relating to Calpac and Speedy Hire as well as the quote from Steve Gillan came from this article in the Independent.

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