The UK prison labour industry

In August 2016 the US department of Justice announced that they are going to set about phasing out their use of private prisons, which triggered a spate of moral high-horsing from British people who tried to claim that our private prison riddled system is still superior to the US system because at least here in the UK we don't use prisoners as a cheap source of labour.

The map in the article header proves how wrongheaded this attitude is. Just because they haven't heard of Britain's prison labour management company One3One, doesn't mean that it doesn't exist, or that it isn't farming out prison labour to ever increasing numbers of private companies that are queuing up to take advantage of prison labour for as little as 30p an hour.

Prisoners in England and Wales are being used as a cheap source of labour in all kinds of industries including printing, textiles, engineering, woodwork, laundry and even assembling plastic poppies for the Royal British Legion.

The idea of training prisoners up with skills so that they are less likely to reoffend when they get out of jail is a vary good idea in principle, but the problem with farming prison labour out to the private sector is absolutely obvious. If scores of companies all over the UK are taking advantage of prison labour for as little as 30p an hour, then this availability of extremely cheap labour has an obvious downwards effect on wages and employment rates in whichever business sectors they become involved in.

Since the Lib-Dems enabled the Tories back into power in 2010, British workers have suffered the longest sustained period of long-term wage deflation in recorded history. The real terms value of British wages has slumped 10.4% since the economic crisis, a wage decline only matched in severity by Greece out of all of the most developed economies in the world.

The Tories have been doing everything they can to reduce wages and the disposable incomes of ordinary people: They've reduced public sector wages in real terms by imposing below inflation 1% pay rises (whilst accepting an 11% pay raise for themselves), they've overseen an exponential rise in people employed on exploitative Zero Hours Contracts, they've repeatedly slashed in-work benefits like Tax Credits and Housing Benefit, they've massively increased the amounts charged for university education and the interest rates charged on this appalling form of Aspiration Tax, they've unlawfully used unemployed people as a massive pool of free labour to distribute to their corporate mates and they've massively expanded the number of prisoners working for private companies too.

The economic effect of prison labour driving down the wages of ordinary workers is bad enough in itself, but there is evidence that the availability of prison labour is actually resulting in real job losses as unscrupulous companies lay off their paid workforces and replace them with prison labour.

Here are some specific examples:

DHL According to the One3One website the global distribution company 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 described 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 massively 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. 

Timson Ltd
The boss James Timson is happy to act as a propaganda mouthpiece for the government's prison labour scheme, but what he fails to mention in his praise for the programme is that his company's increased use of prison labour coincided with a wave of redundancies that wiped out some 30% of the paid workforce at the company.

CiscoCisco is mentioned by the Tory MP Andrew Selous as being a big player in the government's prison labour scheme. In August 2016 the company announced that it plans to lay off 5,500 workers worldwide. Perhaps they could prevent a few job losses in the UK by bringing the services they've outsourced to prison labour schemes back in-house?

The Tories have tried to dress up their move to massively increase the number of prisoners doing work for private profit-seeking companies as being a socially responsible policy, and with all good propaganda narratives there is a kernel of truth to it. Research clearly demonstrates that prisoners who are engaged in productive activities are less likely to behave violently while in prison, and prisoners who have been trained up with skills are much less likely to re-offend after being released.

The problem isn't that prisoners are being given the opportunity to work, it's that allowing private companies to profit from very cheap prison labour clearly has a downwards effect on jobs and wages in the wider economy and there are numerous clear examples of companies like DHL, Speedy Hire and Going Green laying off paid workers and then outsourcing work to prisons.

For all of the reassuring guff from the Tories and their buddies at the CBI about how the government's prison labour schemes don't undercut established businesses or destroy jobs, the evidence is absolutely clear that they do.

It costs the taxpayer an average of over £33,000 per year to keep a person in prison, yet the Tories have been busy using this prison population as an almost free source of labour for unscrupulous businesses who want to undercut their rivals by cutting down on their payroll costs.

In my view the clearest solution to prevent unscrupulous businesses using prison labour as a kind of taxpayer subsidy to undercut their business rivals (who actually choose to pay their staff) is to ensure that employing prison labour costs the employer an hourly rate of at least the minimum wage.

The prison could then deduct a proportion of the wage to contribute towards the enormous cost to the taxpayer of keeping the prisoner housed and fed (Accommodation charge). Part of the remaining sum could be contributed towards compensation for the victims of the crime(s) committed by the prisoner.

The problem isn't actually that prisoners are being given the opportunity to work, it's that this Tory drive to provide prison labour to private profit-seeking businesses has created an opportunity for the most unscrupulous profiteers to take advantage of cheap prison labour to lay off their existing staff, or to undercut business rivals who employ workers on real wages.

It wouldn't actually take much effort to prevent unscrupulous profiteers from taking advantage of prison labour to line their own pockets at the expense of wages and jobs in the real economy, but the Tory attitude to Workfare schemes (using the unemployed as another pool of free labour to distribute to their corporate chums) is illustrative of their attitude. The Tory objective is to help unscrupulous profiteers by providing them with cheap or free labour, and the impact of their policies on jobs and wages in the real economy is utterly irrelevant to them. In fact, many Tories would likely celebrate the downwards effect on wages as a brilliant outcome in line with their wage repression policies of the last six years.

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