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The Public Accounts Committee report concludes that up to £342 million more has been committed to Community Rehabilitation Companies (CRCs) without clear benefits.

• Read the report summary
• Read the report conclusions and recommendations
• Read the full report: Government contracts for Community Rehabilitation Companies

MoJ long way from promised rehabilitation revolution

More than three years into its seven year contracts with Community Rehabilitation Companies (CRCs), the Ministry of Justice is a long way from delivering the ‘rehabilitation revolution’ it had promised.

In 2017, the Ministry was forced to adjust its contracts with CRCs because it pushed through its reforms too quickly and failed to anticipate foreseeable consequences.

The volumes of work paid for under the contracts has dramatically reduced, meaning that CRCs have not invested in probation services. The quality of rehabilitation services has suffered as a result and is undermining the objectives of the reforms.

14 of 21 CRCs forecasting losses

The Ministry accepts that the CRC contracts were plainly not working as intended and has agreed to pay them up to £342 million more of taxpayers’ money. But the Ministry could not explain what it is getting back for this extra commitment.

Despite this bailout, 14 out of 21 CRCs are still forecasting losses. This raises concerns about the potential for contracts, or providers, to fail.

One provider, Interserve, has issued two profit warnings. As a company with multiple contracts across government this is particularly worrying in light of the collapse of Carillion.

19 CRCs have not met reoffending targets

The future income of CRCs will increasingly depend on their ability to reduce stubbornly high reoffending rates. While there has been a modest decrease in the number of re-offenders since CRCs were introduced, 19 CRCs have not met their targets for reducing the frequency of reoffending.

These disappointing results raise questions about whether the current arrangements will be able to deliver the promised benefits before the contracts expire in 2021–22.

The Ministry urgently needs to make sure CRCs improve the quality of the services they provide and deliver on their promises of innovation to achieve the improved outcomes that offenders and communities so desperately need. 

Chair's comments

Comment from Committee Chair, Meg Hillier MP:

"The so-called ‘rehabilitation revolution’ is showing worrying signs of becoming a contracting catastrophe.

Despite a massive injection of additional taxpayer cash, two-thirds of CRCs are forecasting losses and one provider, which holds multiple contracts across government, has issued profit warnings.

Almost all have failed to meet targets for reducing rates of reoffending.

This combination of poor performance and financial instability is neither acceptable nor sustainable. Yet the Government’s attempt to spend its way out of difficulty clearly isn’t working.

It must act now to limit taxpayers’ exposure to risk and give this flagship strategy a fighting chance of delivering what it promised."

Further information

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