Commercial prisons – revenue model concept
Private companies do have the potential run prisons effectively thanks to their position to create a ‘fresh’ start and work under political interference however, to ensure that the prisons are run effectively the revenue model must be dictated towards the right end.
There is the potential for rewarding private companies based on the reduced levels of reoffending as this equates substantial amounts of government money saved.
The following diagram represents a concept for the engagement of private companies and their payment based on results. The system would of course need to more complex, however it is a potentially robust concept to strongly encourage private companies to build and manage prisons more effectively.
The rate of rewards can be base not only on the level of subsidisation (bearing in mind a risk of company failure, and therefore a requirement to reduce this risk). Companies that only require 50% of build costs to be subsidised may gain higher rewards based on higher % of government savings.
Such a reward scheme would ensure that companies strive to innovate and develop methods to reduce the reoffending rate; such an environment will inherently lead to more effective prisons.
