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Prison population reduction would have saved £130m – NAO

The National Offender Management Service is facing significant challenges after a reform to radically reduce the prison population was dropped, costing the Ministry of Justice £130m.

The National Audit Office (NAO) has published a report highlighting the “substantial” financial and operational challenges involved in continuing to drive savings whilst maintaining performance.

The decision to drop a proposal to halve sentences for criminals who plead guilty at the earliest opportunity has cost the MoJ around £130m in lost savings, the NAO has suggested.

Additionally, the prison population is now unlikely to fall significantly, which will limit plans to close older and more expensive prisons.

The proposals would have resulted in 6,000 fewer inmates, potentially taking the prison population below 80,000. New projections see the population falling by just 2,000 prisoners.

Amyas Morse, head of the National Audit Office, praised the Agency’s spending reductions achieved so far, as well as value for money and broadly maintained performance.

But he said: “However, its spending is vulnerable to even slight changes in demand, over which it has no control, and it has very little flexibility to absorb unforeseen costs.

“There are therefore risks to the Agency’s ability to make sustainable savings over the long term, when the prison population is unlikely to fall significantly and the Agency’s funding will continue to reduce.”

Margaret Hodge MP, chairwoman of the Commons Public Accounts Committee, said: “I am concerned that the agency has yet to pin down a plan to get back on track. The agency's fragile financial outlook is at the mercy of events, such as last August's riots and the sentencing decisions of judges and magistrates over which it has little control.”

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