This paper uses the case of prison privatization in England and Wales to scrutinize what it means to “economize the social” through numbers. It argues that we ought to be careful not to equate quantification with economization. To uncover the multiple effects of economization and quantification brought about by new public management reforms and prison privatization, one needs to set presumed dichotomies between the public and the private aside and turn instead to the multiplicity of economizing practices (curtailing, marketizing, financializing) and their implication in different forms of quantification. Ironically, numbers and state contracts governing privately managed prisons also shielded these establishments from economization (e.g. budgetary savings requests); and it is the public prisons that have been exposed the most to measures of government austerity.
- New Public Management
Since the late 1980s, the HM Prison Service in England and Wales has undertaken a series of steps to transform its prison establishments into calculating, economically minded, performance-oriented institutions. This happened in the broader context of wider New Public Management reforms (Hood 1991, 1995). Of particular importance, in this context, was the government’s engagement in prison privatization and the introduction of private sector accounting and management consulting expertise (Mennicken, 2013). The government hoped that the introduction of private prisons would help to “provide an alternative standard against which to measure the performance of public prisons, thereby bringing about improvements in the public sector” (James et al., 1997, p. 9). Privatization was promoted to transform prison establishments from inflexible, inefficient, rules-based bureaucratic organizations to cost-conscious, performance-oriented entities. The rise and spread of standardized performance measures paralleled these developments. Quantified performance targets were introduced to make public and private prison performance outcomes more visible and transparent and to enhance competitiveness amongst individual establishments (Ministry of Justice, 2009, but see also Home Office, 1988, 2000).
This chapter uses the case of prison privatization in England and Wales to scrutinize what it means to “economize the social” through numbers. By economizing we refer to the processes through which individuals, activities and organizations are constituted or framed as economic actors and entities (Çalışkan & Callon, 2009; Miller & Power 2013). Emphasis is placed on the process by which a supremacy of the economic over society, including politics and domestic life, is articulated and established (Miller & Power, 2013). Economizing defined in such broad terms has many components: First and foremost, “it implies a concern with the idea of efficiency – governing aimed at enhancing individual or collective performance, the reduction of wastefulness, and the imposition of rationing through calculation” (Kurunmäki et al., 2016, p. 396). Economizing also encompasses the creation and expansion of markets, and an enhanced focus on competition to improve performance (Çalışkan & Callon, 2010; Davies, 2014). Lastly, financialization, understood as the rise and expansion of financial markets, financial expertise and (capital) investment rationales, can be seen as a variant of economization (Mennicken & Espeland 2019, p. 234). In this context, French scholars in particular have drawn attention to the processes whereby things (e.g. higher education) or human beings (e.g. prisoners) are turned into assets evaluated in their capacity to create value from the perspective of an investor who expects calculable future returns (Chiapello, 2015; Muniesa et al., 2017).
Quantification undergirds all these processes of economization. Quantification and commensuration are key conditions for economic calculation and action (Mennicken & Espeland 2019). Cost accounting, such as the National Reference Cost Index for NHS hospitals or the calculation of prison unit costs, for instance, helps instantiate ideas of efficiency and frugality at the heart of hospital care and the management of prison establishments. Ratings and rankings (e.g. of organizational entities such as universities or prisons) enable benchmarking and the stimulation of competition (e.g. between universities), and are often closely linked with the establishment of (quasi)markets in the public services. Furthermore, especially over the past fifteen years or so, we have seen an increase in quantified social impact assessments, such as social return on investment figures, aimed at making the value of charity and public sector work knowable and visible from an investor’s perspective (Barman, 2016; Hall et al., 2015).
In the following, we scrutinize the multiplicity of such quantification practices and their implication in different processes of economization in the Prison Service of England and Wales. First, we show how prison privatization in the 1990s was accompanied by a rise of prison performance metrics, rankings and ratings aimed at facilitating a shift from “governing by rules” to “governance by numbers” (Miller 2001; Supiot 2015). We observe a market-oriented utilization of quantification, aimed at stimulating competition amongst and between public and private prison providers. Next, we turn to attempts aimed at undoing such economization. We trace efforts of “moralizing” prison performance metrics through the development of measures of the quality of prison life (Liebling, 2004). We show how such moralizing quantification eventually came to be undermined by austerity policies and related economizing practices of curtailment and frugality. Lastly, we discuss the implication of prison quantification in processes of financialization and (capital) investment rationales, focusing on the introduction (and abolishment) of the world’s first social impact bond in Peterborough prison.
We argue that to uncover the multiple effects of economization and quantification brought about by market-oriented new public management reforms and prison privatization, one needs to set presumed dichotomies between the public and the private aside and turn instead to the multiplicity of economizing practices (here: curtailing, marketizing, financializing) and their implication in different forms of quantification. Ironically, in the case of England and Wales, numbers and state contracts governing privately managed prisons also shielded these establishments from economization (e.g. budgetary savings requests); and it is the public prisons that have been exposed the most to measures of government austerity.
Furthermore, we need to be careful not to equate quantification with economization. Although quantification is an important condition for economization, it is only recently that quantification has been largely annexed by the phenomenon dubbed neoliberalism (Kurunmäki et al., 2016). We call for greater attention to the complex interplays unfolding between different practices of quantifying and economizing. In so doing, we also argue for closer scrutiny of the conditionality of the performativity of quantification (Butler, 2010; Kurunmäki et al., 2016). We need to pay closer attention to the conditions under which numbers produce (economizing and other) effects, and we need to better understand the varying nature and extent of those effects.
Quantifying and Marketizing: Prison Privatization, Quantification and the Ethos of Contestability
Since the 1980s, public services in the UK have undergone a series of far-reaching reforms. Instead of state coordination, market competition came to be seen as an effective lever for driving efficiency and innovation (Hood 1991; Miller & Rose 1990; Pollitt, 1993).1 The reforms, labelled “New Public Management” by scholars (see, e.g., Hood, 1991), were based on a conception of accountability that, as Hood (1995, p. 94) writes, reflected high trust in the market and private business methods, and low trust in public servants and professionals. New Public Management ideas also took hold in the Prison Service (Bennett et al., 2008; Bryans, 2007; Coyle, 2005; Coyle et al., 2003; Liebling, 2004; Liebling et al., 2011), providing fertile ground for plans of prison privatization. It was assumed that selective privatizations and the threat of market testing public prisons, where the HM Prison Service had to bid against private prison providers for the running of its own prison establishments, would stimulate the development of a “business culture” (Black, 1993) and “yield cross-fertilization benefits” (Harding, 2001). “The market” was called upon to discipline public prison administrators, financially and operationally (see, e.g., Home Office, 1988 and the introductory quote). Competition between and amongst public and private prison providers should help drive down costs (e.g. costs connected to the running of prison establishments), increase quality (e.g. the quality of prison life) and effectiveness (e.g. the effectiveness of operational procedures).
The first private prison establishment was opened in England and Wales in 1992 (Wolds Remand Prison, which was a newly built prison) (James et al., 1997). In the same year, the first public prison (Strangeways Prison) was also market tested (Prison Reform Trust, 1994). Market testing permitted the private sector to compete directly with the public sector for the management of prisons that were considered to be “failing”, that were not meeting performance targets, for instance with respect to cost management or security standards, evidenced for example by prisoner escapes or riots. As Black notes:
Market testing within the Prison Service will be twofold: First, under the provisions of the Criminal Justice Act 1991, the Prison Service will have to compete with the total privatization of certain prison establishments. […] Internal services currently run by the Prison Service are also to be contracted out, both to the public and private sectors. This is the second tier of market testing. […] In the open market, an agency status Prison Service will have to bid with other competitive tenders in order to run its own existing establishments, under certain proscribed conditions. (Black, 1993, pp. 27–30)
The introduction of market testing and privatization coincided with an “institutional crisis” in the Prison Service (King & McDermott, 1989; Resodihardjo, 2009). Between 1980 and 1987, prison expenditure had increased in real terms by 72% (James et al., 1997, p. 48). The overcrowding of prisons had become a serious issue. By 1990, England alone was imprisoning more people than any other Western European country (Pozen, 2003, p. 263). In the early 1980s, a third of the offenders in custody were sharing with one or two others cells designed for only one person and, in June 1989, Wadsworth prison in London had only eight cells with access to sanitation at night versus 1149 without access (ibid.). Furthermore, in 1990 the Prison Service experienced a series of severe prison riots. The riots had started in Strangeways Prison in April 1990, and spread thereafter to more than 20 prisons throughout the country. As Resodihardjo (2009, p. 93) writes, for Great Britain, these were “the most serious series of riots ever experienced… When the quiet returned, three people had died, 133 inmates and 282 prison staff had been injured and there [sic] the cost of the damage ran into millions of pounds”.
In view of these issues, and the lobbying efforts of the security industry, neoliberal think tanks and the general preference of the Thatcher government for free enterprise, prison privatization and market testing were put forward as solutions to the various problems facing the Prison Service, despite fierce opposition from the entire British penal lobby and the Labour Party. From 1992 onwards, the Prison Service began to be reorganized in terms of a “mixed economy”, with a mix of public and private prison service providers (King & McDermott, 1995). And by the late 1990s the debate had shifted from whether the government should principally allow private prisons or not to how it could best govern them, including the assessment of the efficacy and effects of privatization schemes (National Audit Office, 2003; Pozen, 2003).
In these reforms, a key role came to be assigned to quantification and “auditability” in terms of numbers (Power 1997). Standardized performance metrics should help make prison performance visible and governable across public and private prison establishments. These quantification tools were supposed to turn prisons into competitive, market-oriented “accounting entities” (Kurunmäki, 1999). Whereas in the 1970s in the Prison Service, and in the public services more generally, corporate planning had been the main mechanism through which central oversight was exercised, in the late 1980s, this began to change, and policy-makers turned to ideas of market coordination.
Market-oriented quantification, via accrual-based accounting, performance measurement and prison ratings, should facilitate an extension of the rationality of the market to the Prison Service, and public administration more generally, domains previously viewed as non-market and non-economic (Davies, 2014; Kurunmäki et al., 2016). Quantification thus became implicated, as Foucault put it, in a much broader process of governmental reform, characterized by the transformation “from a market supervised by the state to a state under the supervision of the market” (Foucault, 2008, p. 116) (see also Bruno & Didier, 2013; Miller & Rose, 2008; Supiot 2012, 2015; Rose & Miller, 1992; Davies, 2014).
The first set of standardized performance metrics was introduced into the Prison Service in 1992–93 by Derek Lewis, the Prison Service’s first chief executive who was recruited from the private sector. These metrics included, amongst other things, the number of prisoner escapes, the number of assaults (on staff, prisoners and others), the number of hours spend in purposeful activity, the proportion of prisoners held in unit of accommodation intended for fewer numbers, the proportion of prisoners held in prisons where prisoners are unlocked on weekdays for a total of at least 12 hours and information about the average cost per prisoner place (Prison Reform Trust, 1996). In subsequent years, the number of prison Key Performance Indicators (KPIs) steadily increased from 8 to 18 in 2000–01 (Liebling, 2004, pp. 58–63), to 28 for the newly created National Offender Management Service Agency (NOMS) in 2008–09 (joining up the prison and probation services). These KPIs included public protection measures (measured in number of escapes), Offending Behaviour Program (OBP) completions, OBP starts, number of completed drug rehabilitation programmes, drug testing results, employment of prisoners upon release, accommodation of prisoners upon release, number of serious assaults, overcrowding data (target: number of prisoners held in accommodation units intended for fewer prisoners does not exceed 26% of the population), staff sickness, race equality data (target: at least 6.3% of prison staff should be from ethnic minority groups), costs per prisoner place and audit compliance (NOMS, 2009, pp. 18–19).
In 2003, such quantifications were given a further boost by the introduction of benchmarking and composite performance ratings. The benchmarking and rating programmes were introduced following Lord Carter’s correctional review in which he called for the establishment of the principle of “contestability” within the HM Prison Service (Carter, 2003; Home Office, 2004). According to Nellis (2006, p. 53), Carter’s review exemplified “the messianic managerialism”—the re-engineering of existing structures and functions to produce “guaranteed”, quantifiable and externally verifiable behavioural outcomes—that had come to characterize New Labour’s approach to modernization (see also Pollitt, 1993; Power, 1997). From 2003, prison performance measures of safety, security, rehabilitation and economic efficiency came to be put together in a weighted scorecard, drawn up in the fashion of Kaplan and Norton’s Balanced Scorecard (Kaplan & Norton, 1992), on the basis of which composite performance ratings are drawn up, similar to the “star ratings” of the NHS. Public and private prisons are rated and compared on a 1 to 4 performance scale. Level 4 is awarded to excellent establishments that are delivering “exceptionally high performance”. Level 1 indicates a “poor performer”. Since the introduction of the ratings, according to a study by Bryans (2007), prison governors find themselves operating in a “more competitive” and “less collegiate” world; “more than ever before, their focus is on how prisons are performing relative to other similar prisons” (Bryans, 2007, p. 74) (see also Bennett et al., 2008).
Underlying the introduction of the prison ratings was a belief in the power of market incentives, and the aspiration to govern through competition (Mehrpouya & Samiolo, 2016). As Bryans (2007, p. 73) writes, with the help of the ratings poorly performing prisons were publicly identified and given six months in which to improve their performance. A failure to improve meant that the prison faced the threat of closure or being contracted out to the private sector. The performance measurements thus redefined the prison as a separate performance-oriented unit—a calculating accounting entity, responsible for its own success and failure. The prison ratings enabled comparisons between public and private sector prison performance and they helped render ideas about competition and competitiveness operable. The government also used (and still uses) quantified performance targets in the definition, detailing and monitoring of private prison contracts and the operation of a financial penalty system if such contracts are non-fulfilled.
Before quantified performance measures were introduced, prison values and objectives had been articulated in Circular Instructions, which had been criticized for being “uncoordinated and uncosted” and “lacking a mechanism of ensuring the initiatives they contain are implemented” (Lygo, 1991; Prison Reform Trust, 1992). Of course, the created “market” for prison services is highly imperfect. It is a market that is highly regulated and not characterized by free trade and exchange. The goods traded are not private goods: they are public services aimed at the delivery of public security, punishment and rehabilitation at a reasonable cost. Private prisons act on behalf of the government. They are supervised by the state and accountable to parliament. Private prison providers have to obey the same rules and regulations as public prison establishments. The state is the sole “buyer” of prison services, acting in the interest of a third party—the public. Prison services do not represent a good that is consumed. Prisoners do not have “a choice” and, also, prison establishments cannot freely choose which prisoners they want to house.
One could argue that ideas of marketization and privatization did not lead to the creation of an actual market. First and foremost, we observe the emergence of calculative bureaucracies, created in the name of the market, and a corresponding rise in managerialism (Bennett, 2019; Liebling & Crewe, 2013), akin to what Boltanski & Thévenot (2006 ) have labelled in terms of an “industrial world”, characterized by attempts aimed at “asserting greater managerial control within establishments over both staff and prisoners, making them more ordered and more legitimate inside and out” (Bennett, 2016, p. 8; but see also Bryans, 2007; Coyle, 2005). Furthermore, expanding quantification and calculation did not automatically contribute to an enhancement of administrative capacities. First of all, the prison performance measures and ratings placed new demands on administrative capacities, for example with regard to the expertise required to make quantification operable, to work with and make sense of the numbers.
Limits of Marketizing Quantification
Operational and financial performance measures, summarized in published prison ratings, were aimed at stimulating organizational introspection and inter-organizational competitiveness. They were enrolled in attempts aimed at “exacting responsibility” (Miller 2001, p. 380) following ideals of total, finely calibrated control. Yet, at the same time, we see also the creation of new zones of opacity, invisibility and non-accountability (Bennett, 2016; Liebling, 2004; Mennicken, 2013).
Research has shown that accounting entities are fictional and network-effacing superimpositions on complex organizations (Mennicken & Power 2015, p. 213). Underlying the concept of an accounting entity is the fiction of separable economic units (Hines, 1988) and aspirations to use accounting, such as performance measurement, as a tool for the mapping and managing of social and economic relations (Hopwood 1984; Kurunmäki, 1999; Miller 2001; Miller & Rose, 1990). The boundaries that delineate an organization, such as a prison, as a performance-oriented, economic unit separate from other organizations are not clear-cut, natural or fixed. The making of an accounting entity is not so much an economic than a political process (Kurunmäki, 1999): “The actors who identify entities and define their limits are many and varied, and may speak on behalf of legal, economic, social, political, aesthetic and professional interests” (Kurunmäki, 1999, p. 220). Also in the Prison Service quantification and “accountingization” were, and still are, contested and commensuration, “the transformation of different qualities into a common metric” (Espeland & Stevens, 1998), a “congenitally failing” (Miller & Rose, 1990) undertaking. Even seemingly straightforward measures, like measures of cost, are far from being unproblematic. Should prisons costs, for example, be expressed as a per diem rate for prisoners, or as a fixed sum assuming 100 per cent occupancy?
Inconsistencies exist between the performance measures and targets for public and private prison entities (National Audit Office, 2003). Attempts aimed at establishing comparability are further undermined by variation in the characteristics of different prison entities (size, location, design, function and age). The contracts negotiated for each private prison differ, making it difficult to draw comparisons between different public and private prison establishments. It is also difficult to establish an exact correlation between financial penalties that private prisons occur and their operational performance (National Audit Office, 2003). Financial deductions can be reduced following negotiations between the Prison Service and the private prison contractors. According to the National Audit Office (2003, p. 17), these negotiations are not solely concerned with the prisons’ operational performance, but take also account of problems of “inflexible contract monitoring”. In other words, negotiating penalty deductions allows for the flexing of otherwise inflexible 15-year or 25-year contracts, which normally are based upon fixed key performance indicators (KPIs) and targets. See for example the dialogue below between Martin Narey (Director General of the HM Prison Service in England and Wales, 1998–2003) and Alan Williams (Member of Parliament) in a Public Accounts Committee hearing:
- Mr Williams (Committee of Public Accounts):
Can you just clarify a point which is genuine misunderstanding? In Figure 9 on page 15, cost per penalty point, Ashfield is £94, Altcourse is £293. Why is the cost per point three times higher in one than in the other?
- Mr Narey (Commissioner for Correctional Services):
It is because each penalty point regime— and I confess to having had to have a tutorial on this just this morning—is unique to that particular prison. If you want to compare how a particular prison has performed against another one, you cannot just look at the penalty points incurred, but you will see that prisons have very different base lines, that is, the number of penalty points which are tolerated before a financial penalty is enforced. That again reflects the fact that we have different schemes for different prisons.
- Mr Williams:
Why was Ashfield set at £94? Why is it so different, particularly in view of subsequent events? The worst offender of the lot, yet it has the least disadvantageous penalty point system?
- Mr Narey:
It has been significantly at a disadvantage in terms of the money we have taken from it, a total of £4.2 million, as Mr Beeston said. Whatever the penalty point regime, the fact is that we have been able to use sanctions against Ashfield going way beyond the use of penalty points, in this case in closing places and saying this is not a safe enough place in which to put young prisoners so as to make a very significant financial sanction.
- Mr Williams:
Was the £4.2 million based just on penalty points or on other factors?
- Mr Narey:
No, the £4.2 million was primarily based on closing places and saying we do not think this is a place which is safe enough or good enough to meet our standard requirements so we are not going to put young people into there. (House of Commons, 2003, Ev18)
Further it is difficult to attribute re-offending rates to individual prison performance, as prisoners are regularly transferred between prisons, transcending prison boundaries and the accounting for them (Bastow, 2013; Mennicken, 2013). The Prison Service struggled, and still struggles, to identify the most appropriate KPIs. As the Prison Reform Trust (1996, p. 3) observes:
First, people may not agree as to the most important goals. Second, measuring performance in a quantitative way gives no indication of quality. Third, goals which cover general areas of work can be measured using a number of different KPIs. For example, helping prisoners to return to the community is not achieved solely by providing more than the minimum visiting entitlements; it is also achieved by enabling prisoners to gain educational qualifications, or by helping them find accommodation after release. Fourth, the date may not be accurate or objective. Finally, even if there is agreement as to the KPIs, the target performance may be set too high or too low.
Following these and other criticisms the KPIs were reviewed, repaired and extended (see also Liebling, 2004). They constitute a moving target, and a platform for an ever-expanding apparatus of quantification and calculation, which itself has been described as unwieldy and uneconomical (Bennett, 2016; Coyle, 2005, 2008). Prison governors have to meet increasingly detailed reporting demands, facing “constant oversight from internal auditors and external inspecting bodies” (Coyle, 2005, p. 97; but see also Bennett, 2016). Prison governors also find it difficult to prioritize amongst the various performance measures. They are often overwhelmed by the reporting demands, which take them away from “where the action is”, the “floor” and day-to-day interactions with prisoners and prison officers (Bennett, 2016; Bryans, 2007; Coyle, 2005, 2008).
Moralizing Versus Economizing Numbers
Quantification involves a transformation of quality into quantity, of subjective experience into objectified knowledge (Espeland & Stevens 2008; Kurunmäki et al., 2016). In so doing, it prepares the ground for new possibilities of governing (Kurunmäki et al., 2016; Miller 2001; Supiot 2015). But, as Kurunmäki et al. (2016, p. 395) highlight, we need to be careful to separate quantification from economization, for not all quantification implies economization. Although the rise of prison performance measurement in England and Wales was, in large part, animated by market-oriented reforms and ideals of competition, the introduction of the performance measures gave also rise to the creation of an unwieldy calculative bureaucracy and new information systems that needed to be managed and fed.
Furthermore, we should not forget that the performance measures, at least at their onset, also had a “democratizing” ambition, an aspiration to hold managers, public administrators, and civil servants to account, so as to counteract nepotism and arbitrariness (Kurunmäki et al., 2016; Lewis, 1997; Prison Reform Trust, 1996). Prison interest groups, such as Prison Reform Trust, for instance, had welcomed the introduction of the performance measures, as they allowed for insight into areas of prison activity which had not been publicly accounted for previously (Prison Reform Trust, 1996). Of course, the performance measures were also criticized by the very same groups. The Prison Reform Trust, for instance, questioned the purpose of the prison league tables arguing that they were useful as an internal management tool but did not provide a clear picture of prison life (Solomon, 2004, p. 2). According to criminologist Alison Liebling (2004, p. 26), the market-oriented prison performance ratings and the regime aspirations arising out of them “left crucial questions of moral responsibility and individual transformation untouched”.
Following such criticisms, the measurement system came to be reformed from within. In 2000, the Home Office commissioned Professor Alison Liebling, Director of the Prisons Research Centre at Cambridge University, with the task to develop “quantitative measures of qualitative dimensions of prison life” (Liebling, 2004; Liebling & Arnold, 2002). Liebling and her team developed new performance measures along two dimensions: relationships (respect, humanity, trust, staff-prisoner relationships and support) and regimes (fairness, order, safety, well-being, personal development, family contact and decency) (Liebling, 2004). These measures were aimed at “moralizing prison management” (Liebling, 2004) and at counter-acting the economization and managerialization of prison life. The newly developed “Measures of the Quality of Prison Life” (MQPL) were fully rolled out for both public and private sector prisons in 2012, when they became part of the weighted scorecard of prison performance and were fully incorporated into the 1–4 prison performance ratings under the heading of “decency” (making up 28.6% of the overall prison performance rating). Liebling and her team perceived the performance measures as a mediating, rather than economizing, instrument (Miller & O’Leary, 2007)—as a mechanism that could be utilized to link up and mediate between conflicting concerns and prison values, such as those of security, economy and decency. They used quantification as a way to bring prison values relating to questions of rehabilitation, care and decency back in, and to give prisoners “a voice” through the introduction of a standardized survey aimed at capturing their day-to-day experiences (Liebling, 2004).
It is beyond the scope of this chapter to provide a detailed assessment of the success of this quantification project in reshaping and rebalancing prison value configurations. Further, as Robert Salais’ contribution in this volume reminds us, we need to be cautious when labelling this as “democratization”. Questions of democracy do not only concern issues of consultation and participation (e.g. participation in processes of performance measurement, or the capturing of multiple voices through KPIs). As Salais argues in this volume, democratizing quantification would also entail a critical engagement with the very logic of “managing by numbers”, with the very process of capturing and transforming a prisoner’s voice via KPIs, and the extent to which such quantification is still able to take account (or not) of individual capabilities, hopes and desires. Nonetheless, we ought to acknowledge that the Prison Service’s KPIs contributed not only to an infusion of the Prison Service with market-oriented ideals of efficient, economic management. The performance measures also served as a platform for debate about prison values and reform, not least because of the public attention and criticism they attracted.
At the same time, such measures can themselves become challenged and changed by economization. Put differently, quantification is not only an instrument of economization; it can also be subjected to economization and destabilized as a result. Liebling’s Measures of the Quality of Prison Life (MQPL), for instance, soon after their system-wide introduction and establishment, came to be undermined by austerity policies and related economizing practices of curtailment and frugality. In the wake of the 2008 financial crisis and government austerity measures, concerns with cost and “economies of scale” came to overrule the Prison Service’s “balanced” performance measurement system. Definitions of failure were narrowed to definitions of failure in economic (i.e. cost management) terms. In a report by the HM Chief Inspector of Prisons we read (HM Chief Inspector of Prisons for England & Wales, 2013, p. 7):
The National Offender Management Service (NOMS) as a whole (that is, prison, probation and headquarters functions) had to make savings of £246 million on top of the £228 million savings delivered in 2011–12. This represented a further reduction of seven per cent of NOMS’ resource budget against the spending review baseline. Public sector prisons alone had to find savings of around £80 million. NOMS overall savings were delivered by a combination of workforce restructuring; market testing and privatisation of entire establishments and specific services; standardising costs and services; and reconfiguring the prison estate by closing some smaller, older prisons and increasing the size and number of very large establishments.
The bulk of savings that the Prison Service had to deliver was achieved through a changed estate management strategy. As is highlighted in the quote above, this included not only land sales, but also the closing of smaller, older prisons (with approx. 150–250 certified places of normal accommodation on average) that, in comparison, were costlier to run than new, large establishments with more than 1,500 places where economies of scale can be realized (see, e.g., Oakwood Prison). According to the National Audit Office, by the end of 2013–14, the changed estate management strategy contributed £71 million of savings since 2010 (National Audit Office, 2013). The National Audit Office notes that the estate strategy’s explicit focus was on cost measurement and reduction (i.e. economizing understood in terms of curtailment) and that this limited how far it could address concerns with quality and performance (National Audit Office, 2013, p. 5). The annual prison performance ratings and HM Inspectorate of Prisons’ regular reports were not considered in the estates management strategy. Only cost calculations were taken into account. Of the 18 prisons closed or identified for closure by December 2013, eight were considered to be “high performers” on dimensions related to Liebling’s Measures of the Quality of Prison life (National Audit Office, 2013, p. 30). Different forms of quantification thus came to be hierarchized; leading to a prioritization of issues of security and cost over objectives of individual rehabilitation, measures of decency and the quality of prison life (Bennett, 2019; Liebling & Crewe, 2013).
Ironically, contracted-out prisons were largely spared from these cuts, due to the inflexible nature of the 15- or 25-year contracts under which they are operating and “because of the cost and difficulty of terminating contracts early” (National Audit Office, 2013, p. 6). In other words, state contracts governing privately managed prisons shielded these establishments from economization in the form of budgetary savings requests, and public prisons were exposed the most to measures of government austerity. This does not imply that private prison establishments are not economized, but different mechanisms of economization (and quantification) are at work here, and it is important to differentiate between these. Private prisons, for example, might be more financialized than public prisons, and it is to financialization as one specific modality of economization, and the implication of quantification in such processes of financialization, that we turn next.
Quantifying and Financializing: Accrual Accounting and Social Impact Bonds
Financialization can be seen as one distinctive mode of economizing that has taken hold in the Prison Service, as well as in other parts of the public services in England and Wales, over the past 38 years, first through the government’s Financial Management Initiative (FMI), which was launched in 1982, later through the Private Finance Initiative (PFI), which was launched in 1992, and more recently through the experimentation with Social Impact Bonds (for instance in Peterborough Prison) (Anders & Dorsett, 2017; Disley et al., 2015; Joliffe & Hedderman, 2014). According to van der Zwan (2014), studies of financialization interrogate how an increasingly autonomous realm of global finance has altered the underlying logics of the industrial economy and the inner workings of democratic society. Financialization encompasses a range of different developments connected to the rise and spread of finance: the emergence of new accumulation regimes (including the increasing importance of financial services and financial assets on a company’s balance sheet); the increasing importance of capital markets that is paralleled by an ascendency of the shareholder orientation; the financialization of everyday life; and the rise and spread of financial economics, for example into accounting.
Also the public services, including the Prison Service of England and Wales, have been affected by such processes of financialization. With prison privatization, new stakeholders entered the picture: financial investors, such as banks and shareholders, who seek financial returns on their investments. When this chapter was written, 13 prisons out of 117 were private and contractually managed by G4S Justice Services, Serco Custodial Services and Sodexo Justice Services. In 2019, these private companies housed nearly 20% of the prisoners in England and Wales (20% of approx. 82,000 prisoners).2 All three security firms are globally operating corporations listed on multiple stock exchanges. G4S Justice Services, for instance, is listed on the London and Copenhagen stock exchanges. Serco Custodial Services is listed on the London Stock Exchange. Sodexo Justice Services is part of the Sodexo Group that is traded on the Paris Bourse and the New York Stock Exchange.
Private prison managers are not only subject to government oversight and scrutiny. They are also wary of stock price reactions. Inter alia, this brings to the fore concerns with reputation management—a prison establishment’s appearance to the (financial) market. Globally operating security corporations are interested in economic gains. They are concerned with winning new prison contracts and renewing old ones, and with avoiding both adverse publicity and drops in stock price (Volokh, 2002, p. 1870). Quantification is here not only implicated in the determination of operational prison performance against nationally stipulated KPIs, but also in financial profit and loss calculations, and a logic of (financial) “capitalization” (Muniesa et al., 2017), where prison establishments and prisoners come to be viewed as (financial) assets, as vehicles for the generation of future (financial) returns (see also Birch & Muniesa, 2020).
Such a financialization of the prison organization is intertwined with a shift in the conventions underpinning (economic) quantification (Boltanski & Thévenot, 2006 ; but see also Chiapello, 2015; Chiapello & Walter, 2016). Chiapello (2015) highlights the progressive diffusion of financialized conventions of quantification. Such conventions have been developed and spread by accounting and finance professionals, for example in the form of net present value calculations, probability-based estimates of financial value, and market prices as true value benchmarks (see also Muniesa et al., 2017). Such financialized conventions of quantification have not only been utilized in private prisons. They have also travelled into public prisons. As Liebling (2004, p. 71) writes, with privatization a “new rationality of governance” (Miller & Rose, 1990, 2008) was introduced into the (public) Prison Service, where auditing and accounting practices originating from “the world of finance” came to be applied to the non-financial practices and systems of the Prison Service.
Private Sector Accrual Accounting
In particular, private sector budgeting and accrual accounting were promoted as “a necessary precondition for identifying inefficiencies” and “managing capital budgets properly”. As O’Quinn and Ashford (1996, p. 31) put it: “While adopting accrual accounting and budgeting is technical, it is a necessary precondition for identifying inefficiencies, improving services and saving taxpayers money”.
Unlike cash accounting, private sector accrual accounting records the changes in value of assets and liabilities and distinguishes between operating and capital flows (Ellwood & Newberry, 2007; O’Quinn & Ashford, 1996). Expenses are recorded as incurred and revenues as earned (rather than when cash changes hands). Fixed assets, such as buildings or equipment, are capitalized, i.e. they appear as a separable item on an organization’s balance sheet. The introduction of business-like accrual accounting was supposed to allow for better measurement of costs and revenues and more efficient and effective use of resources, for example, through charges for fixed assets, or calculations of full costs of providing a public service, which could then be compared with the prices charged by outside suppliers (Ellwood & Newberry, 2007).
In the Prison Service, the introduction of private sector accrual accounting was largely driven by the desire to establish financial comparability between public and private prison providers, and to stimulate and govern private financial investment (see also Ellwood & Newberry, 2007). Private sector accrual accounting was supposed to enable the development of benchmarks for inter-organizational financial comparisons. It should help establish a common business language, making financial reports readable across the public and private sectors. Thereby, it should increase inter-organizational competition and strengthen “financial transparency” and “fiscal responsibility” (O’Quinn & Ashford, 1996).
Yet, numerous studies have also challenged the relevance of accrual accounting to governments and have highlighted difficulties of its practical implementation (see, e.g., Ezzamel et al., 2014; Ellwood & Newberry, 2007; A. Bruno & Lapsley, 2018; Barton, 2004). Such difficulties were also experienced in the Prison Service. The assumed benefits proved difficult to realize. The valuation and recognition of assets, such as property and equipment, was far from straightforward, given that no market exists to determine their “fair value”, including financial losses due to impairment. Furthermore, assets, such as prison buildings or the equipment they contain, do not generate any cash revenues for the government, rather they represent a future stream of expenses.
Moreover, private prisons and the costs of running those remained off-balance sheet. This applies also to the costs connected to the preparing and monitoring of private prison contracts. Private prison establishments are governed by contract. These contracts fall into two main categories. Design, Construct, Manage and Finance (DCMF) contracts, also known as Private Finance Initiatives (PFI) that are typically 25 years long and Manage and Maintain Contracts that are typically 15 years long. These contracts are negotiated behind closed doors and they are not available to the public, as they fall under the commercial confidentiality clause. “Fiscal transparency” is thus punctuated, the “representational faithfulness” of the Prison Service’s accrual-based accounts highly limited, and the objective of financial comparability and contestability undermined.
Finally, financial and operational prison performance, and their respective quantification, are largely de-coupled. It is not easy to assess their interplay from the Prison Service’s financial and management reports, and there is no systematic mapping of the impact of financial management on a prison’s operational effectiveness, including measures concerning the quality of prison life, and vice versa.
Despite these limitations, the accounting reforms introduced new ways of thinking about what the state consists of. The state does not “pay” or “fund” any longer. Instead, it “invests” in an accountable manner (Mennicken & Muniesa, 2017; Muniesa et al., 2017). The reforms also led to the rise of new experts, the emergence and empowerment of financial experts and expertise. The transformations shifted the locus and focus of governing. They redefined relations between the state, public and private prison providers, “making up” prison providers in financial business terms, introducing private-sector oriented forms of calculation and financial responsibility. Such reforms also paved the way for experimentations with new forms of financing, supporting the rise of “social finance” initiatives, aimed at stimulating investments that generate financial returns for the (private) investor while including measurable positive social impact, e.g. in the form of reduced recidivism rates. It is to such forms of investments, and the implication of quantification in these, that we turn last.
Social Impact Bonds
By way of concluding this section, we would like to draw attention to a relatively new class of financial instrument, so-called Social Impact Bonds (SIBs). Social Impact Bonds are aimed at “socializing finance”—“rethinking finance for social outcomes” (Social Finance, 2009). Social Impact Bonds are based on a commitment from government to use a proportion of the savings that result from improved social outcomes to reward non-government investors that fund the intervention activities. They are based on a contract negotiated with government that includes definitions of a success metric (e.g. 1-year reoffending rate for short-sentence offenders in a specified geographic area); a specific target population (e.g. offenders aged over 18 leaving prison after a sentence of less than 12 months and returning to a specified geographic area); and the value of success (i.e. the amount returned to investors for a given improvement in the social outcome; generally a proportion of the related savings to government) (Social Finance, 2009). The private investment is used to finance a range of interventions to improve the target social outcome over the contract period (often around 5 years). If the interventions are successful and the social outcomes improve, government pays investors a reward based on the pre-agreed payment schedule (this scheme is also referred to as “payment by results”). SIBs seek to “align government policy priorities with the interests of non-government investors and social service providers” (Social Finance, 2009). They are aimed at creating “a rational investment market” and aligning “the financial and social return on investment” (Social Finance, 2009).
In the Prison Service, a pilot with a Social Impact Bond was started in 2010 in Peterborough Prison. This Social Impact Bond was aimed at reducing the reoffending of approximately 2000 male prisoners who were discharged from HMP Peterborough after serving a sentence of less than 12 months between 2010 and 2014. Social Finance, a not-for-profit financial intermediary, developed the model, raised the finance and was performance managing the bond. The Ministry of Justice commissioned the service, with part of the outcome payments contributed by the Big Lottery Fund. Organizations involved in delivering the service were: St Giles Trust; Ormiston Children and Families Trust (Ormiston); SOVA; YMCA; Peterborough and Fenland Mind (Mind) (Disley et al., 2015; Civil Society Media, 2014).
The investment pool totalled £5 million from 17 social investors including: the Barrow Cadbury Charitable Trust; the Esmée Fairbairn Foundation; the Friends Provident Foundation; the Henry Smith Charity; the Johansson Family Foundation; the Lankelly Chase Foundation; the Monument Trust; the Panahpur Charitable Trust; the Paul Hamlyn Foundation; and the Tudor Trust. If re-offending was reduced overall by at least 7.5%, investors received a minimum repayment of 2.5%. The greater the drop in re-offending beyond this threshold, the more the investors would receive. The total payments by Government were capped at £8 m (or £7 m in real terms) and return to investors was capped at 13% annual IRR (Civil Society Media, 2014).
The Peterborough Social Impact Bond was part of a broader government strategy to outsource the financing of government services and to stimulate more third sector involvement in the delivery of these. An interim report of results (Joliffe & Hedderman, 2014) showed that the frequency of re-conviction events for the Peterborough SIB cohort 1 was 8.4% lower compared to a matched national control group (142 re-conviction events per 100 offenders in Peterborough’s cohort 1 compared to 155 re-conviction events per 100 offenders nationally). This means that the provider (One Service) was on track to achieve the 7.5% reduction target for the final payment based on an aggregate of both cohorts, but that the pilot had not achieved the 10% reduction target for cohort 1 (Joliffe & Hedderman, 2014).
The final cohort impact evaluation (Anders & Dorsett, 2017) found that the provider had managed to reduce the number of reconviction events amongst those discharged from HMP Peterborough by 9.7% for cohort 2. Reduction across both cohorts was estimated to be 9.0%, which reached the minimum threshold of 7.5% across all cohorts, and was sufficient to trigger payment under the terms of the SIB contract (Anders & Dorsett, 2017). The evaluation of the Peterborough SIB was far from straightforward. In the evaluation of the first cohort, it took the evaluators 11 months alone to agree the sample and obtain all the data needed to begin the analysis (Joliffe & Hedderman, 2014). And, unlike random control allocation, the applied method of propensity score matching (PSM), although regarded as one of the best ways of matching quasi-experimentally, could not take account of unmeasured differences which may account for variation in reconviction rates aside from “treatment received” (Joliffe & Hedderman, 2014). It was also not possible to precisely replicate the approach adopted in the dry run because of data quality issues, including missing data pertaining to the type of offence (Joliffe & Hedderman, 2014, p. 4).
Apart from such measurement challenges and the costliness of the evaluation, SIBs like the Peterborough SIB have also been criticized for their short-term orientation, high transaction costs, and their focus on the fulfilment of quantifiable targets that dictate the rate and amount of payment received by contracted service providers (Cooper et al., 2016; Edmiston & Nicholls, 2018; Jeamet & Salais 2019). As Edmiston and Nicholls (2018) highlight, this can compromise service quality and integrity due to “gaming” and perverse incentives (see also Cooper et al., 2016; Jeamet & Salais, 2019). Social investors are likely to have different and potential conflicting motivations. Some may prioritize financial return on investment, whereas others may focus on the social impact rather than financial rates of return (Edmiston & Nicholls, 2018).
In the case of the HMP Peterborough SIB, according to the final process evaluation report produced by RAND Europe (Disley et al., 2015), the private provider (One Service) made extensive efforts to engage offenders and ex-offenders through the provisioning of through-the-gate and post-release support (addressing practical problems, such as housing, benefits, training and education). Yet, often the contact with One Service was ended after a few months and a longer-term engagement with ex-offenders was difficult to achieve (Disley et al., 2015). It was also highlighted that different organizations hired by One Service shouldered unequal burdens in delivering the service, and interviewees perceived contractual relationships behind the Peterborough SIB to be complex (Disley et al., 2015).
In addition, not all reductions in re-offending (more precisely re-conviction) bring realizable savings, where costs of existing services are largely fixed and prison numbers are not a direct product of re-offending (Fox & Albertson, 2011). The Peterborough SIB’s focus on reduced recidivism rates is itself highly questionable. It is based on what Robert Salais has termed in this volume “governance-driven quantification”, where meeting contractual requirements is prioritized over the (long-term) needs of subjects (see also Morley, 2021; Supiot 2015), and root causes underlying the commitment of crime remain largely unaddressed. As a recent OECD report on SIBs stated: “There is a fear that this strong focus on results can change the public service ethos or lead to a narrow mechanical determinism in service delivery” (OECD, 2016, p. 16, cited in Morley, 2021). SIBs reframe public service users, in this case prisoners, as potential revenue sources rather than conscious agents and citizens, and they often lack engagement with subjective experiences and preferences (Cooper et al., 2016; Jeamet & Salais, 2019; Sinclair et al., 2021).
However, the actors involved in the Peterborough SIB differed from those engaged in the prison privatization schemes described earlier. Most of these actors are located in the not-for-profit voluntary sector, and boundaries between the public and private have become increasingly blurred. As Edmiston and Nicholls (2018) remind us, we need to be careful not to dismiss the heterogeneity of these actors and their varied motives. We need to be careful not to overlook the heterogeneous kinds of private capital present within public services and their dynamic influence on service operations and delivery.
On the one hand, SIBs foster the penetration of financial criteria and issues into what were previously non-economic areas (Sinclair et al., 2021). Yet, on the other hand, they can also come to be utilized for the “socializing” of finance, as some investors might forego a higher rate of return for the sake of social impacts, because of their charitable orientation (Disley et al., 2015; Edmiston & Nicholls, 2018). We need to be mindful of the multiple ways in which quantification and financial concerns come to be interlinked—reinforced, mitigated or undermined—in the day-to-day realization of such schemes. Of course, this does not mean to say that (financial) “governance-driven quantification” (Salais, in this volume) is suspended. But we need to attend to the conditionality of its performativity (Butler, 2010) and scrutinize the circumstances that enable its scope and depth to increase and intensify (or not).
This chapter has explored different dynamics of economization and quantification in the Prison Service of England and Wales. In so doing, it concentrated on neoliberal, Anglo-American dynamics of quantification and economization, characterized by attempts aimed at the remaking of everything and everyone in the image of homo oeconomicus (Brown, 2015; Davies, 2014; Supiot 2012). In the UK, such developments were kick-started under the Thatcher government (1979–1990) and later continued under the rule of Labour. This chapter has scrutinized what it means to “economize the social” drawing attention to three different modalities of economizing and the varied implication of quantification in these: ideas and practices of marketizing, politics of austerity (curtailment) and processes of financializing.
First, we examined the rise of market-oriented quantification in the form of prison ratings and rankings aimed at stimulating competition amongst public and private prison providers. We then attended to the limits of such quantification and showed how in particular criminologists undertook efforts to undo such economization through the development of “alternative” forms of quantification measuring the quality of prison life. These efforts, in turn, were undermined by the government’s austerity policies, and related economizing and quantifying practices which brought concerns with economies of scale and cost management to the fore. Lastly, we explored the implication of prison quantification in processes of financialization, drawing attention to practices of private-sector accrual accounting and experimentations with Social Impact Bonds (SIBs).
We underscored the importance of unpacking the multiplicity of economization and quantification. Quantification is an important condition for economization, but should not be equated with it. To develop a better understanding of the multiple roles that quantification can come to fulfil we need to investigate interactions between different quantification regimes (e.g. cost accounting regimes, prison performance ratings and quantifications of the quality of prison life) and their implication in different “orders of worth”, as Boltanski and Thévenot (2006) would put it. We need to follow the numbers across the different sites of their production and circulation (see also Kurunmäki et al., 2016, and the other chapters in this volume). Further, we need to be mindful of the different facets of economization. This chapter focused on neoliberal forms of economizing and quantifying—reforms that were undertaken in the name of the market, involving a logic of competition and capital investment rationales. Of course, we should not forget about other forms of economizing and quantifying—involving, for instance, state planning, public statistics, redistribution and public welfare rationales (see here also the contributions by Mespoulet and Amossé in this volume).
Finally, we have shown how economizing quantification can be punctuated, undermined and undone. State contracts governing privately managed prisons also shielded these from economization, such as government austerity measures. The introduction of prison performance ratings, aimed at enhancing transparency, comparability and inter-organizational competitiveness, was accompanied by the creation of new zones of opacity, invisibility and unaccountability. Private prison contracts as well as SIBs, for instance, are negotiated behind closed doors, and they can further the production of mutual lock-ins that, in many respects, suspend the logic of market discipline. Furthermore, the market-oriented reforms led to a creation of an unwieldy calculative bureaucracy, new quantification systems which needed to be fed and maintained, which could be described as uneconomical.
For those interested in the powers of quantification in all its forms, the challenge is to get to grips with its multiple modalities and intertwinement in different programmes and processes of reform. As Kurunmäki et al. (2016, p. 400) remind us, the performance of calculating selves, prisoners, prison officers and prison governors, may be evaluated by others without their knowledge, or against their wishes. Prisoners and prison governors may seek to influence prison ratings in their favour and tamper with the numbers. On the other hand, quantification can be turned against programmes of marketization, financialization and austerity. This, as also the chapters by Salais and Thévenot in this volume show, happens when ruling mechanisms of quantification and programmes of governing (e.g. governing in the name of the market or efficiency) are subjected to scrutiny, debate and critique, when forms of disruption are sought that go beyond “gaming the numbers”, when numbers become attached to dreams and schemes of doing things differently (Kurunmäki et al., 2016, p. 400).
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This work was supported by the Economic and Social Research Council (grant number ES/N018869/1) under the Open Research Area Scheme (Project Title: QUAD—Quantification, Administrative Capacity and Democracy). The QUAD project is an international project co-funded by the Agence Nationale de la Recherche (ANR, France), Deutsche Forschungsgemeinschaft (DFG, Germany), Economic and Social Research Council (ESRC, UK), and the Nederlands Organisatie voor Wetenschappelijk Onderzoek (NWO, Netherlands). Both authors thank the other contributors to this volume, and in particular Robert Salais, for comments on earlier versions of this chapter. Mennicken thanks the Wissenschaftskolleg zu Berlin for generous intellectual and financial support, and the Quantification Focus Group at the Wissenschaftskolleg (2013-14) for stimulating discussions.
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Guter-Sandu, A., Mennicken, A. (2022). Quantification = Economization? Numbers, Ratings and Rankings in the Prison Service of England and Wales. In: Mennicken, A., Salais, R. (eds) The New Politics of Numbers. Executive Politics and Governance. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-78201-6_10
Publisher Name: Palgrave Macmillan, Cham
Print ISBN: 978-3-030-78200-9
Online ISBN: 978-3-030-78201-6