The Ministry of Justice (MoJ) lost £24m last year on its programme to build new prison accommodation, it has been revealed.
The ministry’s “reactive approach” to add 20,000 new prison places by 2031 was responsible for the size of the loss, according to the National Audit Office’s (NAO) review of MoJ operations, published today (2 December).
The public spending watchdog recommended the MoJ adopts “a long-term strategy” with longer-term funding, to push down its costs.
The MoJ recorded “significant financial losses” in 2024/25 of £58.5m, more than three times higher than its loss of £16.5m the year before, the NAO said.
Construction projects accounted for more than 40 per cent of the ministry’s overall deficit.
In its report, the NAO also “highlighted the importance of… joined-up planning and governance”.
“We recommended a long-term strategy to improve the resilience of the prison estate and to make the case for longer-term funding, since a reactive approach to building new prison places urgently had led to cost increases,” it added.
The NAO revealed the MoJ had “consistently underspent its capital budget” since 2019/20, “often due to delays in the prison expansion programme”.
Last year, it recorded a capital budget underspend of £148m.
ISG’s collapse last year – as well as ESS Modular’s – also had an impact on the MoJ, the NAO said, reiterating its estimation that ISG’s demise would add between three and 18 months to the prison programmes it was working on.
But the watchdog said the MoJ had “already modelled the impact as a worst-case scenario when resetting timelines” before ISG’s insolvency. “It does not currently expect this to affect its revised portfolio completion date,” the NAO added.
ISG was the MoJ’s contractor on 17 per cent of its prison expansion portfolio, amounting to 3,634 places across 13 sites.
The government has been working to retender ISG’s former prison projects. In October, for instance, Wates took over a £73m prison works package that ISG had been working on.
