Prison education: Treasury drags heels on pension guarantee

Private providers could pay 'considerably less' in pension contributions under new contract, unions warn

Private providers could pay 'considerably less' in pension contributions under new contract, unions warn


Unions and MPs have slammed the Treasury’s delay in confirming whether prison educators’ pension schemes will be protected under the Ministry of Justice’s new £1.5 billion prison education contract.

Sector leaders have flagged that prison educators, who now work in the public sector after last November’s Office for National Statistics (ONS) reclassification of colleges, could lose access to the teachers’ pension scheme if the new contract is awarded to a private provider under TUPE terms. 

They also warned that private providers could “undercut” colleges currently providing the provision for over 80 prisons by paying “considerably less” in pension contributions.

The concerns come after the Ministry of Justice released a tender for the procurement of new prison education contracts last week, which determines that providers bid for the new core education services across 11 regional lots. The four-year contract for the new service will launch on April 1, 2025.

Ministry of Justice (MoJ) tender documents, seen by FE Week, outline a possible implementation of the “new fair deal” (NFD) policy, which maintains access to public sector pensions for prison education staff even if the contract is transferred to a private provider.

The application of the NFD policy is under review and is “not likely to be confirmed by HM Treasury (HMT) until latest summer 2024,” the documents state. “The authority hopes that a decision on whether NFD will apply will be made by HMT before contract award,” it added.

The deadline for bids is November 13, 2023.

To mitigate this “uncertainty of the timing”, the MoJ has requested that bidders instead carry out extra administrative work to submit two cost budgets depending on the Treasury’s decision.

“This uncertainty has been identified and accordingly bidders are required to submit two pricing mechanisms, one assuming that NFD will apply to the transfer of FE college staff and the other assuming that NFD will not apply.”

An MoJ spokesperson said: “The Ministry of Justice has always complied with the applicable HMT policy on NFD in our procurements and will continue to do so going forwards.”

University and College Union head of further education, Paul Bridge told FE Week: “Without confirmation from the Treasury that further education staff working in prison education will be subject to the NFD, staff pensions will not be protected under the new prison education service bids which cover most prisons in England.

“This could see staff moved to private providers who can undercut colleges currently providing education for over 80 prisons, by paying considerably less in pension contributions.”

Grahame Morris, a Labour MP who has previously questioned the government on its prison provision, told FE Week that the continued uncertainty around new prison education contracts was “unacceptable” and will continue to damage morale among prison educators and deteriorate industrial relations.

“The Treasury must stop delaying the announcement on NFD, create a level playing field for providers bidding for millions of pounds of public money and reverse the trend of devaluing of the work and professionalism of prison educators,” he said.

Morale in the sector has been steadily diminishing over the years from “intolerable” working conditions and pay, Morris said. Last September, 500 prison education members of the UCU were balloted to strike over pay.

Under the current prison education contract terms, education providers were due a payment uplift of 10.4 per cent, and prison education staff and providers expected this to be automatically applied from April 1, 2023.

Justice minister Damian Hinds confirmed the indexation would be applied from April 1, but FE Week understands negotiations between unions, the current contract providers and the MoJ are still in progress.

There are four providers under the current prison education framework, expiring March 31, 2025: Weston College, PeoplePlus Group, Novus (LTE Group), and Milton Keynes College.

A Treasury spokesperson said: “Following the ONS reclassification of FE colleges as public sector bodies, HM Treasury is reviewing the NFD policy in relation to further education colleges, including those involved in the prison education service.

“We are discussing the implications of this reclassification of further education to the public sector with relevant stakeholders and will set out more details in due course.”

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