Doncaster Prison will be the first jail in the country to operate under a “payment by results” system.
International management company Serco, which has been running the jail and young offenders’ institution since 1994, was yesterday handed a new £250m contract to operate the jail for another 15 years.
But from October the cash it receives will depend on whether it reduces the re-offending rate of inmates.
As part of the deal, prison officers will work alongside volunteers from the Turning Point and Catch 22 charities on a new rehabilitation programme.
The programme will deliver employment training and education, focus on maintaining family links between imprisoned inmates and their relatives, providing secure accommodation on release and providing access to a network of volunteer mentors.
The work will also continue after release in a pilot scheme which the Government hopes to roll out across the country.
Payments to Serco and the two charities will depend on the success of the rehabilitation, and on how many released offenders successfully manage to integrate back into society without committing further crime.
A total of £25m of the contract will only be payable if the one-year re-conviction rate of offenders discharged falls by five per cent.
The operators will be also be able to get bonus payments up to a maximum of a 10 per cent fall in the re-conviction rate. Government officials say even if the payments are paid, the contract will still cost taxpayers £1m less than it currently does.
Justice Secretary Ken Clarke said: “Public protection is not just about how we manage prisons in order to punish people.
“It is also about how we achieve genuine and long-lasting reductions in crime, by cutting reoffending.”
Christopher Hyman, Chief Executive of Serco Group, said: “HMP Doncaster has a strong record of providing a secure environment and working to turn offenders’ lives around.
“Employees, management and our partners including those in the voluntary sector have been innovative in their efforts to rehabilitate.
“I am delighted that, along with our partners, we will be able to continue our pioneering approach by delivering one of the pilot programmes in support of the Government’s new proposals to reduce re-offending.”