The government is reviewing the future role of the private sector in the Prison Service, while putting on hold further building under the private finance initiative.

The rethink was signalled last week when Charles Clarke, home secretary, decided to postpone until the autumn plans to privatise the first cluster of three state-run prisons. Although the private sector has built and run prisons under PFI, these would have been the first group of older prisons to be taken over by independent companies.