John Biggin, director at HMP Doncaster, is brandishing Prisons and their Moral Performance, a book on how to reduce reoffending rates. “Everything we do here is based on serious research,” he says. “We’re not just making it up.”

The walls of Mr Biggin’s office are decorated with two enlarged snapshots of the prison as if Doncaster was a beloved, if delinquent, child. But down the corridor, past the inmates’ artwork and the inspirational haiku poems, are 1,145 male detainees, proving that Mr Biggin faces a much bigger challenge than the Cambridge academic who wrote so powerfully on reoffending.

Doncaster, a medium-security inner-city prison that has been managed by the private company Serco since it was built in 1994, is in itself an experiment: the first in the world where a prison operator will be paid in part according to its success at reducing recidivism.

The UK has among the highest reoffending rates in Europe. Currently 60 per cent of offenders who receive prison sentences of less than 12 months are reconvicted within a year of their release.

The idea is that the so-called payment by results scheme– introduced as a trial at Doncaster last month – will encourage private sector prison providers to improve outcomes at the same time as cutting the £37,163 ($57,571) a year it costs to house each inmate.

Doncaster, which services short-term detainees – many with drug and alcohol problems and from families that have been unemployed for three generations – is an ideal testing ground for the scheme.

Under the terms of the £250m contract to continue operating HMP Doncaster until 2026, 10 per cent of the contract price during the first four years of the pilot is conditional on Serco reducing the reconviction rates of offenders within a year of release by 5 per cent compared with 2009. Assuming that the contract is worth £20m a year and that 10 per cent of this is dependent on results, this means that Serco could earn about £2m a year.

In the short term, this is immaterial to Serco, which earned £213.9m in profits last year and employed more than 100,000 people in 30 countries running everything from a pathology unit at King’s College hospital to logistics for the US Navy.

But with a further nine prisons due to be handed to the private sector amid the largest wave of jail privatisations ever, the prize for Serco in the long run could be sizeable. Although Serco will not bid for all nine, it could compete for five or six against rivals such as G4S, with the intention of winning two or three.

Saving taxpayers’ money at the same time as reducing offending rates in a jail that houses twice the number of inmates than was intended when the red-brick monolith was built is a challenge.

Serco and the Ministry of Justice declined to give detailed information about the contract, saying it was commercially confidential. But Serco added: “The contract is not a loss leader and is commercially viable. We are confident we can meet our targets and achieve a 5 per cent reduction in reoffending.”

Mr Biggin, a prison service veteran of 25 years who took over Doncaster in 2009, says Serco has given him a “tremendous amount of control” over Doncaster. The biggest change is a plan to nurture ex-offenders outside the prison in a bid to prevent them returning inside. Every inmate will be matched on entry with a mentor from one of two charities, who will assess retraining, family and drugs counselling needs and aid their transition back into the community.

If this all sounds expensive, Serco is keen to point to the scope for cost savings. One strength, it says, is that it can apply technologies developed in its other spheres of work, such as for the Ministry of Defence, to its prisons.

Fingerprint technology is now used to monitor access to the prison key room, freeing up a team of staff who managed the office round the clock. Computerised kiosks enable inmates to book family visits, buy tuck shop food and manage their own budgets, cutting the staff workload by more than half and allowing redeployment to services such as a training scheme for new fathers.

The results will be monitored by Sheffield Hallam university, which specialises in reoffending, along with other new pilot schemes aimed at reducing recidivism rates, such as at HMP Peterborough, where investors have put £5m into social impact bonds to fund rehabilitation work.

Alison Liebling, who wrote Prisons and their Moral Performance, is keen to point out contradictions; an austerity-driven Conservative government, which has recently driven incarceration rates higher, is now pushing a cost reduction strategy, and a prison rehabilitation scheme designed to cut offender numbers.

Above all, though, she points to research that shows that the private sector was both at the top and the bottom end of the quality range of prison management.

With the full blueprint for payment by results still to be worked out, this could mean “experimenting with private sector operators is quite high risk”, she adds.

Copyright The Financial Times Limited 2018. All rights reserved.