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Probation reform under scrutiny after ministers adjust contracts

System in which private companies have been awarded contracts has 'encountered unforeseen challenges'

A controversial shake-up of the probation system is facing fresh scrutiny after it emerged ministers had adjusted contracts underpinning the scheme.

The government said it was providing "additional investment" after companies tasked with supervising low and medium-risk offenders under a partial privatisation saw incomes fall below expected levels.

It is understood the extra cash amounts to around £22 million.

Known as Transforming Rehabilitation, the overhaul launched in 2014 saw the creation of the National Probation Service (NPS) to deal with high-risk individuals, while remaining work was assigned to 21 community rehabilitation companies (CRCs).

The project has attracted criticism, with reports warning the public has been left at greater risk of harm as officers manage dozens of cases at any one time and offenders are left unseen for weeks or months.

Justice Secretary David Lidington said the system has "encountered unforeseen challenges".

He said: "Demand has been stronger for the NPS caseload and this has created different financial and operational pressures for both CRCs and the NPS.

"We are putting in place balancing policies aimed at addressing these challenges.

"To date, we have adjusted the CRCs' contracts to reflect more accurately the cost of providing critical frontline services: given this, we are calling on them to provide better support as they help offenders build more positive lives."

In a report last year, the National Audit Office warned that CRC business volumes were "much lower" than the Ministry of Justice had modelled during procurement.

Volumes were down between 6% and 36% against the mid-point agreed in the contracts, according to the watchdog.

Justice Minister Sam Gyimah said that since the contracts were negotiated the number of offenders sentenced to community orders has fallen, while the proportion of offenders assessed as posing a higher risk of harm has increased.

In a written statement to the Commons, he said: "The result is fewer offenders are being referred to CRCs, leading to falls in CRC income to significantly below the levels expected at the time of the competition.

"This has made it extremely challenging for CRCs to deliver the services outlined in their contracts."

He said ministers have recently taken urgent action to adjust the payment mechanism within the CRC contracts so it "better reflects the fixed nature of most of the costs that providers incur when delivering services to offenders".

Mr Gyimah continued: "This additional investment, which will see projected payments to CRCs still being no higher than originally budgeted for at the time of the reforms, will make CRC income less sensitive to changes in demand and therefore more reflective of their actual cost structures."

He added that ministers will continue to work with providers over the coming months to improve the delivery of probation services, with further statements in due course.

Reoffending is estimated to cost society £15 billion every year.

Figures show that from July 2014 to June 2015 around 471,000 adult and juvenile offenders were cautioned, received a non-custodial conviction at court or were released from custody. Approximately 118,000 of these, or one in four, committed a new offence within a year.