The latest stage of the competition for eight prisons and a new approach to competing services across the public prison estate has been announced.

HMP Northumberland (an amalgamation of the former HMPs Castington and Acklington) and the South Yorkshire group of Moorland, Hatfield and Lindholme prisons will proceed to the next stage with three remaining bidders, Sodexo, Serco and MTC/Amey. This competition process produced a compelling package of reforms for delivering cost reduction, improvements to regimes and a working prisons model in these prisons.

This was not the case for HMPs Coldingley, Durham and Onley, so the competition for these prisons is not proceeding and they will remain in the public sector.  The current contract for HMP Wolds expires in July 2013 at which point the prison will move to public sector management.

The competition process also identified further and faster ways of securing future cost reductions. All public sector prisons will be obliged to make additional efficiency savings and the prison service will make collective savings by competing ancillary services, such as maintenance and resettlement services.

The Ministry of Justice has estimated that these changes will generate £450m savings over the next six years.

Secretary of State for Justice Chris Grayling said:

'The cost of running our prisons is too high and must be reduced. We can do this by being more innovative and efficient, and without compromising public safety.

'That is why I have decided to take a new approach to how we compete prison services and reduce unit costs across the prison estate that will lead to better value for the tax-payer, linked to more effective services to reduce reoffending.

'This is a challenge the public sector must rise to. The approach I have announced does not rule out further prison-by-prison competitions in the future.'