WHY JAMAICA SHOULD REALLY OBJECT TO THE UK PRISON DEAL
Like many Jamaicans, both here and in the diaspora, I read with immense pride the recent open letter of former Prime Minister P.J. Patterson to the present UK Prime Minister David Cameron. Indeed, my initial reaction to the letter was a disappointment that it wasn’t penned 14 years ago when I was doing my A Level History examinations. This owing to the fact that the rich historical analysis and critique of the Emancipation Act was worthy of being liberally borrowed from by a struggling student such as I was. However, herein lies the problem of Mr. Patterson’s Open Letter, it like many of the analysis before it has sought to marry two very separate matters. The Prison Financing Deal is essentially an example of a Development Financing Model that is being applied to a National Security matter under the guise of Bilateral Foreign Policy. The reparations matter is about righting a historical wrong that was done to an entire race and region by another race and region. Now once we begin to separate the issues in this way, what emerges is that one’s analysis must be guided by two overriding perspectives, namely the Human Rights of the prisoners at the center of the deal and the suitability of the Development Financing Framework for the country. There is simply not enough column inches to explore the two perspectives in one article, as such the latter will be discussed here.
The Suitability of the Development Financing Framework for Jamaica
Any discussion on the suitability of the Financing framework must begin from an assessment of whether the country actually needs the proposed project. For ease and without access to the policy papers at the Ministries of National Security, Foreign Affairs and Foreign Trade and the Office of the Prime Minister, one will assume that a new prison is a national priority. However, my own gut feeling is that the country does need such a facility given that both the Tower Street and St. Catherine Adult Correctional Centres have figured prominently in Jamaica’s colonial history from at least since the 19th century. Consequently, given rising crime since then and modern developments in Prisoners’ Rights and Public sanitation it can be safely assumed that both have outlived their useful lives.
Now we know that the expected cost of Building a new prison facility is approximately £56 million, given that the UK government wishes to provide £28 Million which has been determined to represent 50% of the cost. Let us assume for a moment that the British offer was not on the table, then it may be assessed that there are effectively five options open to the government to pursue this development objective. These are:
1. Borrowing the money from the Local and International Financial Markets
2. Raising the money through new taxes
3. Raising funds through grant assistance
4. Private placement under a Build Own Operate and Transfer Program (BOOT
5. Some combination of the foregoing
Assessing the grant funding option
Grant funding as a financing option has been unfairly type cast as free money or low cost money. In real terms, tied to Grant funding are packages of conditionalities that recipients must achieve. A litmus test of whether accepting grant funding is good or bad is to measure it against the interest and principal repayment that the country would have to pay should it approach the capital markets.
In July of 2015, the Ministry of Finance successfully raised US$2 Billion on the international capital markets. The interest cost of that loan was 6.75% with a term of 13 years. Notably this was the lowest ever interest rate that Jamaica has raised on the markets. Given that this low was historic, albeit it followed a trend let us utilize an interest rate of 8% for this analysis. Utilizing any internet based mortgage calculator reveals that the country would face a monthly debt obligation relative to this deal of £578,521.37 or £ 7 million annually or J$1.258 Billion.
At first glance, this sounds onerous and would prove the superiority of the British proposal as it would cut the financing cost by 50%. However, data from the UK’s National Offender Management Service Annual Report for 2013/2014 shows that it costs the British taxpayer approximately £34,000 per annum to house each prisoner in that country’s prison system. A bi-lateral Prison transfer deal between Jamaica and the United Kingdom which would transfer the 619 Jamaican prisoners at a cost of £17000 would earn for the country £10.5 million per annum. This is £3.5million or 50% more than the annual financing cost for the entire prison!! Indeed the profit from this model could be plowed back into the entire judicial, prison and education system to ensure that those systems are reformed to meet the needs of modern society.
Thus whilst I share Mr. Patterson’s passion for righting the historical wrong. The more immediate issue is to train our minds to rigorous policy analysis particularly those at relates to deals such as this. Consequently, I would not dismiss the deal out of hand but agree it needs to be worked. In any event the assumption must be that any deal signed between Jamaica and the UK will be closely scrutinized by third countries including the United States and Canada. Lastly, a further benefit of my suggestion is that it does not eliminate from the UK a responsibility to fund maladjustments as a consequence of UK society and social infrastructure. In fact the often reported local grouse is that most of the prisoners there have no real ties to Jamaica and as such their behaviour is very much a product of UK society and not Jamaica. At the very least it will force the UK government to look at strategically investing in a review of their own sentencing guidelines towards rehabilitation rather than incarceration programmes!