Interserve, which is already involved in providing welfare-to-work programmes for the public sector, has announced a joint deal with Durham Tees Valley Probation Trust to run UK prison and prohibition services.

The move comes as the government looks to further open up the probation service to the private sector, with justice secretary Kenneth Clarke proposing complete privatisation.

Interserve is just one of six competing firms looking to run three of nine prisons that have been opened up to the private sector. The contracts also include bonuses based on the rate of re-offenses committed by inmates.