How much will that British prison gift cost Jamaica ?

The British media is reporting that cost of the British contribution to this new prison is £25m and not the £27 that was reported earlier. I will therefore be using this number to run a basic financial analysis of the true cost of this gift to the people of Jamaica, as agreed by our Prime Minister.

We have been told the UK government will cover 40% of the total cost of the prison, which would make the cost of the prison £62.5m and the GOJ will cover £37.5m of the total cost.

We have been told that the UK Government will save approx £10m per year when these prisoners have been repatriated to Jamaica starting in 2020.

A report from the correctional services done in 2008 put the cost taking care of each prisoner in the Jamaican penal system at $698,644.87 or US$9580.98 at the US $ exchange rate at the time of $72.92 to one US$.  Without adjusting for inflation and using a projected exchange rate of $130 in 2020, the cost to the Jamaican taxpayer can be estimated to be $1.2455m per year per prisoner.

So the total cost per annum for the 737 prisoners would be in the order of  $918m per year.  This figure does not include cost for correctional services officers ,  other staff, maintenance ,other operational and administrative cost.

British Number

Capital Investment £25m

UK borrowing rate ~ 0.5%

Assume 30 yrs ( Loan term)

Savings per annum £10m

Financial Analysis

  1. Simple payback period = 2.5 yrs ( Not bad at all )
  2. IRR = 40%, Wow, astounding numbers
  3. NPV = £252.94M  ( Positive to very good)
  4. BCR (Benefit to cost ratio) = 25.294 (  + and above 1 so very good)

Jamaica”s  Numbers

Capital Investment £37.5m , Deferred Cost £25m

Jamaica borrowing rate = 7.5%

Assume 30 yr  ( loan duration)

Savings per annum (Additional cost) [ cost to house prisoners] = –  J$918m/200 = -£4.59m  (Assume rate of $200 : 1£)

Savings on interest payments  ~ £1.875m £ per annum  [ Based on £25m]

Total savings/cost = -£2.715m per annum

Let’s assume the Jamaica Government was going to underwrite the cost of this prison , because we really need it and let’s further assume that the UK £25M would no longer be required to be borrowed by the government ie its a gift.

The analysis will be therefore based on this figure.

Financial Analysis

  1. Simple payback = ???
  2. IRR = ??
  3. NPV = -£57.07m
  4. BCR = -2.28

This deal by the GOJ using the assumptions above is a bad one and gets even worse, if one was to include additional cost for operations of the facility.

Its is my humble view that the GOJ has erred seriously on this one from  a financial standpoint, while the UK government has walked away, the big winner.

The white guys keeps on winning, while the black people keep losing even more to the very people who robbed and raped us for over 400 years.

So we won’t give you reparations, instead we will given you a token gift to build a prison for your people, who we no longer intended to support with UK taxpayers money.

Who is looking after the interest of Jamaicans ?


16 Responses

  1. When we pay people to lead and they fail to do so, they should face the consequences of such failures , but will they

  2. A projected exchange rate of $130 in 2020?

    No bredda. Dat seem well low. Try $150. Dat would be more in keeping with how the Jamaican dollar naturally moves (irrespective of who runs the show by the way, much is made of the dollar being “stabilized” under Shaw for a couple years, but that only came after one of the largest falls in the value of the dollar in a year since the 1990s; the overall upshot is that on average depreciation was *about* the same with Shaw around as it was and is when he isn’t – around 5% or more per year conservatively speaking).

  3. Also technically building and operating this prison IS looking after the interest of Jamaicans…those Jamaicans serving sentences who the UK wishes to deport because of various criminal activities they committed.

    Because believe it or not, with Dave and his merry band in charge they most certainly DO intend to ship those Jamaicans back home whether we are fully ready for them or not.

    So analyzing this “gift” on strict cost-benefit terms is incomplete since it doesn’t compare the cost of this “gift” with the only alternative out there:

    The British deporting 300-700 Jamaican prisoners anyway and us not being prepared to handle them as our prison system is outdated.

    In any case since this new prison is supposed to be able to house 1,500 it means that there will be room for about 700-800 local prisoners. Room which didn’t exist before. And likely wouldn’t have since we would likely have never got around to building a new prison anyway.

    That might allow for a government that so put its mind to it, to institute life sentences for repeat offenders laws that would take a number of criminals off the street for life and thus look out for the interest of the REST of the Jamaicans.

    We can cuss the British all we want for not considering reparations, but why cuss them for pushing us to do something we needed to do anyway while taking responsibility for our own people who have broken laws in their land?

    • The broke the laws in the UK, not in Jamaica. We essentially will be imprisoning people who committed no crimes in Jamaica.

      While they were “working” and paying taxes in the UK, it was fine, they took all the taxes. Now they have run afoul of the law, we ship them back to Jamaica, were most have no ties.

      I cannot agree with this very bad deal !

      Britain have a problem, why should we bear the bulk of the cost to fix their problem.

      • They CAME to the UK and broke laws there. They have ZERO right to remain in the UK as a consequence of breaking the law there….part of the reason being that at least some were too shortsighted to take up British CITIZENSHIP to ensure they had a permanent right to remain in the UK, despite the fact that they were busy making many ties in the UK and retaining little or no ties to Jamaica (not too smart some of those prisoners).

        What you are saying about “essentially imprisoning people who committed no crimes in Jamaica” is a flimsy excuse. They broke laws. Period. Just because you broke them in one country doesn’t make you automatically innocent elsewhere (indeed you need to re-read the Jamaican constitution which bars people from Parliament if they are under a death sentence in ANY part of the Commonwealth or serving a prison sentence of more than six months in any part of the Commonwealth). And they broke laws which are quite likely very similar to our own based on common law.

        Britain has a problem with OUR citizens who were ALLOWED by Britain to work and pay taxes in Britain with the understanding that their entry and right to remain in Britain was contingent upon them following the law. Really, it’s very simple. As someone who claims to have lived and worked in other countries I’m surprised your promoting this kind of slack thinking.

        How is Jamaica supposed to become a responsible society when we are ready to offload OUR bad apples on other countries?

        Did these Jamaicans in prison become British citizens fully and thereby gain protection from deportation? Or did they as JAMAICAN CITIZENS go to the UK, break the law and then get caught by the authorities? If so, how is it that OUR own rass citizens are someone else’s problem? What kind of cocked up thinking is that? Why do we even bother to have Jamaican citizenship then? Why not just abolish it and make all Jamaicans stateless, so that “Jamaicans” abroad really wouldn’t be the legal responsibility of the state of their citizenship (by virtue of not having any citizenship).

        Perhaps then when US citizens help to smuggle guns to Jamaica we should not criticize the US for not doing enough to stem the flow because once those American made guns arrive on our shores they are now OUR problem and not the responsibility of the Americans?

        We can’t claim Jamaicans abroad and in the diaspora when they do well but pretend that the bad apples are someone else’s problem. That’s logically inconsistent.

        • They broke the laws in the UK and were sentenced to let’s say 10 years . They should therefore serve out the FULL time in the UK per the courts and then shipped back to Jamaica.
          I have zero problems with that, because at that time, the GOJ and people of Jamaica would not have to foot the bill to keep them behind bars.

          You pay the time for the crime you committed, where you committed it, full stop.

          No one has a problem per se with Jamaicans who are not legally entitled to be in the YUK being deported AFTER serving there time in the UK.

          What we have is a problem for these people to be sent to Jamaica to serve their time, paid for Jamaican tax payers so it can save the UK tax payers.

          There is no way under heavens that I am going to support such a deal.

          We should NOT subsidies UK tax payers !

          So the issue is not so much that there people are Jamaicans and we they should be sent back home. Its more that we in Jamaica should not be paying to keep them in prison in Jamaica for a crime they committed in the UK.

        • You seem to forget that:

          1. We are dealing with the UK here. Where Parliament is pretty much free to change any law at any time. For the moment the British Parliament has willingly circumscribed itself to only changing laws within the bounds of the EU Treaties, Human Rights treaties and the various Devolution Acts. None of those by the way make it mandatory that prisoners who are not nationals of a country MUST be imprisoned as opposed to being deported immediately.

          2. We are dealing with Cameron who has made promises to his constituents (i.e. his CITIZENS) to cut waste, reduce crime, reduce immigration and (implicitly) remove from society those non-citizens who contribute to waste of government funds and/or crime.

          It would be great if it were as simple as having these people serve the time for the crime in the place they committed it (I agree with that, but I accept that reality can be quite different from what is supposed to be standard/right/ideal).

          So one real possibility that is being entirely overlooked is the fact that the Tories, if they are motivated enough could simply change the law to require that non-nationals who commit crimes that would resort in deportation anyway must be immediately deported. Thus these persons could easily still be sentenced to “ten years”, but would just be deported after trial instead of being locked up at the expense of the British taxpayer (possibly with a fop warning that the sentence is suspended upon the condition that they do not re-enter the UK ever again).

          So instead of locking these people up at the expense of the UK taxpayer we could well have criminals being deported here instead straight away without serving any kind of custodial sentence (and presumably rehabilitation).

          Which would be wonderful for our crime fighting efforts no? Have a bunch of criminals come here and link up immediately with local criminals most likely, without being locked away for a while.

        • There is nothing that prevents them from immediately deporting them once they have been sentenced and that is not being debated at all.

          What is being debated it they should not be sent to JA to become a burden on the Jamaican tax payers.

          So if the UK wants to send them back without prison time, we have no choice. In fact they would have been deported anyone once they had served their time.

          In this case their is no cost to us. I cannot agree with any proposal to use taxpayers money to support these people.

        • Well it seems that taxpayer money isn’t even being planned for use in the construction of the prison as the 60% of the construction costs is expected to be offset from the sale of the older prisons. As to whether the two properties are worth £37.5 million that is another question.

          While I agree with the concept generally (it saves taxpayers money) I think they should only sell one of the older prisons and keep the other. That would increase the number of spaces available which would be a good thing.

          I’ve also seen it blogged that apparently the deal includes a process for the transfer of any prisoners and that Jamaica can refuse certain prisoners.

          The outlines of the deal as revealed in the media and the blogosphere sound as if it would mean that in fact there might be no or little net cost to the taxpayer since:

          – the cost to construct the prisons should come from the British and the proceeds from the sale of the older prison properties

          – since this is to be a replacement prison, then all the current prison staff will be merely be retained instead of hiring extra prison staff to deal with a new prison

          – the ability of Jamaica to refuse prisoners likely limits the number of prisoners to be transferred

        • The cannot close the facilities and sell the land. Even if they could, the would still have to find the money to build the prison through borrowing and once completed and prisoners transferred hope to get a sale to cover the cost of the money borrow.

          There is no way they could get J$6B for both properties.

          Secondly as I stated in another post, the Tower Street facility currently houses 1,700 prisoners and the St Catherine 1,300, that is 3,000. This new prison is between 1,500 – 2,000 .

          This is a shortfall of 1000 – 1,500 spaces, so what would they do with the remaining prisoners.

          The maths is just not adding up .

        • “The cannot close the facilities and sell the land. Even if they could, the would still have to find the money to build the prison through borrowing and once completed and prisoners transferred hope to get a sale to cover the cost of the money borrow.”

          Why can’t they find buyers ahead of the transfer? Surely part of the contract could be that ownership of the newly bought property will be taken up by X date with that date being the date of the opening of the new prison.

          “There is no way they could get J$6B for both properties.”

          I’m not in a position to make that guesstimate.

          But how do you figure that since as far as I know you don’t have a valuation of the properties concerned?

          “Secondly as I stated in another post, the Tower Street facility currently houses 1,700 prisoners and the St Catherine 1,300, that is 3,000. This new prison is between 1,500 – 2,000 .
          This is a shortfall of 1000 – 1,500 spaces, so what would they do with the remaining prisoners.
          The maths is just not adding up .”

          Agreed that something isn’t adding up. Again though, I’ll wait til I see the full details.

        • Let’s be realist here in relation to the sale.
          Do you believe that any “investor” is going to spend $6B and have it sitting there earning no interest and unable to convert it to money in short order, hell no.

          There is one option however and that is the MNS selling the property to a cash rich entity like the NHT.

          Without even going there, the Minister spoke about converting the prison lands in a green space as part of the downtown development and restoration project.

          That sounds to me much like knocking down the building and creating something akin to a park.

          Now this is downtime we are talking about and which serious incentives have to be given for people to invest currently.

          In addition these properties do not fetch the very high prices.

          Like you said, we awaiting more details but I assure you that won’t come unless we debunk what is presently before us and demand more information.

        • I would have thought that downtown properties were technically prime real estate depending on the purpose. After all it wasn’t so long ago that Delroy Chuck was essentially saying as much when he floated his buy out plan.

        • In most place in the world they would be, but given the relatively high crime rate, they certainly aren’t .

  4. KSmith , I am gonna be brief , no time for long arguments. Let’s say a British citizen came to Jamaica , committed the Jamaican illegal act of buggery and was sentenced to three years.

    Do you think it would make sense to England for this man to be sent to prison in England? It’s a different country with different laws bro. It would only make sense for him to serve his sentence in Jamaica.

    • The question you ask has no bearing on what is the current topic of debate since the man in question would likely be sent to prison in Jamaica FIRST and then transferred to England to serve out the rest of his sentence (I see no problem with that by the way).

      What the British want to do is send home a few hundred Jamaicans (I get the sense that they ideally would have loved to send home 700-900 of them) to FINISH serving out their sentences, not to serve out their entire sentences.

      I’ve already agreed with jay that for the British to send the prisoners here but not pay for their upkeep is wrong (in any event it seems the British have pledged £5.5 million for this purpose anyway for about 300 prisoners so that is seemingly no longer a meaningful point of discussion)

      As for the whole conception of different country/different laws. That is true, but that is also woeful ignorant of the reality that powerful countries around the world get to do what they like because they are powerful (case in point the Australians have for nearly 15 years operated “Offshore Processing Centres” in Nauru and Papua New Guinea to detain and process people arriving UNLAWFULLY into Australian waters – in the ideal world you paint the Aussies would detain these people in Australia for breaking Australian law). If folks wish to spit in the wind in that regard, don’t complain when your face gets a bit wet and sticky.

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