Chris Grayling’s Ministry of Justice ‘set itself up to fail’ in reforming probation services, wasting at least £467m of taxpayers’ money.

That is the verdict of public spending watchdog the National Audit Office, whose forensic analysis of the ’Transforming Rehabilitation’ initiative contains yet more damning criticism of how the department was run under the much-criticised former lord chancellor.

Under the 2013 reforms, private firms were handed contracts to supervise low and medium-risk offenders in a partial sell-off of the service. In its report today, the National Audit Office says the reforms were ’rushed’ and the numbers returning to prison for breaching their licence conditions have since ’skyrocketed’.

Contracts with the newly established community rehabilitation companies (CRCs) were amended in 2017 to increase their income and stabilise failing services. But in July 2018 the ministry announced the contracts would be terminated 14 months early in December 2020.

The Ministry expected CRCs to reduce reoffending by 3.7 percentage points over the life of the contracts, resulting in £10.4bn of economic benefits. But by March 2017, just six of the 21 CRCs consistently achieved significant reductions in the number of reoffenders. The ministry also failed in its its wider objectives: only two CRCs delivered the IT innovation they promised and the number of people recalled to prison has risen 47%.

By March 2018, CRCs faced collective losses of £294m over the life of the contracts, compared to expected profits of £269m, ’increasing the risk of providers withdrawing services, performance deteriorating further and potentially multiple providers becoming insolvent’.

Terminating these contracts will cost taxpayers at least £171m. The ministry originally expected to pay CRCs up to £3.7bn over the life of the contracts, but by August 2018 it was expecting to pay CRCs £2.3bn through to December 2020.

The report concludes: ’Together with its earlier unsuccessful efforts to stabilise CRCs, the Ministry will pay at least £467m more than was required under the original contracts. The full costs will not be known until at least December 2020.’

Rory Stewart, prisons and probation minister, said the performance of CRCs was ’too often deeply disappointing’. He added: ’That is why we have stepped in to end contracts early and invested an extra £22m a year in services for offenders on release.’

Meg Hillier, who chairs the Commons Public Accounts Committee , said the ministry ’now needs to reflect and ensure that its new proposals can deliver the much-needed improvements to probation services’.

A string of Chris Grayling’s headline policy reforms while lord chancellor failed, were abandoned or were ruled unlawful. They include employment tribunal fees, the criminal court charge and a ban on prisoners receiving books.