The Ministry of Justice has abandoned a controversial deal to provide Saudi Arabia with advice on the running of prisons, amid reports of a Cabinet row.
Just Solutions International was set up in the previous parliament as the commercial arm of the National Offender Management Service.
It was tasked with selling Ministry of Justice expertise on prison and probation overseas, and its work included a £5.9m contract to provide training for the Saudi Arabian prison system – a move that drew strong criticism and the prospect of legal action from human rights campaigners.
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Last month ministers announced that the unit would be closed down because of a "need to focus departmental resources on domestic priorities", but the MoJ later said it would continue with the Saudi deal because of the "wider interests" of the government.
According to The Times, the contract has since been the subject of a Cabinet row between justice secretary Michael Gove and foreign secretary Philip Hammond – with Gove reportedly demanding the scrapping of the Saudi deal and Hammond arguing that to do so could harm the UK's overseas reputation.
On Tuesday, Number 10 confirmed that the Saudi deal would now not be going ahead.
"This bid to provide the additional training to Saudi Arabia has been reviewed and the government has decided that it won’t be proceeding with the bid," the prime minister's official spokeswoman said.
"The review has been ongoing following the decision that was announced earlier in September to close down the Just Solutions International branch of the Ministry of Justice that was providing some of these services."
Answering an urgent question on the contract in the House of Commons today, justice secretary Michael Gove said: "It is important that the resources of the Ministry of Justice are targeted at our programme of domestic public service reform. So as has previously been announced, we have wound up the work that Just Solutions International, the commercial arm of the National Offender Management Service has been engaged in.
"This is in line with our ambition to ensure that our department's resources are firmly focused on our domestic priorities. And in terms of the commercial work that Just Solutions International had been engaged in with Saudi Arabia, as the House is aware, the final bid was submitted in April this year. Discussions have been going on since then and we have now reviewed this issue further and decided to withdraw our bid."
Gove gave a public show of support for the FCO, however, and insisted that "constructive engagement" with Saudi Arabia remained "the wisest course".
"But there is always a balance to be struck in the nature of the engagement that we make," he added.
"And a decision was taken across government that the Just Solutions International branch of the National Offender Management service should be wound up. And this decision is consequent on that cross-government decision.
"As I have said at this despatch box it is vitally important that we support the Foreign Office, its skilled diplomats and its excellent ministers in the work that they continue to do to influence not just the Saudi government but other governments that are considering how they can improve their own domestic human rights record and indeed promote the rule of law."
Shadow justice secretary Andy Slaughter said it was "a pity" that Gove had had to be "dragged before the House" to answer questions on the deal.
Civil Service World understands that the small number of commercial staff working on JSI are to be redeployed to other projects within NOMS.