This is designed to appeal to their core vote base, who are largely morons, and isn't intended to fix anything. With the local elections coming up, expect to see lots more moronic policies as they attempt to get the morons out to vote for them.
Hang on, if they continue to privatise prisons so that the incarcerated are forever in debt for their keep and also provide a cheap labour force for more private companies then surely it's a win-win for this government.
They maybe a ruthless, incompetent bunch of bastards but they won't miss a business opportunity!