A new prison to hold hundreds of Nigerians currently in jail in England and Wales is to be funded by the British Government.

Under the deal at least 400 Nigerians could be transferred home to serve the remainder of their sentence in the new jail, which Britain will give Nigeria millions of pounds to build.

Officials are negotiating with the Nigerian government over the proposal, which would increase the number of jail spaces in the west African state.

The investment of millions of pounds of British taxpayers’ money is needed because conditions in existing Nigerian jails are so poor that prisoners would oppose their transfer on human rights grounds.

Lin Homer, chief executive of the UK Border Agency, disclosed the plan when she gave evidence to the Home Affairs select committee today.

Ms Homer said: “We are in negotiations with Nigeria to help them to establish better prison conditions in Nigeria. It is about helping them generate a infrastructure that can cope with the prisoners.”

Ms Homer said: “We are prepared to invest if that would enable us to send people home. We haven’t yet, we are in talks with Nigeria and it would be well worth the money to do so.”

Outside the committee, Ms Homer said: “We are looking at investing a few millions to improve prison infrastructure to allow us to return prisoners”.

She said: “It will be a new prison.”

It currently costs an average of £27,700 a year to keep a prisoner in a jail in England and Wales. At the end of March there were 11,283 foreign nationals in jails in England and Wales, of whom the biggest group were 1,099 Jamaicans followed by 855 Nigerians, comprising 724 men and 131 women.

An estimated 400 Nigerian prisoners are eligible to be returned home without their consent under a prison transfer agreement being negotiated with Nigeria.

It is the second time in the past decade that the Government has considered helping a foreign government to increase its prison capacity so that Britain can reduce the number of foreigners in jail.

A plan to build a jail in Jamaica was under discussion several years ago but the idea was abandoned over the question of who would pay the running costs and because of the precedent it would set for other countries with large numbers of their citizens in jails in England and Wales.

The planned deal would require Nigeria to change the law so that prisoners could be sent back without their consent.

Last night a Home Office source said that the money would be spent on refurbishing a jail in Nigeria and training prison officers and other staff.

The source said Britain believed that any deal would be worthwhile because it would free up spaces in jails in England and Wales and save money on detaining and removing Nigerian prisoners when they had completed their sentences.

A government spokesperson said: “The United Kingdom and Nigeria are negotiating a prisoner transfer agreement and discussions are ongoing.

“A prisoner transfer agreement will allow Nigerian nationals imprisoned in the UK and British nationals imprisoned in Nigeria to serve their sentences in their own country.

“We believe that prisoners should normally serve their sentences in their own country – freeing up prison spaces and saving the taxpayer money on enforced removals. This also helps prepare prisoners for their release to the community into which they will return at the end of their sentence.”

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