A Guardian journalist’s exposé of a green-energy business in Wales has revealed that it employed prisoners on wages of just £3 a day. Inmates from the Prescoed prison in Monmouthshire, South Wales, have been working in call centres operated by Becoming Green, a firm specialising in environmental refitting, at a nominal rate of 40p per hour for periods of two months or more. Most alarmingly, though, many of the firm’s non-prisoner employees were either fired or – allegedly – harassed to the point of resignation during the time the prisoners were appointed.

In January, Justice secretary Ken Clarke set out plans to double the number of people working inside prisons – but with no intention of undercutting businesses outside. However, this development for inmates of a minimum-security, open prison – who are entitled to gain “work experience” at outside firms – is a major economic loophole for businesses that has not been addressed by the law.

Prescoed is understood to have given Becoming Green permission to keep the workers on their token wage, effectively for as long as the company wanted – but with the condition that only 20% of its workforce was allowed to come from the prison. It appears that rather than using external labour to bolster its workforce, Becoming Green allegedly aimed to replace its perfectly competent roster of existing workers with much cheaper alternatives.

While the move was apparently perfectly legal, it is nonetheless morally questionable; not in the sense of inmates being able to gain work experience – a patently a useful tool in preparing for law-abiding lives after release – but the notion that perfectly competent workers have lost their jobs unfairly. It is ironic that Becoming Green undoubtedly relies upon the perceived ethical high ground of being environmentally friendly to generate business. The double standard is clear: customers are expected to have a sense of moral duty, but that is not echoed in the company’s employment policy.

In terms of legislation, it is a tricky area: charge too high for prisoner wages and companies will not take a chance; charge too little, and this type of exploitation will continue. Professional Manager has already highlighted similar concerns over the exploitation of interns. Clarke and the government must now find a way to get the balance right with prisoners, and encourage companies to use the scheme in the spirit in which it was intended.