Birmingham prison to remain under public control after Government takeover
In August it was announced that Her Majesty's Prison & Probation Service was taking over the running of HMP Birmingham from G4S.
Previous inspections had found staff asleep or locked in offices and “appalling” squalor and violence.
Birmingham prison is permanently being brought back under Government control.
HM Prison and Probation Service took over the jail from G4S in August.
The move was announced at the same time as Chief Inspector of Prisons Peter Clarke published an assessment of the prison.
The initial "step-in" was for at least six months, before being extended to the summer.
Today, the Government announced that HMPPS has decided, with the full agreement of G4S, to end the contract seven years early.
Prisons Minister Rory Stewart said: "I am confident that HMP Birmingham has made good progress since the 'step-in' but to build on this, the prison needs stability and continuity.
"That is why we have mutually agreed with G4S that the public sector is better placed to drive the long-term improvements required and the contract will end.
He stressed the Government still believes in a "mixed economy" of providers, saying some private jails are among the best performing.
"Indeed, G4S itself is running excellent prisons at Altcourse and Oakwood, and this Government believes passionately that private providers should continue to play a crucial role in our system," Mr Stewart said.
The chief inspector's report, which detailed findings prior to the Government's intervention, revealed that inmates walked around "like zombies" while high on drugs in scenes likened to a war zone.
Prisoners flouted rules without challenge from staff, many of whom were "anxious and fearful" as they went about their duties, the assessment found.
G4S was awarded a 15-year-contract to run the jail in 2011.
G4S custodial & detention services managing director Jerry Petherick said: "HMP Birmingham is an inner-city remand prison which faces exceptional challenges including high levels of prisoner violence towards staff and fellow prisoners.
"We believe that it is in the best interests of staff and the company that management of this prison is transferred to HMPPS and we will work closely with the Ministry of Justice to ensure a smooth transition over the next three months.
"We will continue to deliver high quality services at the other four major UK prisons that we manage and I would like to pay tribute to all of our employees who provide an outstanding service at these prisons, often in a demanding operating environment."
Mark Fairhurst, national chairman of the Prison Officers Association, said the announcement means HMP Birmingham will be returned to "where it rightfully belongs".
The Governor who took command of the prison last August, Paul Newton, will remain in charge if the prison.
A series of improvements have been put in place, including:
The introduction of a new dedicated search team to detect and deter those responsible for bringing contraband into the establishment.
A recent full lockdown search was highly successful in addressing contraband.
A bolstered senior management team and more than 30 additional, experienced prison officers supporting the team on the ground.
New safety initiatives including ensuring that each prisoner has dedicated support from a prison officer.
Additional training for staff in managing vulnerable and violent offenders.
The refurbishment of one wing which is now being repopulated.
The visitors centre is also undergoing renovation and a new family strategy has been introduced.
G4S have agreed to pay £9.9 million to cover the additional cost of the 'step-in' action.