Prison service welcoming new punishment (7)
I believe the answer is:
penance
'punishment' is the definition.
(penance is a kind of punishment)
'prison service welcoming new' is the wordplay.
'prison' becomes 'pen' (I've seen this before).
'service' becomes 'ace' (ace is a kind of service).
'welcoming' indicates putting letters inside (in sense of 'inviting in').
'new' becomes 'n'.
'ace' enclosing 'n' is 'ance'.
'pen'+'ance'='PENANCE'
(Other definitions for penance that I've seen before include "Act of atonement" , "Voluntary self-abasement" , "Act performed in sorrow for sin" , "Punishment inflicted on oneself" , "Punishment for religious wrongdoing" .)