Unceremoniously thrown out of the public school where he was headmaster, Dr. Benjamin Twist moves in with his brother's family. The wife, anxious to see the back of him, arranges an interview for a teaching job. Mistaken for a man called Benjamin, he accepts the offer of what he thinks is a school post but what is actually the job of running Blackdown Prison in Devon.

Twist arrives in a state of drunkenness at the entrance to the prison and becomes caught up in the delivery of some new inmates. One of them, the highly dangerous Max Slessor, escapes, leaving Twist to be mistaken for him and put in a cell under the eye of Albert, who is one of the warders. Twist's protests are dismissed.

While working on the rock pile, he inadvertently lets go of his hammer and smashes the windscreen of the deputy governor's car. Placed in solitary confinement, he is interrupted by a long-term prisoner, Jerry "the Mole" Harbottle, an inveterate tunneller who breaks down the wall from the cell next door to pay him a friendly visit. They stage an escape attempt, but are quickly caught.

When the police report that they have apprehended Slessor, the deputy governor and the head warder realise that Twist must be the new governor they have been expecting. Tempted by the large salary and the lengthy period before any inspection by the committee that appointed him, Twist decides to take on the post rather than admit to a mistake having been made.

He promptly introduces a new regime whereby a committee of convicts (including the returned Slessor) make all policy decisions and the inmates are waited on by the guards. He allows a company to be established to trade in stocks and shares with a bank account in his name. His protests at the introduction of betting and the presence of women from outside at a party are half-hearted and to no avail.

At the party, Twist is coerced by Slessor's glamorous girlfriend, Goldie, into writing a £50 cheque on the trading account. Slessor escapes again with the departing ladies and adjusts the amount on the cheque to a much higher figure. Goldie withdraws the sum in cash and Twist only discovers what has happened when his cheques bounce. The other prisoners are outraged by this act of thievery and send Twist to Slessor's hideout in London's Limehouse to recover the money.

Albert realises that Twist is no match for Slessor on his own and follows with a group of prisoners in a van. They arrive in time to prevent the crook from escaping and to relieve him of the money. Then the gang break into the bank where Twist's account is held, put the money back in the vaults and rewrite the records before heading back to Devon.

Twist is about to be sacked for falling into financial disrepute and for allowing inmates out of the prison when the puzzled bank manager telephones to apologise for having sullied his reputation and the prisoners all return in Albert's van, including the reluctant Slessor. As Twist is being congratulated, the ground gives way and the party descends into one of Harbottle's tunnels.