Revealed: The Government Outsourced a Scandal-Hit Kids' Jail to a Struggling Company

The government gave maintenance work at a controversial young offenders institution to an outsourcing company that was facing financial difficulties, VICE has found. The deal has echoes of how another firm, Carillion, repeatedly won public sector contracts amid profit warnings, before collapsing altogether and endangering vital public services such as hospitals and schools.

In this case, the Ministry of Justice (MoJ) allowed a firm called Mitie to start cleaning and maintaining a children’s jail – Medway Secure Training Centre – early last year. The jail had previously been taken into public control after numerous scandals. The company started the work despite issuing three profit warnings in the previous four months. Neither the government nor Mitie publicised the new contract.

Mitie told VICE that they "have not released details of this contract publicly", and described it as an "extension" of an existing contract with the MoJ for maintenance work at two other prisons. Mitie only publicised the Medway contract almost a year after it had begun, when a subsidiary published its accounts at Companies House.

The MoJ told VICE that it had announced the contract, but when pushed it emerged that the department had only listed the deal on an online database, months after the contract went live. The listing is hard to understand and makes it look like Mitie's work at Medway started five years before it actually began. The listing suggests that the total value of the contract, which spans three sites, is worth £25 million.

The private sector has a long and controversial history at Medway. The young offenders centre in Kent was opened by security outsourcing company G4S in 1998 to house teenage offenders. After a series of scandals the government took direct control of guarding and maintenance in 2016.

In one instance, a young mother suffered a miscarriage in her cell. G4S guards did not unlock her for 25 minutes, and then told her to "go back to sleep". She was not taken to hospital for ten days.

Secret filming by BBC Panorama in 2016 compounded concerns when it revealed G4S guards violently restraining kids in contravention of the rules, leading to 11 arrests after the programme was broadcast.

The government took control from the private company in light of the revelations. G4S – shaken by the scandal – began to sell off its youth custody centres in the UK and US, where it ran dozens of institutions.

Although Mitie only provides maintenance at Medway, with the MoJ supplying the guards, it is possible that the company was worried about Medway’s toxic reputation and opted not to publicise the contract win – something they are entitled to do. However, Mitie denied this suggestion and said it did not normally publicise contracts when they were extensions of existing arrangements.

Equally, the Ministry of Justice may not have wanted to draw attention to the fact it was giving the private sector another slice of Medway, just months after G4S departed under a cloud. But the MoJ said that it did not issue a press release because it has so many contracts with the private sector.

Whatever the reason, the quiet nature of this contract has meant there was little public scrutiny of Mitie's performance at Medway. An inspection published six months after Mitie began its contract said the jail's only medical room was "visibly grubby and dirty" and that it had "failed infection control checks". The report said there was "difficulty in maintaining acceptable minimum standards of cleanliness", and that, ultimately, "the room is not fit for purpose and there is a significant risk of contamination".

Inspectors also found that "Many locks are faulty; a situation that was evident at the last inspection, and which requires addressing urgently to ensure the security of the centre." However, Mitie had improved fire safety measures "to make the bedrooms safe".

One campaigner told VICE of his concern about the deal. "Given all the problems at Medway Secure Training Centre, transparency and openness is needed," said Richard Garside, Director of the Centre for Crime and Justice Studies. He commented that Mitie had a "questionable track record … But we are missing a trick if we just end up arguing about whether the public or private sector should be doing the cleaning and taking out the bins. Children’s prisons like Medway are failed institutions. They should be razed to the ground, with something fit for human habitation built in their place."

The FTSE 250 outsourcing group Mitie has become increasingly involved in custodial institutions since launching its "Care and Custody" division in 2009.

Mitie completely runs the Campsfield House immigration detention centre in Oxfordshire, where a fire in 2013 spread due to a lack of sprinklers, causing almost £1 million in damages. The fire brigade had repeatedly warned that sprinklers were needed.

The company also runs the Harmondsworth immigration detention centre near Heathrow, where secret filming obtained by Corporate Watch and broadcast by Channel 4 News showed staff saying conditions inside were "shit". The footage showed detainees living in unhygienic conditions with pigeons flying around inside the centre. One disgruntled guard said Mitie management had "fucked this place up". Mitie denied claims that the centre was at breaking point.

Mitie’s financial problems first emerged in September of 2016, when it issued a profit warning and claimed that the Brexit vote had damaged its outlooks. The announcement wiped over a quarter off its share price.

Within two months, Mitie issued a second profit warning, and said it would withdraw from its healthcare business. The announcement saw shares fall 18 percent. Then, in January of 2017, just as Mitie started work on the Medway contract, the company issued its third profit warning in four months. In May of 2017, Mitie said its accounting techniques on contracts was "less conservative" than its rivals. Soon after, a financial watchdog launched two probes into the auditing and preparation of Mitie’s 2016 annual accounts. At the time of writing, the Financial Reporting Council told VICE that its probes were ongoing.

Despite all of that, the government thought it was a great idea to award Mitie more contracts. In December of 2017, the Home Office publicly announced that it had handed Mitie a ten year contract, worth half a billion pounds, to deport migrants.

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