A private prison company that ran an “inadequate” youth jail made £11m in the same year inspectors raised serious safety concerns about the welfare of children, some of whom were locked up alone for more than 23 hours a day.
Soaring profits, described as “tragic” by Labour, were disclosed in accounts filed by the US-owned Management & Training Corporation (MTC), which was awarded a £50m contract from the Ministry of Justice in 2016 to run the Rainsbrook secure training centre in Warwickshire.
Profits jumped from less than £1m to £11m in 2020, the year before its contract with the MoJ was terminated 17 months early after a string of damning reports by Ofsted inspectors.
MTC said most of its profit came from its probation services in London and Thames Valley, not Rainsbrook. It said staffing levels had been more than adequate at the centre.
The accounts for its UK operations, which were filed at Companies House this week, also showed the company had since switched to running “migrant quarantine hotels”, using staff redeployed from Rainsbrook, after it was approached by the Home Office and asked to help deliver the services.
These quarantine hotels house adult asylum seekers who have arrived in the UK by small boats, when the short-term holding facilities meant to accommodate them are full up.
Conditions at Rainsbrook, near Rugby, sparked “serious concerns” among Ofsted inspectors, after it emerged children at young as 15 were being locked up for more than 23 hours a day with “no justifiable rationale” during the coronavirus pandemic.
All children were removed from Rainsbrook in June 2021, after subsequent inspections raised further safety issues, including the carrying of weapons and warnings from staff and children that someone was likely to die at the centre.
Some of the children were sent to adult prisons as a result.
Low staffing levels at Rainsbrook, which had capacity for 87 children between 12 and 17, were cited among the reasons for its problems in successive reports by Ofsted in 2020 and 2021.
One report said: “Poor staffing levels and poor supervision of children enable children to bully and intimidate each other. Physical assaults between children are common, and work to resolve these conflicts is minimal.”
Utah-based MTC, which says it champions a “bionic” (believe it or not, I care) culture, has previously been criticised for understaffing a prison in its network of private correctional facilities in the US.
Its UK division acknowledged problems with low staffing levels in its results for the 12 months to the end of December 2020, a period in which inspectors sounded the alarm about Rainsbrook three times.
During that period, the company recorded an increase in profits from £644,000 to £11m, with its highest-paid director earning £234,000.A National Audit Office report last month revealed the government entered into negotiations to pay MTC up to £1.8m in settlement costs over the loss of the Rainsbrook contract, with the company agreeing to meet £244,098 in maintenance costs.
The government also paid MTC £5.6m a month while it negotiated the terms of the contract termination. This was £1.5m less than normal monthly payments because some MTC staff were redeployed under the quarantine hotel contract.
The NAO said the sums could be described as “fruitless payments” because no children were housed at Rainsbrook during the period.
MTC’s 2020 results were temporarily boosted by the government’s decision to renationalise the probation service, backtracking on a disastrous privatisation programme led by the former justice secretary Chris Grayling.
The early termination of MTC’s two private probation contracts inflated revenues by £4.3m to £107.6m, as payments that would have been due in the remaining years of the contracts were brought forward.
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Ellie Reeves, the shadow minister for prisons and probation, said: “It is tragic that taxpayer’s money goes towards massive salaries of directors of companies like MTC while children in their charge are locked in their rooms for 23-and-a-half hours a day.”
She said the government had wasted £4.1bn on Grayling’s “catastrophic” transforming rehabilitation plan to privatise the probation service, which had been left “a shell of its former self”.
MTC said most of its profit came from its probation services in London and Thames Valley, not Rainsbrook. It said staffing levels had been more than adequate at the centre. “While we experienced significant challenges at Rainsbrook STC, we had a strong record in delivering probation services before they were renationalised, along with all other areas in England and Wales in 2020,” it said.
“In London, inspectors commended our sustained improvements to previously failing services and in Thames Valley our service was rated ‘good’.”
Commenting on MTC’s role in the quarantine hotels, a Home Office spokesperson said: “We expect all our providers to ensure that accommodation provided to asylum seekers is safe, comfortable and meets our standards of service.
“MTC work is assured by the Home Office on a regular basis and they have consistently proven to be a diligent partner in dealing with vulnerable migrant arrivals.”
The Guardian has approached the MoJ for comment.