Outsourcing giant Mitie, which recently bought the facilities management arm of rival Interserve for £271m, has been awarded a £6 million contract to provide facilities management for the Yorkshire Ambulance Service NHS Trust (YAS).
The company – in common with more or less the whole “outsourcing” sector, it seems – has a history of problems with the quality of its physical services and financial probity, which this blog post outlines.
It also has significant connections with the Tory government
Under the five year contract, which started on 1 April 2020, Mitie provides technical services to 100 YAS sites covering the entire region, with the option to extend for a further two years.
YAS’s 61 Ambulance Stations require regular maintenance and a rapid response to the failure of critical equipment, such as garage shutters and doors which enable the ambulances to exit quickly. Mitie also has responsibility for maintaining sites which support the Service’s other core functions, such as the 999 and NHS 111 communications centres and offices for administrative staff. These require regular maintenance of Heating, Ventilation and Air Conditioning, power, and fire safety systems.
Mitie is also providing landscaping services, including grass, shrub and weed maintenance, for 64 of the YAS sites, as well as winter services, including highway gritting and snow clearance, for six other locations.
Mitie expansion comes at time of increased privatisation under cover of Covid-19
The BBC report on the Mitie/Interserve merger notes,
“The deal comes at a time when the government is relying heavily on outsourced services providers in its response to the coronavirus crisis.
Private Eye reported in its 14-27 Aug 2020 issue that the government has further privatised the Covid-19 test and trace service by handing over the army’s fleet of 218 mobile testing units to private contractors – including Mitie.
The Department of Health and Social Care would not tell Private Eye which companies they have contracted to provide most of these mobile testing units, but Mitie’s ‘chief government officer’ Simon Venn said it was taking on 19 of the vans. One of them is now at a walk-through site at Rutherford car park in Canterbury.
Mitie describes Simon Venn as
“a senior adviser to the UK government… appointed in 2010 by the then Foreign Secretary, Sir William Hague MP, to sit on the Foreign & Commonwealth Office’s Overseas Business Risk (OBR) board. OBR provides security advice and intelligence to UK companies.”
Mitie’s links with the government extend to director Baroness Philippa Couttie – a Tory peer, party whip and former advisor to David Cameron. She was leader of Westminster Council 2012-2017.
“Both Mitie and Interserve are involved with the NHS Nightingale hospitals, built specially to treat Covid-19 patients, while Mitie has been hired to run 11 Covid-19 drive-in regional testing centres.”
The Financial Times reported that Mitie’s deal to buy Interserve’s facilities management business was “an attempt to boost its public sector weighting”. The company earns 70 per cent of revenues from the private sector.
Mitie supported ConDem cuts to public services
In 2010 Ruby McGregor-Smith, an accountant who ran Mitie until 2017, was one of 35 business leaders invited to sign a letter in the Daily Telegraph, urging Chancellor George Osborne to cut public services. Reducing the budget deficit quickly, they claimed, would
“deliver a healthier and more stable economy…everyone knows that when you have a debt problem, delaying the necessary action will make it worse not better.”
Austerity politics creates work for outsourcers regardless of whether they do things more efficiently than the public sector, or not. The Private Finance Initiative model that accountants have dreamed up – and that Mitie has profited from – keeps capital spending off the government’s balance sheet, making the official budget deficit smaller. Pushing public money into private hands shrinks the state and weakens organised labour.
The Mitie Chief Exec’s support for the ConDem public spending cuts agenda was rewarded in April 2013 with her appointment as non-executive director to the board of the Department for Culture, Media and Sport.
Mitie investigated twice in one month by Financial regulators
In 2017, Chief Exec Ruby McGregor-Smith left Mitie under the cloud of investigations by the Financial Conduct Authority – a year after the Tory government had made her a life peer.
On her watch as Mitie Chief Exec, in 2016 the company issued a profit warning that was the subject of the financial watchdog’s investigations. The company announced her departure a month later.
Under new boss Phil Bentley – formerly director of British Gas – Mitie carried out an accounting review which led to it reporting a £43m loss for the year to the end of March 2017 and re-stating its profits for the previous year.
The same month as the Financial Conduct Authority’s investigation of the profit warning, UK’s accountancy watchdog, the Financial Reporting Council, opened a probe into Deloitte’s auditing of Mitie’s accounts for the years ending 31 March 2015 and 2016.
“Outright failure of the audit profession and regulators”
The problem of Deloitte’s lax auditing was not an isolated case.
After a string of scandals that exposed failures in annual audits and prompted a shake-up of the sector, this year the UK’s Financial Reporting Council (FRC) assessed the seven largest auditing firms and described the situation as “unacceptable”.
Richard Murphy, tax justice campaigner, accountant and economics professor at City University of London, said there had been a “rapid decline” in auditing standards that would lead to more company failures at a time when society could least afford it. He added,
“It’s an outright failure of the audit profession and regulators.”
Although the FRC scored Deloitte highest out of the so-called Big Four accountancy firms – the other three are Ernst and Young, KPMG and PricewaterhouseCooper – it concluded that all of them must do more to challenge their clients.
The Big Four have to split off their audit divisions from the rest of their business by June 2024.
A story in The National explains,
“Auditing is a less profitable part of their work and companies have been accused of signing off profits without asking enough questions to ensure the continuation of more lucrative consultation work. Critics say the approach has meant they have failed to spot emerging financial crises and identified frauds.”
Experts in fire prevention failed to install sprinklers in immigration removal centre
A 2014 Open Democracy article by Clare Sambroook reported that Mitie’s record in facilities management was not too great.
At the time, Mitie was running Campsfield House Immigration Removal Centre, near Oxford. It wasn’t going well – and in 2019 when the contract with Mitie ran out, the government closed the Centre.
In October 2013 a suicidal inmate set fire to his cell. The blaze spread quickly — there was no sprinkler system. Ten fire engines rushed to the scene; 180 people had to be evacuated.
Mitie are experts in fire prevention. They tell potential clients:
“our fire and security team can integrate fire prevention, detection, and suppression with your security equipment, including fire detectors, fire alarms, extinguishers, sprinkler systems . . .”
Seven years ago, after a similar fire in the same Campsfield block, Oxfordshire Fire & Rescue Services strongly recommended sprinklers.
Why didn’t Mitie heed the Fire Service’s warning and install sprinklers when they got the Campsfield contract in 2011? Phil Miller, a Corporate Watch researcher, asked Mitie. They wouldn’t say.
In 2014, Corporate Watch investigated the company’s track record during its last three years in the asylum ‘market’, and found a catalogue of failures in both safety and care.
This was not an isolated case – Mitie’s 2014 £90m cleaning and catering contract with Cornwall’s Treliske Hospital generated disastrous problems in its first year that ranged from huge increases in staff sickness among the 485 staff transferred to the company from the NHS, to continued failures to meet contractually- required standards such as cleaning a ward to a satisfactory standard.