Refugees in London are being housed by the Home Office in run-down, insect-infested hotels. Meanwhile, private housing providers are raking it in.

Corporate Watch spoke to an Iraqi Kurdish family who arrived in the UK in November 2020. Since then, the family – who wish to remain anonymous – have been put up by the Home Office in disgusting conditions in several hotels in London with their six children. They told Corporate Watch that – aside from the insect infestation – they have had to deal with the ceiling caving in; water pouring in from the apartment above them; insufficient food, a lack of electricity, and – when there has been power – dodgy and dangerous electrics.

Mother of the family Rojda (not her real name) told Corporate Watch:

“I’m a mother of six kids, our life is very hard here, and we have no rights.

When we arrived here [in 2020] we had two rooms for all of us… all of our accommodations have been very bad”

Rojda described how she often had to take the family to see another friend living in a different hotel in order to take showers because of the lack of hot water. Rojda said that it was a “shame” that despite living in a rich capital like London she didn’t even have electricity or hot water.

The adults in the family have not been given permission to work in the UK and are completely dependant on the Home Office for accommodation.

They are currently living in a hotel in just three rooms for a total of eight people. The hotel is infested with bed bugs which are causing skin irritation. They provided Corporate Watch with these shocking photos:

A baby with a skin irritation caused by bed bugs

Dead insects on a child’s cot

The family were temporarily moved to new accommodation after a housing officer intervened, but Rojda told us that within weeks they were forced to return to the bug-infested hotel.

Heartbreakingly, Rojda told us that the staff at the hotel had denied her son food, after he complained about the state of the family’s accomodation.

Rojda said that it’s not just her family who are suffering. She doesn’t have a common language to communicate with the other families at the hotel, but she can see that the conditions are just as bad for them

The Home Office’s slum landlords

Nearly 55,000 refugees are currently housed in the Home Office’s ‘contingency accommodation’ waiting to find out if their asylum claim will get approved. The UK’s asylum housing contracts have been wholly privatised since 2012.

The company that is responsible for providing the accommodation that Rojda’s family is housed in is Clearsprings Ready Homes, which reported a massive jump in profits in its last set of accounts – to £4.5m. Its surging profits have led to a seven-fold increase in dividends to the parent company. Clearsprings handles the asylum accommodation contracts for the Home Office in the south of England.

Clearsprings also runs Napier, an ex-military barracks which is being used to house refugees in Kent in conditions described as “squalid” by lawyers of the residents.

In other parts of the UK, the Home Office has awarded contracts to Serco and Mears Group. Outsourcing giant Serco reported £180m in profits in 2019, while Mears reported over half a million worth of profits from its housing business alone.

We’ve decided not to name the Central London hotel because of fears that fascists will target the residents.

“Imagine coming to school with that”

Rojda suggested that we speak to the children’s teachers so they could tell us about the effect living in these conditions has on the wellbeing of the children and their education.

The school provided a statement which says that it has had to get “more and more involved” with helping children in “temporary accommodation”, including providing support with practical things like travel and uniforms, as well as “navigating the bureaucracy”. Its statement reads:

“Living in these difficult conditions obviously impacts the children. They tell us about how overcrowded it is, how noisy, and how they have trouble sleeping.

Imagine coming to school with that. They are trying to learn a new language, integrate into a new school, adapt to a new culture when at the same time they have to deal with great uncertainty about how long they will be staying for.”

Passing the buck

The Canary contacted the Home Office about the conditions at the hotel. They passed the buck to Clearsprings, saying:

“We are dealing with unprecedented pressures on the asylum system, but despite this we continue to ensure the accommodation provided is safe, comfortable and secure.

However, we expect high standards from all of our providers, and any asylum seekers who have problems can get in touch with Migrant Help 24/7, every day of the year.”

We also contacted Clearsprings Ready Homes. A spokesperson said:

“Clearsprings Ready Homes works closely with its delivery partners to ensure that safe, habitable and correctly equipped accommodation is provided. Whenever issues are raised, or defects are identified Ready Homes will undertake a full investigation and ensure that those issues are addressed.”

The Home Office also said:

“The Nationality and Borders Bill that we are introducing will deliver the most comprehensive reform in decades to fix the broken asylum system.”

However – far from making the situation better for refugees – the Nationality and Borders Bill will make the situation even worse by introducing endless reviews of people’s asylum claims, which stretch out the asylum process. This means that people are reliant on Home Office accommodation for even longer. In general, the bill is designed to make claiming asylum in the UK even more difficult.

“Not an isolated experience”

Rojda’s family’s situation is not unique at all. The Home Office’s private contractors routinely provide dirty and dilapidated accommodation to those seeking asylum. Earlier this month, Clearsprings was forced to make improvements to flats it’s using to house refugees in Uxbridge after they “were found to be rife with damp, mould, water leaks and pest infestations”. Last year, six men won a high court legal challenge. The court ruled that their accommodation at the Napier Barracks in Kent – which is managed by Clearsprings – failed to meet a “minimum standard”.

We spoke to Maddie Harris, director of the Humans for Rights network. She said:

“The experience of this family is utterly appalling and shows a clear disregard for their health, wellbeing and rights. It is also, not an isolated experience. We have spoken to hundreds of people seeking sanctuary in the UK who are accommodated in hotels throughout England and it is clear from the testimonies shared with us that there is no attention paid to upholding even the most basic of rights. People often spend well over a year in cramped, overcrowded hotels, run by private contractors who surveil their every move.”

Medical care is limited

Harris continued:

“Medical care is often limited or restricted by staff who refuse to assist people in registering with GP surgeries. Food is nutritionally poor and small in quantity and often lacks consideration for faith, cultural or dietary requirements. Access to solicitors and legal advice is severely lacking and little to no information is provided to people. These hotels and accommodations such as Napier Barracks, are for many experienced like quasi-detention and we have heard from numerous people that their mental health is severely effected by isolation, lack of information and complete uncertainty as to the progress of their asylum claim. These accommodations are run by private companies, who profit from and are responsible for much of this harm.”

“Ultimate accountability lies with the Home Office”

Harris concluded that, although private companies are profiting from running the accommodation, the Home Office bears the final responsibility. She said:

“Ultimate accountability lies with the Home Office who are responsible for these contracts and the welfare of asylum seekers in the UK, yet there is a complete lack of oversight for how these contracts are managed, resulting in untold harm to many thousands of people seeking sanctuary in the UK.”

Solidarity

Refugees living in the Home Office’s slum accommodation can be found in many of our communities. These are people who are new to the UK, and they are bearing the brunt of a racist state which is colluding with ruthless private companies out to make a fast buck from the suffering of others. We need to be ready to stand in solidarity with people in the Home Office’s slum accommodation, and to struggle alongside them for better conditions.

Featured image via Alisdare Hickson/Wikimedia Commons (resized to 770×403 pixels), all other images used in this article were provided to Corporate Watch by Rojda’s family (with permission)

We know that Rojda’s family’s situation is just the tip of the iceberg. If you – or people you know – are in a similar situation you can talk to Corporate Watch here.

The post Refugees are being housed in infested hotels by the Home Office’s slum landlords appeared first on Corporate Watch.

In the last year, refugee and housing campaigners have been keeping a close eye on Mears, with local resistance to its slum landlord practices emerging across the UK. This report just gives a quick update on some recent news on the company.

Unless you live in one of the properties it manages, you may well not have heard of Mears. But it has quietly built up a small empire across the UK, primarily by taking over privatised housing services from local councils. Along the way it’s already clocked up a list of scandals from Glasgow down to Brighton, involving accusations of local government corruption and numerous alleged overcharging scams.

The death of Adnan Olbeh

Adnan Olbeh was found dead on 5 May 2020 in a Glasgow hotel where he had been placed by Mears Group under its management of the UK’s “asylum dispersal” scheme. He was 30 years old, from Syria. The cause of death is unclear, with any postmortem examination delayed by the corona crisis.

What is known is that Adnan was one of hundreds of refugees recently evicted from their flats by Mears and other asylum landlords.

The mass evictions were part of the Home Office’s coronavirus strategy. Often with just an hour’s notice, people were told to pack and leave their flats and moved into hotels. The logic behind this is not entirely clear, but it seems in line with other aspects of the government’s shambolic covid-19 response. “Social distancing” measures included people being transported four or five to a small van, stripped of cash support and facilities to cook for themselves, and instead being made to eat close together in hotel canteens — with food including the likes of undercooked chicken and mouldy bread.

According to Smina Akhtar, interviewed by John Grayson for the Institute for Race Relations:

“We have had lots of reports from people in the hotels about really awful food and poor conditions there. Adnan’s friend told me that his mental health really deteriorated in the hotel. A week before he died his friend asked the hotel to call an emergency ambulance because Adnan was in a terrible state. His friend went with him to the hospital but said that the staff there did nothing, they offered him no medication, and sent him back to his hotel.”

According to Mears, in evidence to the House of Commons Home Affairs select committee, it was acting on a directive from the Home Office.

Mears’ Home Office contracts so far

Adnan Olbeh’s death is one visible tragedy linked to the misery of the UK asylum system. Thousands more people live with the everyday effects of a housing system which “disperses” people into run-down slum housing in the country’s most impoverished communities.

For Mears, this means a ten year profit stream. For Mears’ new tenants – rat infestations, broken boilers, collapsed ceilings, piles of rubbish, and environmental hazards of all kinds seem the norm.

John Grayson of South Yorkshire Asylum Action Group (Symaag) has been documenting the “chaotic” and “failed” Mears contract in Yorkshire. In the past he reported on similar conditions under the last contract holder, G4S.

So have Mears even managed to underperform the shambles of G4S’ housing management? It’s maybe too early to make a full comparison. But it doesn’t look like things have got off to a good start.

G4S and others had complained bitterly about making losses on the former round of asylum housing contracts. To drive profits up, Mears started their own tenure by trying to slash the amounts they pay to the smaller landlords they rent from. In South Yorkshire, Mears offered landlords new contracts paying up to 20% less than G4S had done. Many refused to sign up in what John Grayson calls a “virtual landlords strike” which left Mears struggling to place the asylum seekers it was contracted to house.

In the North East, Mears had similar problems negotiating with G4S’ main sub-contractor Jomast – development company headed by Teesside multi-millionaire Stuart Monk. According to Grayson, this left over 1000 people stuck in hotels across West Yorkshire and Humberside in Wakefield’s “Urban House” temporary asylum accommodation over the winter. And, as he explained to us, the problem is by no means solved.

“When Covid-19 arrived the whole asylum housing system was frozen in the Mears contract areas with around 400 people still in hotels and 270 in Urban House. Many people have now spent four months in Urban House, when they are only meant to stay there a few weeks. Urban House has appalling conditions which have been extensively documented in pictures and videos sent out from people resisting inside.”

One thing Mears has achieved in Yorkshire is provoking a major local authority to come out against the contract. In January, as well as launching inspections of 240 Mears properties, Sheffield Council called on the Home Office to terminate the Mears contract and transfer asylum housing in the city directly to the council. This is only really a token gesture – the council has no say in national asylum policy. But it could be one move in a shift against the outsourced asylum housing system, if followed up elsewhere in the country.

In Scotland, there is a strong solidarity network in support of refugee housing rights – including the Glasgow No Evictions campaign and groups such as the Unity Centre, Living Rent tenants union, and charity Positive Action in Housing. The main rallying point in 2019 was previous contractor Serco’s threatened “lock change evictions” of 300 of its tenants. Well aware of the opposition, Mears has so far tried to tread more carefully. It has promised not to carry out similar evictions, and set up a so-called “independent scrutiny board” to deflect criticism.

In the North of Ireland, the PPR Project is one association monitoring and exposing conditions in Mears’ housing there.

Milton Keynes mystery

Before it turned asylum landlord, Mears’ big profit hope was getting more involved in the very lucrative business of housing development. One of its potential jackpots was a 50/50 joint venture with Milton Keynes council to redevelop seven major estates. The deal was valued at £1 billion, and branded as “YourMK”.

But as of last year, the scheme was dead in the water. In July 2018, the council said it was putting the regeneration deal “on hold”. In October 2018, whistleblower allegations emerged that Mears had been overcharging Milton Keynes for repairs by up to £80,000 a month, with overall some £15 million “unaccounted for”. When we looked at Mears last February, the YourMK website had gone dead, with a page announcing that further information would be coming soon.

The MK scandal still seems to be quietly brewing. In July 2019, the MK Citizen reported first of all that the regeneration scheme was definitively “scrapped”. But a couple of weeks later a second Citizen report corrected that YourMK was “not dead but dormant”, with the council and Mears “in discussions about whether it will remain the right partnership structure in future”.

In May 2020, we haven’t seen any new announcements. The YourMK website is still down, and there is no official word on that supposedly missing 15 million. Where are the budding investigative journalists of Milton Keynes to get to the bottom of this?

Booted out of Brighton

Mears’ ten year housing maintenance contract with Brighton and Hove council finally came to an end on 31 May. Again, customer complaints came together with whistleblower revelations – and, yet again, the apparent disappearance of large sums of money.

A council investigation found it had been overcharged by £500,000 by a plastering subcontractor hired by Mears. A second investigation was later opened into overcharging for electrical work.

Mears will not be missed in Brighton. And just before they left, in February 2020 their workers were balloting for strike action over pay and Mears’ plan to combine holiday and sick pay.

Newham: Mears Cats

In East London, Mears run 250 homes which are set for demolition as part of Newham Council’s “Regeneration Zone” in Canning Town and Custom House, E16.

Like Milton Keynes, this is another overlong saga of a failing regeneration project leaving people stuck in poor housing. Back in 2011, Newham handed the properties to a private management company called Omega to let out on short term commercial tenancies. This was supposed to be a “temporary” arrangement before the bulldozers came in. Mears bought out the contract in 2014, and six years later are still in place. While the buildings are still owned by the council, Mears collect the rent and do the repairs – in theory.

In reality, Custom House tenants speak of conditions that would be very familiar to anyone in Mears’ asylum accommodation in Sheffield or Glasgow. Months overdue repairs, water leaks, exposed asbestos, rat infestations and a “war” to get anything done – all whilst paying average rents twice as high as in directly run Newham council properties.

Tenants have set up a vocal campaign group called Mears Cats, part of the Peoples Empowerment Alliance of Custom House, pushing to get their repairs done and for Newham Council to take direct responsibility. Boglarka Filler, one of the Mears Cats, told Corporate Watch:

“Schemes such as the partnership between Mears and Newham Council have brought further misery to people already on the receiving end of austerity and insecure employment. Mears Cats are campaigning for better quality, cheaper housing for Mears tenants struggling to cope with disrepair and debts caused by high rents. We will take action to ensure that the Mears contract will not be renewed in Newham when it runs out in 2021, and that we get a fair deal next time.”

Steady profits, feisty shareholders

On a business front, Mears continues to turn a decent profit and pay out to its shareholders. Its last year (2018) annual results clocked operating profits up 4.7% (though revenue was 3% down), and shareholders pocketed a dividend up 3% on the year before.

Mears has kept up its strategy of honing in on its “core” housing maintenance business. After buying up Mitie’s property division last year, it sold off its own home care wing.

Most recently, Mears has said that it only expects a modest impact from the covid crisis. Housing is what is called “non-discretionary” spending – unlike foreign holidays or consumer fads, there is still demand for essential repairs in a downturn. The bulk of Mears’ income is locked in from long term contracts, largely with the public sector. As the company explained, 90% of its order book comes from public bodies and “the government has made a clear commitment that invoices will be settled quickly”.

Through the lockdown, Mears has said it is only carrying out only emergency repairs. Although workers complain they are still being sent on unnecessary jobs without “social distancing” in place, or called in just to sit in company offices.

Less positive for management, there are new rumbles from rebellious shareholders. Back in 2018 one of the two biggest shareholders, a German investment manager called Shareholder Value Management (SVM) successfully pushed out the company’s long-term chairman. At the latest AGM in June 2019, the other big investor also threw its weight around.

PrimeStone Capital, a Mayfair based investor which owns over 13% of Mears’ shares, tried to get two new nominees on the board of directors against management’s wishes. The shareholder rebellion was narrowly defeated. In a statement, PrimeStone explained it was unhappy that “the company’s revenues and profit have remained flat despite its strong market position and growth prospects [while] average net debt has doubled”.

It argued that:

“Mears’ underperformance is predominantly due to a lack of strategic, commercial and financial experience on the board. The current board has a strong concentration of directors with a background in social housing, health & safety and charities.”

Mears’ profit-hungry management guarantee shareholder payoffs by squeezing their repair costs to the bone. The outcome is the lived experience of their tenants across the UK. But, for some shareholders, they’re still not doing enough.

Students and shirts

Despite its well documented failings, Mears continues to win new contracts – for example, a new housing development project in North Lanarkshire, and a housing maintenance and repairs contract with Crawley council.

Another sideline is its student housing offshoot Mears Student Life, so far with just two complexes in Dundee and Salford.

Mears also likes a bit of football. In May 2019 the League One side Rotherham United confirmed it had extended its contract to emblazon the company’s classy red and black logo on its away kits for the 2019/20 season.

The post Mears Group 2020 update: scandal-ridden landlord under fire from Glasgow to Gloucester appeared first on Corporate Watch.

Mears is an outsourcing company working in two sectors: housing management, and home care. It has recently won the £1.15 billion Home Office contract to provide asylum seeker housing in Scotland, Northern Ireland, Yorkshire and the North East of England.

So what sort of company is Mears? Corporate Watch has looked into Mears’ past record to find how the “strong sense of social responsibility” its promotional materials boast plays out in practice.

Mears presents itself as a step up from notorious outsourcing rivals like Serco and G4S. But it is far from certain the company can be trusted to provide decent homes for refugees.

• Mears is being hit by multiple scandals. Its flagship regeneration contract in Milton Keynes may be collapsing amid allegations of overcharging for repairs, while it has recently been dropped from a big repairs deal on its home turf of Gloucestershire. Allegations involving overcharging scams and corruption hang over deals from Brighton and Scotland. Most shocking of all: in 2017 Mears tried to ban beards.
• The Mears home care business struggles to break even and to keep care workers, unsurprising given the infamously low rates of pay in the sector. Over 40% of Mears’ care workers left the company last year.
• Meanwhile, Mears’ top brass receive handsome rewards. The company paid out £52 million out to its shareholders over the last five years, while CEO David Miles made £443,000 last year — over 20 times the average wage for Mears workers.
• While profits and payouts remain healthy, Mears’ financial profile shares many similarities with those of troubled outsourcing firms such as Interserve and Carillion, with potentially few resources to fall back on if contracts are lost or government spending is cut further.
• Mears’ current Chief Operating Officer, John Taylor, was previously boss of scandal-hit housing company Orchard & Shipman — when that company won the bid to run much of the previous Scottish asylum housing contract under Serco.
• To keep growing, Mears is expanding into new business lines, such as building its own housing developments and running its own regeneration schemes. It also manages the National Planning Portal, which processes most of the UK’s planning applications, and last year it bought rival outsourcer Mitie’s social housing division. In January 2019 Mears won its biggest deal yet —  £1.15 billion worth of asylum housing contracts with the Home Office.

Do you have information about Mears you’d like to share with us? Click here to get in touch.

Main picture: a Mears sponsored networking event with senior council and housing association managers.

Click on the heading below to go straight to a section:

• History: council housing profiteer
• Housing
• £1.15 billion Asylum Housing Contract
• “Blurring the boundaries between private and social”
• National Planning Portal
• Home care
• Scandals: Milton Keynes regeneration, Brighton overcharging, Scottish corruption allegations, Stroud repairs, Apprenticeships, Industrial disputes, Beards
• Company people
• Shareholders
• Finances

Mears is one of the UK’s biggest maintenance and repairs contractors, working on over 650,000 homes for councils and housing associations. Mears home care division provides care to 15,000 older and disabled people.

The company employs 12,000 people. It is based in Gloucestershire, but works all over the UK.

Mears’ shared are listed on the London Stock Exchange. Its businesses bring in around £900 million a year.

History: local privatisation profiteer

Like G4S, Serco, Capita and other well-known “outsourcing” corporations, Mears Group has grown from the ongoing privatisation of public services. But whereas G4S or Capita have profited from the sell-off of national services, Mears has thrived in the smaller and less visible world of local government privatisation.

Until the 1980s, “social housing” was very largely the responsibility of elected Local Authorities. Council housing was not just owned and managed by Local Authorities, but maintained and repaired by local in-house teams. These “Direct Labour Organisations” (DLOs) made no profit and recruited and trained people to maintain the housing stock.

This model of local public provision was attacked by Conservative and Labour governments from the 1980s on. Legal changes and budget controls pushed the privatisation of council housing in a number of ways, including “Right to Buy” sales and the mass stock transfer of around 1.9 million homes from councils to housing associations. Another was pushing councils to contract out repairs and other services to the private sector.

This included “compulsory tendering” rules that forced authorities to hire low-cost contractors who undercut their in-house teams. More broadly, it involved a spreading ideology of privatisation: repeating the mantra that private companies were more “efficient” at running services. Of course, this personally benefited many local politicians and managers who moved into well-paid private sector jobs.

As many authorities closed or sold off their DLO maintenance departments, the winners were contractors like Mears.

Housing

Mears’ housing business falls under three headings: maintenance, management, and development.

The bread and butter business is winning council and housing association contracts for maintenance and repair work.

According to its latest annual report, Mears works on “over 14% – over 650,000 – of the social homes in the UK”. In some cases, for example in Manchester or North Lanarkshire, Mears works through joint venture companies set up together with local authorities. This division still makes up over three quarters of Mears’ housing business.

But maintenance margins are tight. The business model is based on trying to undercut councils’ and social landlords’ “in house” services; and there is competition from several big national rivals, as well as smaller local companies. In a June 2018 presentation, Mears identified four major housing maintenance competitors: Wates, Fortem, Kier (click here for our profile of them), and Mitie Property Maintenance, which it has since bought.

To increase margins, Mears is trying to break out into wider “management” roles. So far, Mears has overall management responsibility for some 10,000 properties. Almost 3,000 of these are run by Mears’ two “non-profit” subsidiaries Omega and Plexus (see section below). Mears also offers a range of management services to other landlords, such as “income management” (i.e., rent collection), and “emergency accommodation”.

Mears also sees the overlap between its housing and care businesses as a good selling point – looking to capitalise on an ageing population. Its “housing with care” schemes involve running sheltered housing with carers on call.

Finally, Mears has also started to develop and build houses itself, particularly as part of regeneration schemes. The Mears New Homes division was set up in 2014.

A related business line is “property acquisition funding”. Mears buys up properties, does them up and sells them on to “a long-term funding partner”, perhaps after a few months. It has set up a £30 million fund for this sideline.

To describe its new business approach overall, Mears likes to use a current regeneration buzzword – “Placemaking”. It explained what this means in a June 2018 investor presentation.

According to this document, Mears’ approach combines maintenance, housing management and “asset management” in deals that are “bigger and more complex”, with “potential for higher margin” and “some opportunities secured outside competitive process” (we are not exactly sure what that last phrase means).

Placemaking also involves: “blurring of the boundaries around social, affordable and private rented housing”. We will discuss this point further below.

Mitie buy-out

Through the years, Mears has grown steadily by picking up outsourcing contracts from both councils and housing associations, taking over former DLOs and buying out competing maintenance businesses.

Its biggest acquisition yet was announced in November 2018. Mears agreed to buy Mitie Property Management, the social housing management wing of outsourcer and detention profiteer Mitie, for £35 million. (See our 2018 company profile of Mitie here.) Mitie Property Management has over 1,000 staff and contracts with more than 30 landlords, bringing in annual revenues of £138 million.

However, Mitie Property Management has been one of the worst performing parts of Mitie’s business, which the company has been looking to get rid of for some time (click here to read more in our 2018 Mitie company profile). But for Mears, this will mean taking one of its main competitors out of the game.

Image: Glasgow asylum housing run by previous sub-contractor Orchard & Shipman, whose old CEO now works at Mears.

Big government deals – the Asylum Housing contract

In an investor briefing last year, Mears’ management said they had decided to turn their focus to bigger deals, particularly from central government: “Evolution of business means we are gaining access to opportunities previously out of our reach.”

In particular, Mears worked on two big government tenders in 2018. One, now in the bag, covers major Home Office asylum housing contracts for Scotland, Northern Ireland, and North East England, Yorkshire and the Humber. Together they are worth £1.15 billion over ten years.

These contracts involve providing housing for thousands of asylum seekers who have been “dispersed” to those areas by the Home Office while they apply for refugee status. In practice, the accommodation is rented from a wide range of housing associations and smaller private landlords, with Mears acting as the overall manager.

This is the first time Mears has worked as a refugee landlord. In Scotland, Mears takes over from the previous manager, Serco, after a strong local campaign against that company’s attempts to evict 300 refugees from their homes in Glasgow. A court case challenging the evictions is currently in progress. In Yorkshire and the North East, Mears is replacing G4S – whose asylum housing has been notorious for squalor, infestations, and scandal when racist vigilantes attacked homes whose doors had been painted an identical red colour.

While this is a big new income source for Mears, asylum landlords have not always had an easy ride financially. Both Serco and G4S complained of losing large sums of money on the previous deals. Financial information on the new contracts has not yet emerged and we do not know if the government bowed to the contractors’ demands to increase payments and profit levels.

There are few specifics yet about how Mears will run the new contracts – and so whether there’s likely to be any change from the miserable record of G4S and Serco.

One notable point: from September 2012 until 2016, Serco’s Scottish asylum housing was largely sub-contracted to another scandal-hit company, Orchard & Shipman. Mears’ current Chief Operating Officer, John Taylor, was Chief Executive of Orchard & Shipman when they won the deal working with Serco. He then moved to Mears in 2013. Presumably his experience will have helped with Mears’ bid for the new contract.

For more information on the new asylum housing contracts see our recent article.

For background on the previous contracts, and on the asylum housing system overall, see The UK Border Regime chapter 5. The Unity Centre in Glasgow and SYMAAG in Yorkshire are two groups actively supporting the struggle for decent housing for refugees.

Ministry of Defence bid

Mears’ other big government tender was less successful. It had hoped to take over the contract to run much of the Ministry of Defence’s main accommodation estate in 2018, after Carillion went spectacularly bust. Mears lost out to rival outsourcer Amey. Mears does have another smaller MoD contract – since 2016 it has run the military’s “substitute service family accommodation”, to find private sector housing for military personnel.

“Non-profit” subsidiaries: “blurring the boundaries” of private and social

One important trend in the UK housing world is the convergence of “private” and “social” sectors. Mears is an enthusiastic part of this. As mentioned above, it boasts that one of the key features of its “placemaking” business strategy is:

“Blurring of the boundaries around social, affordable and private rented housing”.

What exactly does this mean in practice? To start with, Mears has two “affordable housing” subsidiaries called Omega Housing and Plexus UK (First Project). Both are wholly owned by Mears and are registered with the government’s Social Housing Regulator as “social housing providers”. They are listed as “non profit” but are companies limited by guarantee rather than charities. At the end of 2017, Omega managed around 1,000 properties, and Plexus over 1,700. In addition, Mears stated in a June 2018 investor presentation that a “key priority” is to also achieve Registered Provider status in Scotland.

Just what is a profit-seeking company doing running “social landlords”? While technically “non profit”, these subsidiaries can help other parts of the business make money. This comes across clearly from Mears’ website page on its “affordable housing” operations. Councils often require new developments to include a proportion of “affordable housing” in order to meet planning stipulations, called “section 106” agreements. Mears is clear about how Plexus and Omega can play this role, saying that its affordable housing arms “assist and support developers on section 106 agreements.”

Secondly, the “affordable” subsidiaries can be used to access public grants:

“We work with investors to purchase stock where we can secure long leases at affordable rents and can utilise Local Authority funding in addition to leveraging in private institutional funding.”

Thirdly, they will help develop relationships with key “partners”, such as local councils, who Mears may also work with on more profitable developments. Mears can offer a suite of services to its partners, from high-end luxury sales to temporary accommodation for the homeless.

In particular, one model Mears is pushing is converting empty commercial property, such as old offices, into “affordable housing”. For example, in recent developments in Luton and Basingstoke.

The National Planning Portal

One Mears subsidiary, called Terraquest, is unlike other parts of the business. It deals in information. Terraquest’s main work is “land referencing” – researching and identifying rights over property, including ownership rights but also things like planning permission. It also has other business lines including employer security checks.

How does Terraquest fit into Mears’ strategy? Most obviously, as it says on its website, Land Referencing is a crucial tool for property developers – it “enables developers to acquire land and rights over land to meet their development requirements in a timely manner.”

But there may also be something more. Mears’ business is above all about “partnership”, making joint ventures and contracts with other developers – especially government bodies, councils, and housing associations. Many of these are Terraquest’s customers.

Mears/Terraquest’s biggest coup is running a big piece of the whole UK planning system: 90% of all planning applications in England and Wales (according to a Mears presentation) go through one internet system called the National Planning Portal. If you try to submit a local council planning application online, you will probably be redirected there. The national portal is set up by the government’s Ministry of Homes, Communities and Local Governments. But it is run privately by a joint venture – which is 75% owned by Terraquest.

There is no suggestion that Mears uses the nationwide planning data it manages to gain an unfair advantage in its own developments. But, at least, providing this service must give it a real familiarity with the planning system and how it works across the country.

Home care

Mears’ first attempt to make money from old and disabled people’s need for care at home came in 2007 when it bought a home care company called Careforce. More acquisitions followed – most notably Care UK’s home care division in 2015 – and by 2015 Mears had become the second biggest home care provider in the UK.

However, the ‘market’ has not been as profitable as Mears hoped. Most of Mears’ contracts are with cash-strapped local authorities. Even with infamously low wages being paid to staff, many contracts do not pay enough for companies to break even.

As a result Mears has had to scale back its ambitions. It finally turned a – very small – profit on home care in 2017, after it had closed a fifth of its branches, mostly in the north of England. Mears now provides care for 15,000 people a year. Its revenues from this in 2017 were £134 million, down from £152 million the year before. The company says it is still trying to grow its home care business but only with contracts that “can provide clear and sustainable margins” (in other words turn a profit).

When we investigated Mears in our Home Care Business report two years ago, we found the company appeared, on the whole, to be providing a better service than its for-profit rivals. However, there were still instances of appalling care. Failings in one branch saw people left without medicine and meals.

We also found that while staff pay at Mears may have compared well to that at other major home care companies, it was still barely above minimum wage. Mears says its care workers are paid above minimum wage and that “it is central to our strategy that care workers are properly recognised as the skilled workers they are”. However, staff turnover remains, in Mears’ words, “unsustainable”. A massive 42% of staff left the company in 2017.

A few recent scandals

While it has enjoyed recent success winning big contracts, things haven’t been going so well for Mears in the deals it already has. Its flagship regeneration contract in Milton Keynes may be hitting the skids, while it has recently lost a major deal in its own home turf of Gloucestershire. Meanwhile, allegations of overcharging scams and possible council corruption hang over deals from Brighton and Scotland.

Milton Keynes regeneration vehicle

YourMK is, or was, Mears’ flagship regeneration project: a £1 billion “partnership” with Milton Keynes council to redevelop seven major estates over 15 years, affecting 8,500 homes. Mears likes to boast about this scheme. For example, a slide in a June 2018 investor presentation gave a list of “housing challenges”. For all of these, the solution was, of course, Mears, “evidenced by .. YourMK”.

The scheme is a 50/50 Joint Venture with the council. Set up in 2015, it initially had the relatively straightforward aim of maintaining the council’s existing stock. But it was soon clear that the “Placemakers” at Mears were thinking well beyond just doing repairs. A Mears “think tank” brochure from 2016 flags up ideas for a “mixed market approach” involving “bond finance”, “private sale”, and “scope to create [a] subsidiary vehicle that could deliver funding over 30-40 year term”. All of which could be very profitable for Mears and other private sector partners.

But, less than two years into the scheme, the wheels started to fall off. Residents on the first estate targeted, Fullers Slade, protested at being “let down and ignored” by YourMK. The council put the regeneration scheme on hold in January 2018. And in July, the council made a number of U-turns to bring “community engagement”, “neighbourhood employment”, and repairs management teams back in-house to council control.

Mears is still employed as repairs contractor but now under council management and with its work “clearly badg[ed] .. as undertaken by Mears Group PLC” to “remov[e] confusion for tenants”. The council also announced it would change the “structure, operation and senior management of Your MK”. It is not yet fully clear what this will mean for the partnership with Mears.

Things got even worse for the deal in October 2018. According to the Milton Keynes Citizen, the council asked its auditors to investigate allegations that Mears had overcharged for repairs by up to £80,000 a month, and that £15 million of council money is “currently unaccounted for” by Mears. The Citizen reports council leader Peter Marland saying:

“The council received a whistleblowing allegation regarding spending on our housing repairs contract. We have asked our external auditors to investigate fully, as is right, to establish if the allegation has any basis and will act accordingly.”

A Mears spokesperson said: “Mears does not in any way recognise these claims and are not aware of any audit being undertaken within the council. Mears operates transparent accounting in all of our public contracts.”

At the time of writing, the YourMK website has been closed down, with a page announcing that information will be updated in April 2019.

Click here to contact us if you have any further information about the YourMK partnership or Mears’ activities in Milton Keynes.

Brighton overcharging scandal

The Milton Keynes deal is not the first time Mears has had to deal with overcharging allegations, or with whistleblowers.

Another big Mears’ contract is the £200 million, ten year housing maintenance deal with Brighton and Hove City Council (BHCC), which began in 2010. A council investigation found that it had been overcharged by over £500,000 for some 1,000 plastering jobs. The overcharging came from another company sub-contracted by Mears but the council’s audit review found that “it had not been picked up because of insufficient control mechanisms operated by Mears.” The council’s report also acknowledged a general “break down in trust” between the council and Mears. But the plastering scam was not an isolated incident.

In 2016, the Brighton Argus reported residents’ complaints of “being charged up to £30,000 at twice the cost advised by independent surveyors.” And in October 2017 the council started a new investigation into further overcharging “discrepancies” with electrical work carried out directly by Mears. This is “estimated to be in the order of six figures again”, according to the Brighton and Hove News.

At the time of writing, Mears is still working in Brighton. But the contract will come up for renewal or retender in 2019.

Picture: from Brighton & Hove Housing Coalition

Scottish corruption allegations

In Scotland, Mears has a major contract with North Lanarskhire Council, worth an estimated £445 million over ten years, to maintain the council’s 36,500 council homes, as well as schools and public buildings.

The contract started in January 2011, as a “partnership deal” between the council and a company called Morrison Facilities Services Ltd, a subsidiary of Anglian Water. In 2012, Mears bought out Morrison and took over the deal. The joint venture is now called “Mears Scotland”, with Mears holding 67% of the stock and the council 33%.

The managing director is Willie Docherty, whose wife Sadie Docherty was Lord Provost of Glasgow between 2012 and 2017. Before joining Mears in 2012, Willie was head of Glasgow’s “arms length” company City Building, which was spun-off from the city council’s old building services department – and became embroiled in scandals over awarding contracts to several Labour Party donors.

In January 2015, North Lanarkshire’s Labour council hit a crisis, as one Labour councillor named Tommy Morgan was sacked from his role as chair of the “audit and governance panel”. Scottish media reported allegations that he had been ousted for “asking awkward questions” about the Mears contract. Later, Morgan said he was suing the Labour Group over the issue.

In July 2015, council leader Jim McCabe was reported by opposition councillors to the Public Standards Commissioner. According to the Scottish Herald, Mears had “just secured substantial concessions in its housing repairs contract with the council – costing the authority some £25m,” while “a report from the council’s own auditors, accountants Scott-Moncrieff” said “councillors had not had full facts before deciding not to re-tender the deal.” An SNP councillor then asked the Commissioner to investigate whether McCabe had failed in not declaring his personal friendship with managing director Willie Docherty.

The Commissioner’s investigation cleared McCabe, concluding that his actions “did not amount to a contravention of the Councillors’ Code of Conduct.” McCabe resigned from the council in January 2016, after 18 years as leader. Later that year, the chief executive of North Lanarkshire asked police to review separate claims that McCabe had been on a holiday to Turkey with another Mears executive, Steve Kelly. McCabe insisted: “all holidays I have been on, I have paid for. And I can prove that beyond any doubt.” McCabe did take gifts of dinners, whiskey and chocolates from Mears, but these were legally declared on the council’s website. A separate investigation by Audit Scotland also concluded that the council’s accounting of money payments in the Mears contract was not illegal.

In short: allegations have flown thick and fast around the Mears Scotland contract, and there is no doubt that the council leader was close to Mears executives. But there is no evidence of any illegal wrongdoing.

The Mears Scotland contract will be up for renewal in 2020.

Picture: Mears Scotland promotional photo, Willie Docherty is standing, on the left.

Repairs problems in Stroud and elsewhere

In 2017, Stroud Council, in Mears’ own county of Gloucestershire, cancelled its £4 million maintenance contract with Mears after just one year. The contract began in 2016 and was set to last for up to 10 years. According to local press, Mears agreed to end the contract after “heavy criticism about its council housing repairs and maintenance work”. A council spokesperson said “Mears were unable to maintain the high standards we demand of our contractors, and also found elements of the contract commercially challenging.”

Other areas where complaints about Mears have made the news for the wrong reasons include the London boroughs of Walthamstow and Islington, where they work for Family Mosaic housing association (now part of Peabody Group), and also Cornwall.

Apprenticeship inspection

Mears prides itself on having an educational role. In the latest (2017) annual report it describes itself as “a national Social Mobility Champion and leading employer of apprentices”. In 2017 it had 345 housing apprentices and 224 care apprentices.

However, the education inspectorate Ofsted gave the “Mears Learning” division, which runs apprenticeships in the company, a negative rating of “insufficient progress” in its report in May 2018.

Industrial disputes

The trade union Unite announced victory in its strike over a pay dispute with Mears in Manchester in February 2018. According to the union, workers at Manchester Mears and Manchester Working (a joint venture with the council) “were being paid up to £3,500 less than colleagues for undertaking the same work”. The company agreed to raise and equalise wages after 80 days of strikes.

Beards row

In June 2017 Mears made headlines when it tried to ban workers from having beards. It told maintenance teams they needed to shave in order to “wear appropriate dust masks effectively”. Unite the Union accused Mears of “penny pinching stupidity”, saying it should just pay for better dust masks that can cover beards.

People

Chairman: Kieran Murphy

Mears’ long-time chairman Bob Holt was recently pushed out by the second biggest shareholder, German investor Shareholder Value Management. It alleged Holt – who cut his business teeth working for notorious Tory donor Lord Ashcroft – had “continually failed to challenge the status quo” of “deteriorating results, a stagnant share price and faded shareholder value”. Holt was paid £285,000 for 2017.

His replacement, Kieran Murphy, is an investment banker rather than a builder. Murphy started his career as a Treasury civil servant in the 1980s before heading into the private sector working with German investment bank Dresdner Kleinwort. There he became a managing director and “head of industrial sector”. He then worked from 2004-15 as a partner and “senior advisor” at Gleacher Shacklock, a corporate finance consultancy set up by another ex-Dresdner banker. His career has been advising businesses on financial deals such as raising money or buying other companies.

Nowadays, Murphy sits on the boards of large “public sector” organisations as well as private companies. He is the chairman of the Ordnance Survey, the government mapping service – which could be useful for Mears’ work running the National Planning Portal. He is well connected in the university world, as a former director of City University and now of the University of London. He also chairs the investment committee at University College London hospital. Of course, these institutions are also big property owners and developers in their own right.

In: Kieran Murphy

Out: Bob Holt

Chief Executive: David Miles

Miles is a long-term Mears manager. An electrical engineer by trade, he worked at Mitie back in the 1990s but joined Mears in 1996 when it went public. He ran Mears’ social housing division and was “chief operations officer”, before rising to CEO in 2010.

Miles was paid £443,000 in 2017. Miles’ 2017 pay included a basic salary of £369,000 plus £55,000 pension contribution and £19,000 “taxable benefits”.

But he was also eligible for a bonus on top of his salary of up to £774,000, which would have taken his income well over the million mark. However, his bonus pay is linked to the company’s financial performance, and with Mears’ finances slightly reduced from the previous year, Miles didn’t get any of his bonus in 2017. In fact, he hasn’t made anything like his possible top bonus in the last four years.

Still, his £443,000 was more than 20 times the average Mears employee’s salary of £21,684.

David Miles

Other executives

The finance director, C.M. Smith, and executive director Alan Long are also Mears stalwarts, having worked at the company for 18 and 12 years respectively. They were paid £294,000 and £248,000.

John Taylor, Chief Operating Officer, is a newer arrival. Until 2012 he worked at Orchard & Shipman, another “property management company”. Notably, Orchard & Shipman were sub-contracted by Serco to run much of their asylum housing contract in Scotland between 2012 and 2016. This is effectively the same contract that Mears have now taken over from Serco.

A few non-executive directors

Mears’ strategy involves networking across the “blurring boundaries” of high finance and charitable housing provision. This is reflected in the “non-execs” on the board, who are plugged in to these different parts of the regeneration industry.

To give a few examples, non-executive director Julia Unwin is a high-flyer in the charity sector who also has a foot in the privatised water business. She is former Chief Executive of the Joseph Rowntree Foundation and the Joseph Rowntree Housing Trust and also now a director of Yorkshire Water.

Elizabeth Corrado is linked to the booming world of “social finance”, where investment banking meets “philanthropy” – for a profit, of course. According to her Mears profile she has worked as an investment banker and government advisor on structured finance, and was “until recently an Executive Director of the Power to Change charitable trust”.

Roy Irwin was the Chief Inspector for housing of the Audit Commission, the official body which audited local councils’ finances – until it was scrapped in 2012, with its functions privatised. He then found a home at Mears in 2013, becoming Chairman of its “social landlord” businesses Omega and Plexus. In 2017 he also joined the board.

Shareholders

Mears’ shares are bought and sold on the London Stock Exchange. As a result a range of different investors own stakes in the company. At the time of writing, the top five biggest stakes are held by investment funds:

PrimeStone Capital LLP 12%

Shareholder Value Management AG 9%

Majedie Asset Management 9%

Heronbridge Investment Management LLP 7%

Schroder Investment Management Ltd 5%

Most companies on the stock market have similar ownership profiles, with no single investor having close to a majority stake. As a result, while a company may be acting primarily in the interests of its shareholders, responsibility for its actions is difficult to lay at the door of any one shraeholder.

However, Mears’ two biggest shareholders see themselves as ‘activist investors’ that involve themselves in the running of their companies.

Mayfair-based PrimeStone Capital describes itself as working “constructively with management and stakeholders to create long term enduring value.” Primestone was founded by Franck Falezan, Benoît Colas and Jean-Pierre Millet, three financiers previously with The Carlyle Group, a major US venture capital firm.

Shareholder Value Management (SVM) is a German investment firm based in Frankfurt. It has been particularly involved in Mears’ governance in the last year as it successfully led a move to oust long-term chairman Bob Holt (see the people section).

However, the Mears’ board rejected SVM’s attempt to replace him with Andy Hogarth, their preferred pick, saying board appointments should not “be imposed on us by a single shareholder.”

If Mears does face financial difficulties in coming years and is unable to pay out the dividends its shareholders have become accustomed to, expect more disagreements between management and shareholders.

Mears slogan: “making people smile”

Finances

In its last annual report, for 2017, Mears’ work brought in revenues of £900 million. All of that came either directly from the public sector – through local authorities and NHS Trusts or from housing associations. This was slightly down on the previous year but overall Mears has grown quickly. Its revenues more than doubled in size over the previous ten years, increasing from £420 million in 2008.

After all costs were taken off, Mears’ profits were over £20 million each year between 2014 and 2017, and solidly above £10 million in the years before that. Mears will release its results for 2018 in March. In an early announcement to the stock market, CEO David Miles said it had been a year of “very good progress” and that business had been in line with expectations.

Mears is a ‘public limited company’ (PLC), meaning its shares can be bought and sold on the London Stock Exchange. Investors reckon the company’s shares are worth £3.30 each and £363 million when they are all added together (market capitalisation, in the jargon). That puts Mears’ value on a par with companies such as lorry firm Eddie Stobart and Hotel Chocolat.

Consistent profits have allowed Mears to pay millions out in dividends (the jargon for the cash paid out) to its shareholders. Mears paid out £12 million in 2017, up from £11 million the year before. In the five years between 2013-2017, Mears paid out £52 million in dividends, with the amount rising each year.

Mears’ financial health at first glance appears solid. Borrowing too much from banks and other lenders is a major reason why construction and maintenance companies go bust, Carillion most recently. At present Mears does not appear to be close to the same fate.

According to its published accounts, the new activities in its housing and care businesses have not been funded by taking on lots of extra debt. As of 2017, the last year for which full financial results are available, Mears had not increased its levels of borrowing, even with its move into housing development rather than simply maintenance.

Long term debt amounted to £51 million in 2017, down from £60 million the year before, all arranged through credit deals with Barclays and HSBC banks. As of 2017, Mears has the ability to borrow £170 million through those deals if required, plus a new £30 million pot it can access for its new scheme to buy property before selling them onto to long-term developers (see the housing section).

Mears just missed a target for covering its debts in 2018.ⁱ But the company said that was mainly due to cash reserves being lower than planned due to being paid for certain activities slightly later than expected.

However, a potential worry for Mears is that its business model depends on winning new maintenance or care contracts every year. Mears makes much of being a high quality and socially responsibly company. If that reputation takes a hit, and local authorities and housing associations are more reluctant to use the company, Mears’ finances would look a lot less secure.

There are already hints to what could happen in Mears’ accounts. Company Watch (no relation to Corporate Watch), a financial analysis firm used by the government, recently described the business models of outsourcing giants Serco, Capita, Interserve and Mitie as “bankrupt”. Mears shares some of the characteristics the analysis pointed to as potential problems.

Like those companies, Mears is operating in ‘low margin’ businesses, facing competition for contracts that, for the most part, do not allow for significant amounts of profit to be made. Mears’ profit ‘margin’ has hovered around 3% for the last ten years, just like the big four outsourcers.

Added to this, Mears – like Serco and the rest – does not own a vast array of ‘tangible assets’ such as buildings, land or equipment that it could sell or rent out in the event it needed to raise cash (but see the housing section, above, for details of Mears’ current attempts to change that).

According to Mears’ 2017 accounts, the value of its long term assets add up to £237 million. Just £22 million of those were tangible assets. Most of the rest, £194 million, were made up of ‘goodwill’. This is a slippery accounting concept that appears when one company buys another for more than the value of its assets at the time of purchase (see a fuller explanation here). The idea is that the acquired companies will in time generate wealth equivalent to the purchase price, so that should be recognised in the accounts. But thanks to amendments to regulations made under the Blair government, companies have been able to use this to artificially inflate their overall worth, with Carillion again the most notorious example (click here for an in depth look at this by the Financial Times).

Goodwill amounts to over 40% of Mears’ total assets – a bigger proportion than Interserve and Mitie, slightly less than Serco and Capita.

Mears’ goodwill comes from their acquisitions of housing and care companies. Without this, the overall worth of the company according to its accounts would drop from £210 million to just £15 million. So can Mears confidently expect the acquired businesses to bring in profits to justify the current valuations?

Almost £100 million of the goodwill is for the home care businesses Mears has bought (see the section on home care above for details). Many home care companies are facing severe financial difficulties, with market leader Allied Healthcare recently at the brink of going under.

Mears’ home care operations only broke even in 2017. Its accounts contain a long justification for the potential of its home care business, and thus maintaining the value of its goodwill. But these all depend on increased local authority funding, which is hard to predict with any confidence.

If Mears does, at some stage, have to accept that it overpaid for its home care businesses, its overall worth could be significantly reduced.

The same applies to the £94 million Mears currently estimates the housing businesses it has bought to be worth (this may have increased significantly with the purchase of Mitie’s housing division in 2018).

Do you have information about Mears you’d like to share with us? Click here to get in touch.

The post Mears Group: scandal-hit council housing profiteer turns asylum landlord appeared first on Corporate Watch.

A private “social housing” business, Mears Group, is about to become one of the UK’s biggest refugee landlords, winning three ten year asylum accommodation contracts from the Home Office worth a total £1.15 billion. When the contracts start in September 2019, Mears will run asylum seeker housing in Scotland, Northern Ireland, and in Yorkshire, the Humber and the North-East of England.

The UK’s asylum housing system has become notorious for its slum conditions. Refugees are scattered around the UK into the cheapest possible housing, sub-contracted to local landlords by the corporations who win the main government contracts. It remains to be seen whether Mears will do things any better than its competitors in the business. (See Chapter 5 of our book The UK Border Regime for much more on the asylum housing and “dispersal” systems.)

At the same time, the charity Migrant Help has landed a £100 million contract to run the Home Office system called “Advice, Issue Reporting and Eligibility (AIRE)” services. It will be the official point of contact for refugees to get advice on their asylum claims, and will also work with Mears and the other accommodation providers. Migrant Help will earn between £10 million and £20 million a year from the deal, which will initially run for four years from September, but can be extended for up to ten years. It has already been doing similar work for the Home Office since 2014.

The AIRE advice contract also involves advising refugees on what do if their claims are refused. That specifically includes telling them about “the support available to return to their country of origin.” The Home Office has a clear focus on pushing people to leave through so-called “voluntary return”, and will see Migrant Help as playing an important role in meeting its “removal” targets.

G4S gone, but the system stays the same

Mears’ asylum housing deals are part of the overall system where the Home Office contracts refugee housing out to private corporations in a number of big regional contracts. This approach was set up in 2012, when six regional deals named “COMPASS” went to three companies: G4S, Serco, and Clearsprings Ready Homes.

The new round of contracts have a new name, AASC (Asylum Accommodation and Support Contract), and seven instead of six regions – Scotland and Northern Ireland have been split into separate deals. But otherwise the basic structure of centralisation and privatisation is the same. Previously, asylum housing was provided by a range of landlords including local authorities.

In Scotland, Mears takes over from Serco, after a strong local campaign against that company’s attempts to evict 300 refugees from their homes in Glasgow. In Yorkshire and the North East, it is replacing G4S – whose asylum housing is notorious for squalor, infestations, and the scandal when racist vigilantes attacked homes whose doors had been painted an identical red colour.

G4S, still suffering from attention on brutality in its Brook House detention centre, has now lost all its asylum housing contracts. Serco, though out of Scotland, has kept its contract for North West England, and will also take over from G4S in the Midlands and East of England. Altogether, Serco is now the biggest asylum landlord, with contracts worth £1.7 billion. Clearsprings Ready Homes holds onto its smaller contracts in Wales and the South of England.

Mears’ big score

Will Mears do a better job than its predecessors? Certainly, this company doesn’t have the inglorious reputation of notorious outsourcing giants Serco and G4S. Mears is a much smaller company than either of those, and has no previous experience in asylum housing. Its main business lines include providing repairs, maintenance, and other services to housing associations. It also has a home care division – we have looked at the company before as one of the UK’s main home care profiteers.

We are planning to publish a new company profile of Mears very soon. If you have have any information on the company, please get in touch!

Update: see our new company profile of Mears Group here.

New Asylum Housing Contracts

Midlands and East of England. Value (over 10 years, estimated at start of contract): £800m. Winner: Serco

North West England. Value: £900m. Winner: Serco.

North East, Yorkshire and the Humber. Value: £600m. Winner: Mears Group.

Northern Ireland. Value: £50m. Winner: Mears Group.

Scotland. Value: £500m. Winner: Mears Group.

South of England. Value: £800m. Winner: Clearsprings Ready Homes.

Wales. Value: £300m. Winner: Clearsprings Ready Homes.

Sources: contract values and specifications from tender announcement on European TED database; winners announced on Home Office website, 8 January 2019.

Picture by John Grayson.

The post New asylum contracts: Mears Group and Migrant Help win big, as G4S loses housing deal appeared first on Corporate Watch.

This brings together Corporate Watch’s recent research on the “hostile environment” against migrants in the UK, and the companies that profit from it. It also includes a lot of new research and analysis, and looks at the history of recent migration struggles in the UK, asking what has been effective.

You can download it for free here. And you can order paper copies here in our online shop. (It will be in bookshops soon too).

We will be glad to send copies for free to asylum seekers and other people without papers. For other people and groups fighting the border regime, we can send at cost price or whatever you can afford to donate. Email us on contact[AT]corporatewatch.org.

The UK Border Regime

Throughout history, human beings have migrated. To escape war, oppression and poverty, to make a better life, to follow their own dreams. But since the start of the 20^th century, modern governments have found ever more vicious ways to stop people moving freely.

The UK border regime includes the razor wire fences at Calais, the limbo of the asylum system, and the open violence of raids and deportations. Alongside the Home Office, it includes the companies running databases and detention centres, the media pushing hate speech, and the politicians posturing to win votes. It keeps on escalating, through Tony Blair’s war on refugees to Theresa May’s “hostile environment”, spreading fear and division.

This book describes and analyses the UK’s system of immigration controls. It looks at how it has developed through recent history, the different actors involved, and how people resist. The aim is to help understand the border regime, and ask how we can fight it effectively.

You can read the introduction and summary of the book here.

And see the full table of contents below.

Table of Contents

Introduction, Acknowledgements, Summary

Part One: Background
1. A brief history of the UK border regime
2. The Home Office: an overview
3. Sorting people
4. What is the border regime?

Part Two: Control
5. In limbo: reporting, dispersal, destitution
6. Immigration raids
7. Detention
8. Deportation
9. Calais (the ultimate “hostile environment”)
10. The “hostile environment”: making a nation of border cops
11. Hostile data
12. The logic of hostility: how collaboration works
13. Does immigration control work? The deterrent dogma

Part Three: Consent
14. Public opinion: target publics
15. Media: communication power
16. Politicians
17. Corporate power
18. Agitators
19. Anxiety engine

Part Four: How can we fight it?
20. Fighting the border regime

Annexes

Annex 1. Border profiteers: list of major Home Office immigration contracts
Annex 2. Border profiteers: company mini-profiles (G4S, Serco, Mitie, GEO, Carlson Wagonlit, Titan Airways)
Further reading

The post OUT NOW: The UK Border Regime appeared first on Corporate Watch.

Throughout history, human beings have migrated. People move for many reasons: to escape war, oppression and poverty, to make a better life, to follow their own dreams. But since the start of the 20^th century, modern governments have found ever more vicious ways to stop people moving freely.

The border regime is a name for the overall system that tries to control people’s ability to move and live, depending on our immigration status. That fixes our chances in life depending on what “papers” we have, on where we had the luck to be born, on our wealth or education, on the colour of our skin.

The UK border regime includes the state’s external borders, where people are checked coming through passport control, and patrol boats and sniffer dogs search for those trying to enter unseen. It also works inside the country, through the bureaucratic nightmare of visa and asylum applications, or the open violence of workplace raids, detention and deportation flights.

In recent years it has been creeping into ever more areas of everyday life: for example, “right to work” and “right to rent” rules, immigration checks in NHS hospitals, or the Schools Census collecting immigration data from children. This move has escalated with Theresa May’s “hostile environment” policy, but was already well under way with the previous Labour governments.

The Home Office is the main government department responsible for immigration control. But there are many other players involved too. For example, private security companies running detention centres, or IT firms developing new surveillance tools. Or the media pumping out anti-migrant propaganda, and ambitious politicians posturing to look “tough on immigration”.

And the border regime also relies on millions of other people collaborating in small ways, sometimes without even knowing. For example, healthcare or council workers, “just doing their jobs”, pass on personal information that may lead to someone being detained and deported. Or any of us who just walk on by when we see someone being stopped or raided. The border regime cannot exist without our consent.

What, and who, is this book for?

The aim of this book is to provide information and ideas to help understand how the border regime works, and to think about how we can fight it effectively.

Our research group, Corporate Watch, has been studying the UK border regime for ten years now. We have produced many articles and reports investigating parts of it, and in particular the private companies that make money from it. We work closely with people fighting the system, and are active in these struggles ourselves. In this book, for the first time, we bring this research together in one place.

The book isn’t about why the border regime is a problem. It says little about the human cost of borders – the deaths in the seas and deserts, the torture camps our government helps fund in Libya, the routine abuse and destitution faced by refugees who make it to the UK.

It is written for people who are angry about these things and want to stop them happening. For people directly affected by immigration controls, or those involved in groups fighting for free movement, or other people who support these struggles.

The book talks a little bit about how border controls are connected to other forms of oppression and exploitation – about the roles they play in capitalism, colonialism, nationalism and racism. We believe that the fight against borders is tied to struggles against all these structures, and more. But there is a lot more to say on this than can fit in this book.

One crucial point. Migrants, and above all people “without papers”, are on the cutting edge of this struggle. But the border regime affects all of us. The rich and powerful use it to spread fear and division, to stop people working together to make a world where everyone can live a decent life. As such, it can only be defeated with solidarity, by people both with and without papers fighting side by side.

What’s in this book (and what isn’t)?

This book contains:

• detailed profiles of different parts of the border regime and how they function, from databases and detention to media propaganda;
• information on border profiteers and their contracts, from security giants like G4S to data gatherers like Experian;
• some thoughts on how the system works together as a whole;
• examples of resistance over the last 20 years, looking at why actions have been effective, with a few thoughts on strategy.

We certainly don’t cover everything. Except for Calais, we don’t look much at the UK’s frontier controls. We don’t say much about how the UK works with the European Union to help build a “Fortress Europe” against Africa and Asia. There is lots more to investigate about how the UK, like other European states, tries to “externalise” its borders by making deals with ex-colonial countries. We barely scratch the surface of the connections between the border regime and the global economy. Also, at this point any comment on how Brexit will affect all this would just be speculation, so we say little about that.

All of these are crucial topics, but this book is pretty big and heavy as it is.

Summary

We have tried to divide the book up into self-contained sections so that you can skip to the parts you need. Here we’ll give a quick run-through of the main points of the book.

In addition, the final Annex to the book contains further information on border profiteers: a list of major Home Office contracts, and then mini-profiles of six companies. These are detention managers G4S, Mitie, Serco and GEO Group; plus deportation contractors Carlson Wagonlit Travel and Titan Airways. You can also find more detailed company profiles, and updates, on the Corporate Watch website.

Part One: Background

We start by looking at the history of the UK border regime. Attacks on migrants go back at least to the Middle Ages, but the idea of systematic border controls really kicked off with newspaper campaigns against Jewish refugees from Eastern Europe, which led to a 1905 law called the Aliens Act. More recently, the border regime has grown in three main phases, each involving both new laws and increased resources such as guards and detention centres. In each case we see a common pattern: media push scare stories targeting new scapegoat groups, politicians respond with clampdowns. In the 1970s, the targets were Black and Asian workers from Britain’s old empire; in the 2000s, asylum seekers from the wars in the Balkans and the Middle East; most recently, so-called “illegals”.

Chapter 2 takes a quick glimpse at the Home Office, its structures and resources. In Chapter 3, we look at how the border regime relies on identifying people and sorting us into categories: citizens vs. migrants, refugees vs. “economic migrants”, “genuine” vs. “bogus” asylum-seekers, “legal” vs. “illegal”. Some of these labels come from official definitions, such as the various “tiers” of the visa system, or the asylum process. Others are more informal. For example, there is actually no legal definition of an “illegal immigrant” – this label is the creation of newspapers and political speeches.

Chapter 4 looks a bit deeper at “what is the border regime”. This is the most theoretical bit of the book, introducing the idea of a system of control. To make the theory more real, we illustrate it with a diagram: a picture of a kind of Frankenstein’s Monster. The border regime is a monster, it has teeth and does real harm to people’s lives. But it is not unstoppable. It is made up of many parts, many of which are weak or rusty, many of which don’t work well together. When we can identify its joints and weak points, we can see where it is vulnerable and can be beaten.

Part Two: Control

This is the biggest part of the book, with nine chapters. The first seven look in detail at different parts of the border regime. These are:

• In limbo: the reporting and asylum dispersal systems.
• Raids: the work of the 19 Immigration Enforcement raid squads, looking particularly at workplace raids.
• Detention: an overview of the immigration detention system and the private companies that run most of them.
• Deportations: the “removal” system, with a particular focus on mass deportations using charter flights.
• Calais: the ultimate hostile environment on the UK-France border.
• Hostile Environment: a run-through of 12 main anti-migrant measures introduced under Theresa May’s recent hostile environment approach.
• Hostile data: how the Home Office tracks people with its current databases – and how it wants to expand them into One Big Datasphere.

In each chapter, we also look at how people are fighting back – and at the impacts of this resistance. From the revolts that forced the government to scale down its detention plans, and the countless cases of people beating deportations, to the legal and political battles that have ended charter flight routes and blocked or delayed recent hostile environment policies.

Chapter 12 looks deeper at how the border regime relies on the collaboration of many people outside the Home Office, from landlords and banks to nurses and teachers. It investigates the different ways the government tries to persuade people to collaborate. For example, not just threatening fines and prison sentences, but also seeking to shift the culture inside institutions like the NHS.

In Chapter 13 we ask: so what do all these attacks on migrants actually achieve? The border regime certainly makes many people’s lives a misery. But it doesn’t come close to achieving the official goal of “controlling immigration”. Since the 2000s, many policies have been based on the deterrent dogma: the idea that tough measures will persuade people to leave the UK, or not come in the first place. But the evidence suggests this doesn’t work. Indeed, the government’s own figures show “voluntary returns” have been going down since the start of the new hostile environment approach. The one factor that has actually affected immigration numbers is not a Home Office policy, but the Brexit vote scaring off investment and European workers.

In fact, we argue, the border regime will never succeed in effectively controlling immigration. At least, not so long as the UK remains a democratic state with limits on the use of visible violence, and a capitalist economy that demands migrant labour. This leads us to the question: so what are tough immigration policies really for?

Part Three: Consent

This part of the book digs a level deeper, to look at the forces that drive the border regime.

We suggest that hostile policies aren’t really about controlling immigration. They are shows, spectacles that “strike a pose” of control. Whipped up by media campaigns, politicians use new laws and clampdowns to pose at being tough.

Who is the show for? Politicians, from both left and right, often say they have to be tough on immigration to satisfy “public opinion”. But what does that actually mean? There is no one public opinion about migration: there are millions of different people, with very different views.

In Chapter 14, we look at the evidence from polling surveys on British people’s attitudes. In particular, an anxious minority of about 20% of the population say immigration is an important political issue. These are largely older, white people. Some are well-off pensioners living far from any actual immigrants. Others are working class people living in deprived areas, including the dispersal zones where asylum seekers are dumped. Crucially, both these demographic groupings are often key voters chased by politicians in election battles. They are the main target audiences for anti-immigration policies.

These target publics have quite different economic situations and experiences, but they share a sense of alienation and anxiety that is pumped up by media propaganda. Chapter 15 looks at how that works. Summarising several valuable studies, we see how media spread the story of migration as a threat – although specific scapegoats shift over the years. And we ask what motivates journalists and media bosses to do this dirty work.

Chapter 16 turns to politicians. We start with election strategy, seeing how politicians court target voter groups. Next we see how a run of Home Office ministers have built their careers posturing as tough on migrants. Finally, we look at how politicians exist in a closed bubble or “ecology of ideas” with the media – the two feed off each other in a vicious spiralling of bad ideas.

Chapter 17 gets to business. Some capitalists directly profit from the border regime. But most, from farmers to the City banks, rely on a constant supply of migrant labour. All major business lobby groups are pro-migration (in this narrow sense). This is why immigration policies never really try to close the borders to all migrants. Instead, policies target smaller scapegoat groups such as asylum seekers or “illegals”, who are seen as economically “low value”.

Chapter 18 looks at right-wing agitators. Far right parties, more respectable think-tanks like Migration Watch, and the new “alt-right” or “alt-light” internet propagandists, all work to push mainstream politics further against migrants. (Shifting the “Overton window” of what is politically acceptable.) Currently only about 20% of the UK population is strongly anti-migrant. But if these people have their way, the hatred will grow.

Finally, Chapter 19 digs deeper into the nature of anti-migrant propaganda. It is rooted in fear, part of the politics of anxiety that shapes many aspects of our culture today. What does this mean for those who want to fight these ideas?

Part 4: Fighting Back

People are fighting the border regime every day – and winning. Yet there’s no denying we’re swimming against a strong tide. It’s more urgent than ever not just to fight the border regime, but to work out how to fight it effectively.

In Chapter 20 we look back over examples of successful resistance, and think about what makes them successful. Actions and campaigns win when they hit the border regime at its limits: from tight budgets and institutional failings, through legal and political constraints, to the ultimate limits of people’s consent.

We note that political action – that is, campaigning to get politicians to change policies – is rarely successful in UK migration struggles. To shift the politics of the border regime we need to shift the wider culture in which millions of people give it their consent. This requires building active movements from the grassroots up: taking effective action, spreading victories, inspiring each other.

But while migrants are on the front line of this struggle, they cannot win it alone. We really start to threaten the border regime when people with and without papers come together in common struggles.

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• Security is a global boom industry, and unlike other outsourcing giants G4S remains profitable and growing.

• G4S also runs prisons and immigration detention centres in the UK, Australia and South Africa under its “G4S Care and Justice” subsidiary. These are amongst its most profitable contracts.

• Although it recently sold most of its controversial Israeli business, G4S works with Afghan warlords and in regimes like Syria or Sudan. It has a long record of scandals, failures and controversies – but keeps on winning new contracts.

Do you have any information you’d like to share about G4S? Contact us securely through our contact page.

Business basics

The business has three main parts:

• “Secure Solutions”: human security guards, security technology, warzone mercenaries, and “facilities management” which integrates security with other management and maintenance contracting. It is active in 82 countries, and works with a range of corporate, public sector, and private clients.

• “Cash Solutions”: cash transport vans and related technology. It is active in 42 countries and makes up 14% of the company’s core revenue.

• “Care and Justice”: a sub-division of Secure Solutions operating in the UK, Australia, New Zealand and South Africa. It runs prisons, immigration detention centres, police stations, and some other government services such as asylum housing. It only makes up 7% of G4S’ total business. But profit rates are typically much higher than for “mundane guarding” work.

G4S operates through around 600 local subsidiaries. They typically – though not always – use the G4S branding. Its head office is in Crawley, not far from Gatwick Airport.

Total revenue in 2017 was £7.4 billion. Profit after tax was a reasonable £236 million. G4S paid out £290m to its shareholders in dividends in the last two years.

The bulk – 80% – of G4S’ contracts are with the private sector. Globally, the company has 150,000 customers and 55,000 suppliers. 34% of Secure Solutions business comes from major corporations and industrials; 18% financial institutions; 10% from the retail sector; with other business in energy, transport, and leisure sectors. The largest individual customer is Bank of America.

Only around 5% of G4S’ business now comes from the UK government, down significantly from a few years ago. It continues to lose money on some existing UK state contracts, notably the COMPASS asylum housing deal – but all of these “onerous contracts” date to before 2013. Its prison and detention contracts, on the other hand, are highly profitable. According to the Financial Times, these “contracts earn margins of more than 15 per cent, higher than for more mundane guarding.”

Most of its revenue (£4.61 billion) came from the “developed markets” of the US and Europe. “Emerging markets” revenues were £2.8 billion, with the main regions in order of size being: Middle East and India (£845m), Asia Pacific (£736m), Latin America (£700m) and Africa (£457m).

However, the “emerging markets” employ the majority of G4S’ staff. 31% of workers are in the Middle East and India alone. Here, and in Africa, security for energy, mining, and oil and gas extraction industries are key businesses alongside general corporate and government contracting.

G4S has approximately 570,000 employees spread worldwide. Staff turnover is high, over 25% a year, and the company recruits around 150,000 new workers each year. G4S identifies one of its “key risks” as poaching of skilled staff by competitors. Wages are the bulk of the company’s costs – staff costs were £5.43 billion in 2017. But workers are not well paid: the average annual pay was just £9,534. In the UK, G4S recognises the GMB union; it also has a European Works Council.

Another risk involves “negative impacts” on “employees’ health and safety” – including security staff being killed or attacked. In 2017, 25 workers died on the job last year (down from 47 in 2016): 11 of these in road accidents, as opposed to eight in armed attacks. G4S acknowledges three “non-accidental deaths” of prisoners in its custody in 2017, down from nine in 2016.

In 2017 G4S exited from some unprofitable and controversial business lines, including its main Israeli operations – as well as UK children’s homes and youth detention.

Outlook and strategies

Global security is a boom industry. As the world becomes a more hostile and dangerous place, and with growing inequality and ecological collapse, corporations, states, and the rich have a growing demand for security guards. G4S sees growth everywhere, but notes Asia-Pacific as a particular growth region.

In particular, G4S sees the best prospects in “sophisticated security technology”, and “integrated products”, which combine tech with “manned security”.

On the one hand, there is rapid development of new weapons and technologies. On the other, “barriers to entry” are low in “manned security”, so there is less competition at the high-tech end of the market. And as the majority of G4S’ costs go on labour, automation can be a key way to increase margins. In 2017 tech security brought in £2.45 billion revenue, about a third of the total, and the company wants to grow this area further.

Key issues

Detention and prison profiteering: “G4S Care and Justice”

This is the division which runs prisons and immigration detention. It is currently active in the UK, Australia, New Zealand and South Africa. Care and Justice makes up 7% of G4S’ total revenues. As well as locking people up, Care and Justice also takes other government contracts related to managing imprisoned and vulnerable people, e.g., asylum housing and electronic tagging.

G4S Care and Justice (UK) currently has contracts including:

• five Ministry of Justice prison contracts: HMP Altcourse, HMP Birmingham, HMP Oakwood, HMP/YOI Parc, HMP Rye Hill;

• Gatwick detention centres (Brook House and Tinsley House);

• a separate contract to run the Tinsley House family unit where children are detained;

• healthcare in Serco-managed Yarl’s Wood detention centre, as well as the Gatwick centres;

• two COMPASS asylum housing contracts (Yorkshire, Humberside and the North East; Midlands and East of England);

• police support and police station management contracts;

• and a new (2017) electronic tagging contract – despite the 2013 scandal where it lost an earlier tagging contract, was investigated for fraud, and was temporarily banned from bidding for new government contracts.

Beyond the UK, G4S Care and Justice (South Africa) has a 25 year contract to run Mangaung maximum security prison, which opened in 2001, and which it describes as “the second largest private prison in the world”, with nearly 3000 inmates. Others have described it as “a private hell”

G4S Care and Justice (Australia and New Zealand) runs three Australian prisons, and tagging and police support services in the two countries. It previously ran Australia’s notorious Manus Island offshore immigration detention centre – but exited this contract swiftly in 2014 after horrific mistreatment was exposed, including one guard being convicted of murder.

The detention and prisons part of the business is extremely profitable. Internal G4S documents, reported on last September by the BBC and the Guardian, showed the company making profit rates over 20% for Brook House, and even over 40% for Tinsley House in 2016. This is despite the fact that the profit margins officially agreed in their contracts are far lower: 6.8% in the case of Brook House. G4S is supposed to pass cost savings onto the Home Office; whether or how this happens in practice is unknown.

It is also despite G4S paying a record £2.88 million in penalties for breaches in its Ministry of Justice prison contracts in 2016/17 – it has paid over £7 million altogether since 2010.

Prisons and detention centres are perhaps the most profitable of all G4S business. But this line of work also carries higher risks: both in terms of frequent scandals, and when the company tries to expand into less well-known areas of government work such as loss-making housing contracts. That said, recent detention scandals have showed no signs of affecting profits or share prices (although the fortunes of outsourcers generally has, see below). G4S is not currently flagging up prisons as a growth area for the company – but there is little doubt it will bid for new opportunities when they arise.

Asylum housing

However, one “Care and Justice” deal has not performed so well: the COMPASS asylum housing contracts. G4S has been losing substantial sums on these deals – though it still appears to be bidding for the new round of asylum housing tenders currently underway.

In 2012, the Home Office reorganised its system of housing asylum seekers (outside detention). Previously, there was a mixture of housing arrangements run by local authorities as well as private companies. Now all housing is provided by large private companies under regional contracts called “COMPASS” – “Commercial and Operational Managers Procuring Asylum Support Services”. The Home Office said it hoped to save £150 million over seven years through this arrangement. The six contracts were awarded to just three companies: G4S, Serco and Clearsprings Group. G4S won the contracts for “North East England, Yorkshire and the Humber” and “Midlands and East of England”.

But, as the Home Affairs Committee points out: “although the system of three Providers looks straightforward on the surface, below it lies a complex network of contractors, sub-contractors and hundreds of private landlords.” G4S’ sub-contractors include: Live Management Group Ltd, Target Housing Association, UHS Ltd, Mantel Estates Ld, Jomast, Cascade.

The Compass contracts are due to end in August 2019. They were initially scheduled for five years, plus an optional two year extension, which the Home Office took. Although full details are not clear, the new arrangement looks set to be very similar, based on seven large regional contracts. They are due to be awarded in Autumn 2018.

The corporations complain that they have made heavy losses on the COMPASS contracts. G4S and Serco, in particular, seemed to have seriously messed up preparing for the deal. Both had problems early on with sub-contractors and failed to source all the properties they had expected; both complained they hadn’t anticipated the problems of negotiating with councils over properties; G4S took on properties without inspecting them. Then the mess got deeper as the “refugee crisis” arrived and the Home Office got even further behind in processing claims, meaning the numbers of people to be housed swelled.

Despite all this, G4S and Serco are interested in continuing in this business – if the Home Office will increase its fees. The signs are that the Home Office will agree to pump more money into the system, so that its contractors can turn a profit. In March 2018, G4S’ CEO Ashley Almanza explained to analysts how he expected the Government would offer better terms:

“Clearly the customer is very keen to have us in the process. … There are only two other suppliers in the market who’ve got the expertise to manage a very, very, very complex contract. If the contract was offered on the same terms, clearly we would not participate. I’m going to guess that the other supplier would also not participate. We’ve both seen enough to know that that’s not a viable model. I think there’s every sign that the customer understands that, knows that. The discussions are constructive and positive.”

Conditions in asylum housing are notorious. South Yorkshire Migration and Asylum Action Group (SYMAAG) have collected numerous horror stories from people housed in Yorkshire and other areas. In Sheffield, a toddler with cancer is dumped by G4S in rat-infested accommodation. In Manchester, Serco don’t treat bedbug outbreaks but simply wrap infested mattresses in plastic covers. These are not exceptional cases: water leakage, fire hazards, mould, rats, cockroaches and bedbugs appear standard. In Birmingham, Migrant Voice published a survey of G4S-run housing in January 2017 noting filthy accommodation, broken windows and furniture, vermin infestations, and more issues were commonplace.

Technology: robot guards and AI controls

G4S sees technology, including automation, as key to its future development. For several years it has been developing technologies including artificial intelligence monitoring of CCTV systems and access control, and of course robot guards.

This area is led by a subsidiary called G4S Technology Ltd based in Tewkesbury, Gloucestershire. G4S has been an active partner of state-sponsored security tech schemes: e.g., the EU STRANDS robot project involving a number of universities (Birmingham, Lincoln, Leeds, Aaachen, Vienna, and the Royal Institute of Technology in Stockholm).

Conflict zones

In 2017, G4S sold its main Israeli business, which had been heavily involved in prisons and the occupied territories, for £88 million. However it still retains a 25% stake in the central Israel police training facility, called Policity. In fact its most recent Annual Report stills list three Israel subsidiaries: G4S Israel PPP Ltd; G4S international Logistics (Israel); and Policity Ltd (25%).

G4S bought the Armorgroup mercenary company in 2008, which was a major private military contractor in Iraq and Afghanistan and involved in numerous scandals. G4S continues to win major security contracts in both countries.

G4S has subsidiaries in tyrannical regimes including Sudan (Armorgroup Sudanese Co Ltd) and Syria (Group 4 Syria). Its Sudanese business has included working closely with the Sudan People’s Liberation Army – now the army of South Sudan, accused by the UN of war crimes involving “appalling instances of cruelty”.

In more detail

History

G4S’ roots are in Scandinavia. Two Danes, Philip Sørensen and Marius Hogrefe, founded the guarding company København Fredriksberg Nattevagt in 1901 – it would later become Securicor. Soon after, in 1906, Sophus Falck established a fire and rescue company called Redningskorpet – which would later become Falck. These companies expanded and bought up other security firms through Scandinavia and beyond, including Securicor’s UK subsidiary which later became independent under the name Group 4.

G4S, under its various guises, has been at the forefront of the private prison and detention industry in the UK. Back in 1970, Securicor was given the very first contract to run a purpose-built immigration detention centre, Harmondsworth. In 1991, Group 4 won the management of the UK’s first privatised prison, the Wolds in Hampshire. In 1997, Securicor took on the first prison PFI contract. In 2008, G4S absorbed GLS, another company heavily involved in running UK detention centres. In 2011, G4S won the contract to run Birmingham Prison, the first time a public-sector prison has been transferred into private management.

Securicor and Falck merged in 2000, and the two re-merged with Group 4 in 2004. The company listed on the London Stock Exchange, and the combined group was rebranded as G4S in 2006. Then CEO Nick Buckles led the firm on a rapid expansion, buying up numerous global subsidiaries in the 2000s. One notable acquisition was Wackenhut, the second largest US security firm, in 2002. (The prison part of Wackenhut’s business was sold on and became GEO – see profile below.) Another was the mercenary firm Armorgroup in 2008, which has been active in warzones such as Iraq, Afghanistan and Sudan.

But Buckles’ vision crashed in 2011. The planned £5 billion acquisition of Danish facilities management giant ISS, which would have moved G4S out of security and into general outsourcing on a big scale, was over-ambitious. This costly deal was cancelled after a shareholder rebellion. Soon after, G4S was hit with its two biggest scandals yet: the 2012 Olympics fiasco, and the 2013 electronic tagging scandal which led to it being banned from bidding for new UK government contracts for six months.

Buckles stepped down in May 2013, and new boss Ashley Almanza embarked on a restructuring programme. The expansion drive ended, with the company offloading troublesome subsidiaries. It claims now to be focusing back on the “core” business, with less high-risk deals. This approach seems to be working, with a slow but steady growth rate over the last four years.

Read more background in our extended “G4S: A Company Profile” from 2012.

Picture: CEO Ashley Almanza.

Bosses

G4S’ current directors are a grey bunch. There are no ex-politicians on the board, and members are mainly from the world of European corporates and finance. Chief Executive Ashley Almanza (appointed 2013) is a South African accountant connected to the oil and gas industry. He worked for many years as a finance officer for British Gas, and is a director of offshorer drilling contractor Noble Corporation. The non-executive chairman, John Connolly, is an accountant who worked all of his career at Deloitte. He is also chair of Great Ormond Street Hospital Charity. One non-exec director, John Mogford, is CEO of water company United Utilties. Others have links to companies like Syngenta, Cap Gemini, Volvo, BAE Systems, as well as investment trusts and private equity.

Executive pay

Almanza was paid £3.85 million in 2017, down on his £4.79 million the year before. This is 403 times the average G4S pay. It includes a basic salary of £939,755, an annual bonus of £1.12 million and a “long term incentive plan” (LTIP) of an extra £1.44 million. All of the “LTIP”, and 85% of the annual bonus, is awarded depending on meeting financial targets. There is no assessment relating to “ethics” or “Corporate Social Responsibility”, although the other 15% of LTIP includes an assessment for “health and safety”. In the year of the Brook House scandal, Almanza was scored 11 out of 15 on this part of his bonus.

Finances

G4S is profitable and growing: after a few tricky years that saw a series of lower-than-expected profits, G4S is bouncing back. Revenues reached £7.4 billion last year; overall growth was 17% over four years from 2013 to 2017. Overall profit in 2017 was £236 million, also up 17% on 2013. (“Operating profit” was £502 million). The majority of net profit is paid out to shareholders in dividends: £145m in both of the last two years.

Revenue growth often depends on winning large contracts, and this can mean it has ups and downs depending on specific big customers. But it is in nothing like the trouble of other outsourcers like Mitie or Capita. Security is generally more profitable than other outsourcing sectors; and G4S has a diverse worldwide client base, rather than depending on a few big government deals for work.

Profits by region broadly reflect the size of those markets. G4S made £345 million before tax and interest in the “developed world”, £198 million from “emerging markets”. Business is particularly profitable in the UK and Ireland: £118 million, almost as high as £123 million from North America and higher than £104 million from Europe, even though it brings in less revenue than either.

Share price: G4S’ share price has been hit in the wake of Carillion’s collapse, which has made investors nervous about outsourcing companies in general. But the markets didn’t seem bothered at all about the Brook House abuse scandal – in fact G4S shares rose in the weeks after that broke.

Taxation: overall, G4S has an effective tax rate of 33% in 2017 (26% in 2016).

Cashflow and debt: G4S has enough cash to pay its bills and has cut down its debt levels over the last few years. As of the end of 2017 it had almost £600m in cash plus an extra £1bn of overdraft facilities with banks that it can access. It has overall debts of just under £1.5 billion but its accounts suggest these should not cause significant problems. Again, the company has reduced its debt levels significantly over recent years. It has a less than impressive BBB- credit rating from Standard & Poor’s rating agency – that’s the bottom of the so-called ‘investment grade’ level which allows major pension funds to buy its shares. G4S regularly issues bonds in Sterling, Euros and Dollar markets.

Owners and investors

G4S is a public limited company, listed on the London Stock Exchange (LSE), and also on the NASDAQ OMX exchange in Copenhagen. In recent years it has been popping in and out of the FSE100 index, which lists the 100 biggest LSE traded companies.

Like many big PLCs, most of its shares are owned by major global fund managers. At the end of 2017 its biggest shareholders were: Invesco (13.05%), BlackRock (6.02%), Harris Associates (5.11%), and Mondrian Investment Partners (5.07%).

There have been high profile cases of investors selling G4S shares after public campaigning around Israel – notably the Bill and Melinda Gates foundation which withdrew a $170m stake in 2014. The “Boycott, Divestment and Sanctions” (BDS) campaign may well have prompted the 2017 sale of G4S Israel. Still, it is hard to say what substantial impact if any there has been on G4S’ overall finances: there are plenty more ready to invest so long as the profits are coming in.

G4S Scandal sheet

Just a few highlights. See also: G4SFacts website; Stop G4S facebook group with regular updates; detailed 2016 dossier on UK incidents by Liberty.

(2018) Birmingham prison deaths: in March and April 2018, five inmates died within seven weeks in G4S’ notorious prison.

(2017) Brook House: undercover filming exposed guard brutality inside the Gatwick Detention centre, leading to several sackings and an ongoing “independent” inquiry. Yet G4S has still had its contract to run the two Gatwick detention centres extended for a further two years.

(2017) DAPL pipleline: G4S provided security for the controversial Dakota Access Pipeline in the US, which has been resisted by indigenous communities.

(2016) Birmingham Prison Riots: some of the heaviest recent riots in UK prisons took place in the G4S-run prison, before being quelled by 10 Tornado teams of (public sector) anti-riot officers.

(2016) Exit from Palestine: G4S has now exited most of its Israeli businesses – although some subsidiaries remain listed in its latest Annual Report. G4S was a major collaborator with the occupation in Palestine, working with prisons, checkpoints, settlement businesses, and Israeli police, including in the occupied West Bank. Our 2015 report on the Israeli prison industry, and this 2011 report by WhoProfits, document these activities in detail.

(2016) Orlando gunman: the killer of five people was a long term G4S employee.

(2016) Quits youth detention business: after BBC Panorama exposed horrific scenes of brutality inside its youth prisons.

(2016) Bogus 999 calls: five G4S police station staff were suspended in Lincolnshire after claims they had logged fake emergency calls to help meet targets.

(2014) Manus Island: killing of Reza Barati. G4S guards in the Australian migrant detention camp in Papua New Guinea were accused of beating detainees with hoses and iron bars. After one Iranian man was killed, two men including a G4S guard who threw a rock onto his head, were convicted of his murder. G4S ended its Manus contract the month after.

(2013) South African prison torture: reports of horrific torture and abuse by G4S guards at Mangaung Prison, dubbed “a private hell”.

(2013) Tagging scandal: a Serious Fraud Office investigation opened after reports of massive over-billing by G4S and Serco in their electronic tagging contracts. The two companies were temporarily banned from UK government contracts. But this was lifted in 2014 after G4S agreed to pay back £109 million. Despite all this, G4S won a new Ministry of Justice tagging contract in 2017.

(2012) London Olympics fiasco: G4S took a $355 million contract to provide security at the 2012 Olympics, then failed to recruit enough guards, leading the Army to step in and take over security.

(2012-ongoing) G4S and Serco each won two of the UK government’s COMPASS asylum housing contracts in 2012. Appalling slum conditions in their accommodation has been well documented. Despite losing money on the existing contracts, both companies appear to be bidding for renewals.

(2011) The false leg tag: in one oft-cited anecdote, G4S were caught tagging a man’s prosthetic leg.

(2010) Killing of Jimmy Mubenga. Three G4S “escorts” held down and killed 46 year old Jimmy Mubenga as he was being deported to Angola. Although the inquest jury found he had been “unlawfully killed”, the guards were acquitted of manslaughter in 2014. The judge ruled that evidence of “endemic racism” in the G4S workforce could not be used in evidence.

(2010) US Senate Inquiry finds G4S’ ArmorGroup subsidiary in Afghanistan “relied on local warlords … linked to murder, kidnappings, bribery” to supply its men and weapons.

(2009) G4S Armorgroup Iraq killings: G4S mercenary Daniel Fitzsimons shot dead two colleagues in the Baghdad “green zone”, after the company had received repeated warnings about him.

(2008) Death of Mr Ward: the aboriginal elder was “cooked to death” in a G4S van transporting him to court in Western Australia.

NB: unless other sources are stated, information comes from the company’s annual reports and accounts. Latest information can be found here on its website.

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• One of its biggest contracts is running 11 Australian immigration detention centres. In the UK, it runs Yarl’s Wood detention centre.
• Serco has been hit by numerous scandals, most famously in 2013 when it was exposed along with G4S overcharging the government by millions on its electronic tagging contract.
• Serco was the first of the big-name outsourcers to hit financial trouble recently, with a run of profits warnings starting in 2013. Damage was done by numerous loss-making contracts taken on as the company raced to expand. As a result the company had to ask shareholders for £530m to keep the company going in 2015. Serco is struggling to get back on track, but hopes that its outsourcing model will prove profitable again long term: prisons and wars still seem a winning bet. They’d better be: shareholders haven’t received a dividend in three years.

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Business basics

Serco has an annual revenue of around £3 billion. It employs over 50,000 people.

Serco specialises in running services outsourced by governments and other public institutions. These are its five business areas, listed by share of revenue in 2017:

• Defence (£973m, 29%). Support services to military, e.g., running bases, “maritime services”.
• Citizen Services (£871m, 26%). Call centres and case management, back-office admin and IT, employment and “skills” services.
• Justice and Immigration (£559m, 17%). Prisons and detention centres, prisoner transport.
• Transport (£559m, 17%). Rail and ferries, road traffic management, air traffic control.
• Health (£348m, 11%). Non-clinical services, admin.

Serco operates in four regions: the UK and Europe, USA, Middle East, and “Asia Pacific” (mainly Australia and New Zealand). Europe is by far the largest, with around 45% of total revenue (£1.34bn) in 2017. And the large majority of that is in the UK – 40% of the total. Revenues from the other regions are: Americas £688m, “Asia Pacific” £579m, Middle East £352m. Middle East is the only region where sales grew last year.

Serco is just keeping afloat financially. It made a small loss in 2016, and broke even in 2017. So far its creditors and investors are keeping it alive as it hopes to return to profit.

Losses are largely due to the hangover of a number of big unsuccessful acquisitions and contracts Serco took on in the early 2010s, when an ambitious management sought rapid expansion. But Serco is also finding it hard to build up profitable work again in tougher conditions for outsourcing.

In 2014-16, Serco exited its failing private sector businesses. But it is still tied into a number of loss-making government contracts. The 2017 Annual Report names as the “principal” “loss-making operations”: “COMPASS UK asylum seeker support services, the Caledonian Sleeper, Future Provision of Marine Services (FPMS), Lincolnshire County Council, and the Prisoner Escort & Custody Services (PECS) contracts”.

Running prisons and detention centres is one area where profits are still strong. Serco runs all Australia’s onshore detention centres, as well as Yarl’s Wood detention centre in the UK. It is keen to bid for new contracts in this field.

Despite losing money on the COMPASS asylum housing scheme, Serco is believed to be in the bidding for the next round of these contracts. Along with G4S, it expects that the Government can be persuaded to make these deals much better paying.

The Americas division “accounts for approximately 23% of Serco’s overall revenue, and provides professional, technology and management services focused on Defence, Transport, and Citizen Services.” In the US, Serco is perhaps best known for its 12 year contract (started in 2013) to manage an “Obamacare” subsidised health insurance scheme.

Its work in the Asia Pacific region is basically limited to Australia, which makes up 19% of overall revenue. The money here is largely in prisons and immigration control (discussed below).

In the Middle East, which represents 12% of overall revenue, Serco has various defence, transport, health and “citizen services” contracts: e.g., Australian military bases, “facilities management” in Dubai Airport and in Abu Dhabi, and “defence training support” in Qatar.

Outlook and strategies

After recent bad experiences with corporate outsourcing, Serco is sticking to its “core” model of chasing government contracts. There are challenges in this. Margins are tighter as governments are under financial and political pressure to make contracts less lucrative. And as Serco’s 2017 Annual Report notes, “governments have become much more skilled at contracting and focused on risk-transfer; as a consequence margins and risk-adjusted returns earned by many suppliers to government are much lower today than they were ten years ago”.

On the “plus side”, Serco argues that state outsourcing will pick up and has good long term prospects. First, governments fluctuate for and against outsourcing, but when one state is turning against, another is putting on a fire sale.

Second, “core” Serco business areas are not going away. “we can be very confident that the world will still need prisons, will still need to manage immigration, and provide healthcare and transport, and that these services will be highly people-intensive for decades to come.”

The company estimates the potential for government outsourcing in its target markets at £300 billion – only a third of that is currently outsourced. Also, the market is fragmented with many competitors – Serco only has about 3% of the current contracts.

In particular, prisons and immigration control look like a long term growth business —  and are highly profitable. While other jobs are being hit by automation, Serco reckons: “a prison custody officer can sleep soundly in the knowledge that his or her skills will be required for years to come.”

Key Issues

Detention and prisons profiteering: “Serco Justice and Immigration”

Serco runs six adult prisons in the UK, with a total capacity of 5400. They are HMPs Ashfield, Doncaster, Dovegate, Lowdham Grange and Thameside in England, and Kilmarnock in Scotland.

Serco has long been a player in the UK immigration detention business. However it currently only has one detention centre: Yarl’s Wood. It continues to bid for new ones. It bid unsuccessfully for the major deportation “escorting” contract won by Mitie at the end of 2017.

In Australia, Serco won the 2009 contract to run all detention centres on the Australian mainland and an offshore processing centre on Christmas Island. The contract was renewed for another five years in 2014, valued then at $1 billion. However, its value has been dropping as Serco is paid “per immigrant”, and refugee arrival numbers are down due to interceptions at sea.

In 2016, Serco tried to enter the US market with extensive lobbying at federal and local level to open a family detention centre near the Mexican border. The proposal was eventually rejected by officials in Texas.

Asylum Housing

However, one “Justice and Immigration” deal has not performed so well: the COMPASS asylum housing contracts. Serco has been losing substantial sums on these deals – though it still appears to be bidding for the new round of asylum housing tenders currently underway.

In 2012, the Home Office reorganised its system of housing asylum seekers (outside detention). Previously, there was a mixture of housing arrangements run by local authorities as well as private companies. Now all housing is provided by large private companies under regional contracts called “COMPASS” – “Commercial and Operational Managers Procuring Asylum Support Services”. The Home Office said it hoped to save £150 million over seven years through this arrangement.

The six contracts were awarded to just three companies: G4S, Serco, and Clearsprings Group. Serco has the contracts for “Scotland and Northern Ireland” and “North West England”.

But, as the Home Affairs Committee points out: “although the system of three Providers looks straightforward on the surface, below it lies a complex network of contractors, sub-contractors and hundreds of private landlords.” In Scotland and Northern Ireland, Serco hires a sub-contractor called Orchard and Shipman to deal with the small private landlords it rents from.

The Compass contracts are due to end in August 2019. They were initially scheduled for five years, plus an optional two year extension, which the Home Office took. Although full details are not clear, the new arrangement looks set to be very similar, based on seven large regional contracts. They are due to be awarded in Autumn 2018.

The corporations complain that they have made heavy losses on the COMPASS contracts. G4S and Serco, in particular, seemed to have seriously messed up preparing for the deal. Both had problems early on with sub-contractors and failed to source all the properties they had expected; both complained they hadn’t anticipated the problems of negotiating with councils over properties. Then the mess got deeper as the “refugee crisis” arrived and the Home Office got even further behind in processing claims, meaning the numbers of people to be housed swelled.

Despite all this, G4S and Serco are interested in continuing in this business – if the Home Office will increase its fees. The signs are that the Home Office will agree to pump more money into the system, so that its contractors can turn a profit. In March 2018, G4S’ CEO Ashley Almanza explained to analysts how he expected the Government would offer better terms:

“Clearly the customer is very keen to have us in the process. … There are only two other suppliers in the market who’ve got the expertise to manage a very, very, very complex contract. If the contract was offered on the same terms, clearly we would not participate. I’m going to guess that the other supplier [Serco, we assume] would also not participate. We’ve both seen enough to know that that’s not a viable model. I think there’s every sign that the customer understands that, knows that. The discussions are constructive and positive.”

Conditions in asylum housing are notorious. South Yorkshire Migration and Asylum Action Group (SYMAAG) have collected numerous horror stories from people housed in Yorkshire and other areas. In Sheffield, a toddler with cancer is dumped by G4S in rat-infested accommodation. In Manchester, Serco don’t treat bedbug outbreaks but simply wrap infested mattresses in plastic covers. These are not exceptional cases: water leakage, fire hazards, mould, rats, cockroaches and bedbugs appear standard.

In more detail

History

Serco started out in 1929 as a company called RCA Services Ltd, the British “electronic services” subsidiary of Radio Corporation of America (RCA). Post-war, its business included two early examples of UK government outsourcing: large contracts with the Ministry of Defence to manage the ballistic missile early warning system, and a secret radar base in Suffolk.

When state outsourcing really took off in the 1980s, the company was there. It won a prototype 1984 contract to run an RAF supply depot, in which the old air force staff were simply transferred over and brought their experience. In 1987 the company became Serco (Services Company), through a management buyout.

Serco grew rapidly. Led by a group of four founding directors known as the “gang of four”, it was very much part of the Thatcherite programme of dismantling the state. According to Sam Knight in the Guardian: “Rentokil did cleaning; G4S did security; Capita did IT; Serco did anything and everything – and its panache in the bidding process meant that it often beat out competition from specialist firms.”

The Blairite second wave of outsourcing opened even more areas up to “public private partnerships”. From 1990 to 2010, Serco focused almost entirely on government business. The boss from 2002 was Chris Hyman, an accountant, South African, and devout Christian who proclaimed that he would make Serco “the world’s greatest service company”.

But after the 2008 crash, austerity hit government budgets, matched by “slowdowns in military spending”. To keep growing, Serco expanded its private sector business. But the move to corporate work went badly, involving “a number of very heavily loss-making contracts”. And then came a run of bad news stories, including the 2013 electronic tagging scandal which saw Serco banned from government tenders for six months.

Hyman resigned just before a Serious Fraud Office investigation began, and a new team took over in 2014, led by CEO Rupert Soames, grandson of Winston Churchill. But the results of bad deals were still hitting, and in 2013-2015 Serco issued four profits warnings. The new strategy was to consolidate, selling off “non core” businesses (e.g., the loss-making “Business Processing Outsourcing” call centre in India) and focusing back on government work again. But Serco is not yet out of the woods.

Picture: CEO Nicholas Soames with Vice Admiral Tony Radakin CB, Second Sea Lord

Bosses

Soames is top flight English elite: grandson of Winston Churchill, brother of Conservative MP Nicholas Soames, former president of the Oxford Union. His previous jobs were with tech firm GEC (parts of which have been since incorporated into BAE Systems and Telent) and financial software company Misys (now part of Finastra).

Chairman Sir Roy Gardner, on the other hand, was a carpenter’s son who became one of Britain’s leading businessmen. He was CEO of Centrica (former British Gas), after also working with GEC-Centrica, and has also been non-executive chairman of Compass Group. But he’s probably best known as chairman of Manchester United between 2002-5, then Plymouth Argyle from 2009-10, a period which ended with the club entering administration and nearly being liquidated.

The board includes a number of other corporate high-flyers, and also a former top civil servant, Rachel Lomax, who has been on the Bank of England’s monetary policy committee and been Permanent Secretary at three government departments.

Soames was paid nearly £4 million in 2017: £850,000 base salary, £288,000 in pension contributions and other benefits, a £956,505 performance related bonus, and £1,710,294 in long term incentives. Angus Cockburn made £1,758,172 and Ed Casey £2,089,101.

Finances

Losses: In Serco’s 2017 Annual Report, the company says it aims at 6-7% annual revenue growth and a trading profit margin of 5-6%. But currently revenues are stagnating and the operating profit rate is “much too low” at 2-3%. Operating profit was a mere £50 million in 2017 – and after interest and tax the company booked a final profit of only £100,000. In 2016 it made a £18 million loss. Regionally, the UK and Europe has the lowest profit margins. This is where Serco still has a number of loss-making contracts on its books.

Shareholders

Serco’s shareholders at the time of writing this profile were a variety of investment funds, all holding relatively low proportions of the companies’ shares:

• MSD partners 10%;
• FIL Ltd 6.67%;
• Marathon Asset Management 5.31%;
• Majedie Asset Management 5.09%;
• UBS Asset Management 5.04%;
• Avzalor Asset Management 5%;
• Orbis Group 4.96%;
• Morgan Stanley Investment Management 2.99%
• The Vanguard Group 2.82%
• RWC Asset Management 2.69%

Even given its financial troubles Serco’s shareholders have remained relatively stable over the past five years. Shareholders may have confidence in the new strategy –or they may be waiting for their shares to increase in value before they sell. Either way they are unlikely to look on their recent investment in the company with much fondness.

Serco was forced to ask shareholders for £530m in 2015, and has not paid a dividend for the last three years. The 2015 ‘rights issue’ – essentially the company selling new shares much cheaper than their stock market value at the time to raise new cash –came as part of a ‘refinancing’ deal Serco made with the banks and investment funds it was borrowing money from. This has ensured Serco has stayed afloat after all its recent problems. But shareholders expect the company to do more than just survive: they want as much of its cash as they can get.

Serco Scandal Sheet

Serco’s appalling reputation precedes it. These are just a few highlights. See also the Facebook page Serco Watch for regular stories, particularly from Australia.

(Ongoing) “Nightmare on Christmas Island”. Serco’s running of Australia’s “offshore processing centre” for migrants since 2009 is a continual horror story, with numerous accounts of brutality, beatings, suicide and self-harm, overcrowding, child neglect, and more. See, for example: 2011 CorpWatch report; 2013 account from the Australian Human Rights Commission.

(Ongoing) Serco and G4S each won two of the UK government’s COMPASS asylum housing contracts in 2012. Appalling slum conditions in their accommodation has been well documented. Despite losing money on the existing contracts, both companies are now bidding for renewals.

(Ongoing) Serco is regularly accused of underpaying its staff. The most high profile current case is the campaign by cleaners at Bart’s hospital in London.

(2017) Mount Eden scandal: Serco lost this New Zealand prison contract after reports of extreme violence and neglect, such as ignoring a severely injured man lying in a pool of his own blood. At least one former prisoner is now suing Serco New Zealand over his treatment.

(2017) Paradise Papers: the leaked offshore documents revealed the law firm Appleby listing Serco as a “high risk client” due to its “history of problems, failures, fatal errors and overcharging”.

(2016) US detention lobbying: Serco tried to enter the US market with extensive lobbying at federal and local level on a proposal to build a new detention centre to lock up families with children near the Mexican border. The proposal was eventually rejected by local officials.

(2014) Hospital overcharging: internal documents leaked to Corporate Watch suggested Britain’s biggest pathology provider, established by Serco in partnership with Guy’s and St Thomas’ hospitals in London, overcharged the hospitals millions of pounds for tests and services.

(2007 – ongoing) Yarls Wood. Multiple accounts of sexual assault by guards are just the most reported aspects of life in the detention centre under Serco. The contract was renewed in 2014, shortly after the death of Christine Case on 30 March 2014.

(2013) Prisoner transport: the Ministry of Justice put Serco’s £285 million London and East Anglia court transport contract under “administrative supervision”, and called in City of London police to investigate potential fraud, after Serco staff were alleged to be cheating on paperwork.

(2013) Tagging overbilling scandal: along with G4S, Serco was investigated by the Serious Fraud Office for over-billing on its electronic tagging contracts – including charging for tagging dead people. It was given a six month ban on bidding for new Government contracts. But it got away without any criminal convictions after agreeing to repay £68 million.

(2012) NHS false data: Serco admitted 252 instances of filing false data to the NHS related to performance of its Cornwall out-of-hours GP services contract.

(2012) Bradford schools taken back in-house: Bradford council in Yorkshire outsourced its education management to Serco for ten years. The contract was ended after “there were real problems under the Serco regime”.

NB: unless other sources are stated, information comes from the company’s annual reports and accounts. Latest information can be found here on its website.

The post Serco: company profile 2018 appeared first on Corporate Watch.

The South Yorkshire Migration and Asylum Action Group (SYMAAG) has taken a leading role in exposing these contractors, and is now helping start a new campaign against the prospect of G4S and Serco renewing their mandate. Here we publish the announcement for a public meeting called by SYMAAG on 24 February, and some further analysis by the group’s John Grayson.

South Yorkshire Migration and Asylum Action Group invites you to:

AN ACTION DAY CONFERENCE SATURDAY 24 FEBRUARY 2018 10.30 a.m. (for 11 a.m. start) to 4 p.m.

HUMAN RIGHTS AND ASYLUM HOUSING:

Discussing the £4 billion Government AASC (Asylum Accommodation and Support Services Contracts) from 2019 to 2029.

THE SANCTUARY, CHAPEL WALK, SHEFFIELD CITY CENTRE (OPPOSITE CRUCIBLE THEATRE) S1 2PD.TEN MINUTES WALK FROM RAIL AND BUS STATIONS.

Tenders are already in from the corporations and companies set to exploit the latest (and biggest) contract to be offered in the UK and European asylum markets, housing refugees waiting for the outcomes of asylum claims.G4S has already confirmed its interest. Asylum housing throughout the UK was outsourced in 2012 by the Home Office with a five year £1.7bn contract given to three international security companies G4S, Serco and the smaller Reliance company. The contracts have been problematic for most asylum tenants (with four critical parliamentary inquiries), and disastrous for many individuals and families.

The 1999 Asylum and Immigration Act stripped asylum tenants of all the rights established in law for council and private tenants. Since 2012 there have been many examples where the legal and human rights of refugee children and disabled refugees have been threatened by conditions in, and management, of asylum accommodation. Two of the present contractors Serco and G4S have been criticised and sanctioned for their record on human rights in managing contracts in detention centres, and children’s prisons in the UK, and in prisons and detention centres in South Africa, Palestine, and Australia. Is this record relevant to the award of new contracts for the care of refugees with £4 billion of taxpayers money? Should it be? Come along on 24 February and have your say and decide what actions we can take.

Speakers will include asylum tenants, journalists, housing researchers and academics, and YOU in small group discussions producing plans for action. Tell us you are coming by contacting dignitynotdetention@yahoo.co.uk

BRIEFING: FROM COMPASS TO THE £4 billion AASC ASYLUM HOUSING CONTRACT

On 18 November the new AASC (Asylum Accommodation and Support Services Contracts) for asylum housing across the UK from September 2019 to September 2029 were opened for tender. The cost to the British tax payer is a staggering £4 billion. Bidders for the contracts were given TWENTY NINE DAYS to the 17 December to register an interest. There were seven contract areas offered (Northern Ireland is the smallest at £50 million, the North West and the South of England the largest with £900 million all over ten years) making it likely that bidders would be limited to corporations and large housing companies operating in asylum markets across the EU, like the present holders of the UK COMPASS contracts: G4S, Serco, and Clearsprings.

There is already confirmation that G4S has put in their tender.

There are other indications that the three holders of the contracts, or private contractors like them, may well be the government’s preferred companies for delivery of the new contracts. On the 9 November, nine months on from a highly critical report on the COMPASS contracts by the Home Affairs Select Committee published on 31 January 2017, the government finally gave its response to their findings and recommendations. The government rejected the findings and recommendations wholesale and claimed that the “the standard of accommodation provided to asylum seekers has improved since 2012.”

Since the present contractors came on board in June 2012, there have been four significant inquiries, featuring asylum housing in Parliament, the Children’s’ Society Parliamentary panel in 2013, a Home Affairs Committee inquiry in 2013, a Public Accounts Committee inquiry in 2014 and the current Home Affairs Committee inquiry.

In 2016 G4S was fined £5.6m for the standard of the housing it provided in 2013/14. Despite all that, regardless of persistently negative media coverage and asylum tenants’ tenacious resistance and solidarity campaigning, still, G4S, Serco and Clearel hold the contract. They were given an extension (and more money) in December 2016 which will take them through to September 2019.

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