The company in charge of a previously ‘inadequate’ rated youth detention facility in Milton Keynes says it is still offering good value for money - though an investigation has revealed it will cost the taxpayer more than £450 million over the course of its contract.
Oakhill Secure Training Centre in Chalgrove Field was built in 2004 to accommodate 80 boys between the ages of 12 and 17 who have been subject to court orders.
Its remit is to rehabilitate young offenders across the country through training and education.
But an investigation by JPIMedia, the publishers of this newspaper has revealed the full cost of the facility – which was this year rated as ‘requires improvement’ and was ordered to stop using ‘pain-inducing techniques’ on the youths detained here.
The Ministry of Justice entered into a PFI contract to both build and run the facility in 2003. G4S was chosen as the company to operate it, while the building work was valued at £19 million.
However, our study has revealed that, with the ongoing cost of the contract linked to a particularly high rate of inflation, the centre will have cost the taxpayer £455 million by the time the 25-year contract runs out in 2029.
A G4S spokesman said: "Recent inspection reports have recognised the positive progress at Oakhill STC and we are committed to continuing that good work.”
The contract was costing the Ministry of Justice £14 million a year back in 2004. But as it is linked to the Retail Price Index – a particularly steep rate of inflation – the contract is costing more and more each year.
In 2028, the repayments will total £23.9 million – almost £10 million a year more than when the deal was signed.
Yet G4S’s ability to run the facility has been under consistent speculation since the centre opened.
In 2017 the facility was rated as ‘inadequate’ by the watchdog Ofsted and heavily criticised over its ability to keep young people safe.
A total of 330 assaults were recorded over a three-month period.
“One manager said that young people are carrying improvised weapons because they do not feel safe,” inspectors wrote at the time.
“This inhibits some staff from intervening because of the fear of a weapon, and this in turn reinforces the view of young people that staff cannot protect them, thereby continuing the cycle.”
Its latest Ofsted inspection from this year showed good signs of progress – but the facility continues to be rated as ‘requires improvement’.
PFIs, or Private Finance Initiatives, were a method of funding public building introduced under the John Major Government in the early 1990s. By the time of the early 2000s, under Blair’s new Labour, it became practically the only means for local councils, hospital trusts and prisons to get anything built.
The schemes worked by public bodies entering into contract with private companies to both build and operate new infrastructure.
Under PFIs, private companies handled up-front costs on projects such as prisons, hospitals, schools, and infrastructure, in exchange for yearly payments from the state over decades.
Bodies that entered into such schemes would then be entitled to PFI Credits – or grant payments back from the Government – in return for signing the lengthy deals.
Last year, then chancellor Philip Hammond said that he would not sign off on another PFI deal, describing the partnerships as an unwanted ‘legacy’ from New Labour.
A report from the National Audit Office says there are over 700 current PFI deals with a capital value of £60 billion. Even if no new deals are entered into, future charges which continue until the 2040s amount to £199 billion.
And our JPI Media investigation has revealed that at least £4 billion of additional costs have been added to PFI schemes up and down the land, either through rising Retail Price Index-linked inflation or extortionate maintenance fees.
That figure is likely to be the tip of the iceberg.
Joel Benjamin, founder of the People versus PFI campaign group, said: “It's a shocking waste of public money, but in a way, it's not a surprise when you consider these PFI project mortgage repayments are inflation linked and are going to last 25 or even 30 years.”