The Might of Mitie

Again from Facebook, I notice that Napo Greater London Branch are continuing their discussion of possible bidders for probation work and as a consequence have turned their attention to the largely unknown cleaning company Mitie. 

Now this outfit used to have a cleaning contract at my office after our faithful band of long-serving ladies got the push some years ago. I think I'm right in saying they had a contract for 'facilities management' right across the whole probation estate, including hostels, following our nationalisation into the NPS first time around. They proved to be broadly useless and vastly expensive amid stories of huge round trips to change a light bulb if I remember correctly, so what's the story behind this lot? 

The Wikipedia entry says of them:- 

Mitie Group PLC is a British strategic outsourcing and energy services company with their head office in Bristol, and more than 200 smaller offices throughout the UK and Ireland. Mitie operates mainly in the UK and Ireland with a growing presence in Europe. It provides infrastructure consultancy, facilities management, property maintenance and a range of energy management services to its customers. It is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index.

Mitie was founded by David Telling and Ian Stewart as MESL in 1987. It was first listed on the London Stock Exchange in 1988. It merged with Highgate & Job in 1989 and was renamed the Mitie Group.

Their strategy of growth through acquisition has seen Mitie acquire several businesses over the past few years and in 2006 it acquired Initial Security, a leading security business. Following on in 2007 Mitie acquired Robert Prettie & Co. Ltd for £32.7m and incorporated the specialist plumbing, heating and mechanical services business into their Property Services division. In 2008 Mitie continued its acquisitions strategy through the acquisition of Catering Partnership, and DW Tilley. The purchase of DW Tilley allowed Mitie to extend their roofing services nation-wide. 2009 saw the acquisition of Dalkia Facilities Management for £130m to bolster its Technical Facilities Management capability and an expansion into Social Housing with the purchase of Environmental Property Services (EPS) for £38.5m. In 2010, Mitie acquired the integrated facilities management business of Dalkia in Ireland.

Mitie stands for Management Incentive Through Investment Equity, and the company's managers own a substantial minority stake in the business. Mitie's business model is based on taking 51% equity stakes in start-up businesses that fall into its broad fields of activity. The management of the new business invests the remaining capital and if certain targets are met they may sell the balance of the business to Mitie after a fixed period for a sum based on the profits achieved (an earn out). Payment is made in a mixture of cash and Mitie shares. The managers usually remain with Mitie after the earn out.

As a result of this business model Mitie has a large number of group businesses that have significant managerial autonomy but share internal systems, Human Resources and marketing resources.

The outfit is run by Ruby MacGregor-Smith and her Wikipedia entry tells us:-

Ruby McGregor-Smith, CBE, is the CEO of Mitie Group PLC, a strategic outsourcing company headquartered in Bristol, UK. She joined Mitie as Group Financial Director in 2002 and was appointed CEO in 2007. She is the only Asian female chief executive of a FTSE 250 company. She was awarded a CBE in 2012 for services to business and promoting diversity. Her ten years at Mitie have seen a £1.5bn rise in the firm’s turnover, which passed the £2bn mark for the first time in 2012.

Following university McGregor-Smith trained for six years as an accountant at BDO Stoy Hayward. After qualifying, she joined Serco Group PLC, an outsourcing firm, in 1991, and worked there for nine years in a range of operational and financial roles.

In 2002, after a brief spell at the facilities management firm Service Group International (SGI), McGregor-Smith joined Mitie Group PLC as Group Financial Director. In 2005 she was promoted to Group COO, and became CEO two years later when her predecessor Ian Stewart retired to take over the role of Deputy Chairman. As the first Asian female chief executive of a FTSE 250 company, the appointment received extensive press coverage.

McGregor-Smith’s tenure as CEO has seen Mitie’s top and bottom lines grow every year, boosted by strong demand for energy efficiency services. She was quick to identify energy management as a source of future growth: the 2009 acquisition Dalkia UK, a facilities management firm specialising in energy services, significantly boosted Mitie’s strength in this niche market. Internal initiatives at Mitie in which McGregor-Smith has personal involvement include ‘Mitie’s Got Talent’, a company-wide talent contest; and ‘Mitie Millions’, at which she and finance director Suzanne Baxter judge budding entrepreneurs with up to £5m to invest in the winners. The only non-executive directorship she holds is on the board of recruitment firm Michael Page.

A recent article entitled 'Fail and prosper : how privatisation really works' on the OpenDemocracy website dwells quite a bit on Ruby, Mitie and how they fit into the great privatisation scam, sorry plan:- 

Ruby earns more than maybe anybody you have ever met. She is not an Oscar-winning movie star. She hasn't won Wimbledon. Ruby McGregor-Smith is an accountant who runs a British company called Mitie (pronounced Mighty). She pays herself £1.4 million a year. Her Mitie shares, worth £2 million, bring another £60K in annual dividends. On the side, as a part-time director, she picks up £60K more. Last September she 'bought' more shares. They cost her absolutely nothing. She sold them straightaway, making £730,000 in a moment. And now, thanks to British taxpayers, Ruby is about to get richer.

On the eve of her 51st birthday last month, the Home Office gave her a gigantic contract: eight years' work, worth £180 million, running two immigration lock-ups in West London. Mitie got the job — holding 1000 men at Colnbrook and Harmondsworth Removal Centres — only three years after entering what Ruby calls the "market". What's Mitie's experience? They run buildings for Lloyds Bank, clean Odeon cinemas, print and distribute documents, and maintain school buildings under Private Finance Initiative contracts.

For almost three years they have run Campsfield House Immigration Removal Centre, near Oxford. It isn't going well. Last October one suicidal inmate set fire to his cell. The blaze spread quickly — there was no sprinkler system. Ten fire engines rushed to the scene; 180 people had to be evacuated. Seven years ago, after a similar fire in the same Campsfield block, Oxfordshire Fire & Rescue Services strongly recommended sprinklers. It didn't happen. Mitie are experts in fire prevention. They tell potential clients: "our fire and security team can integrate fire prevention, detection, and suppression with your security equipment, including fire detectors, fire alarms, extinguishers, sprinkler systems . . ." Why didn't Mitie heed the Fire Service's warning and install sprinklers when they got the Campsfield contract? Phil Miller, a Corporate Watch researcher, asked Mitie. They wouldn't say.

How does this 'market' work? Less than three years' experience of guarding immigration detainees. One massive fire. And then a gigantic government contract to run two more detention centres. Why didn't the work go to a company more experienced than Mitie?

Ruby McGregor-Smith became chair of the CBI's Public Services Strategy Board last year, not long after she'd scooped that £730,000 windfall. “UK business plays a hugely important role in delivering many public services around the country," she said. And:

"It is crucial, at a time when private provision is under intense scrutiny, that we demonstrate the positive impact that the private sector can make in transforming services and generating value for taxpayers through greater competition."

Four years ago she was one of 35 business leaders invited to sign a letter in the Daily Telegraph, urging Chancellor George Osborne to cut public services. Reducing the budget deficit quickly, they claimed, would "deliver a healthier and more stable economy". They said: "everyone knows that when you have a debt problem, delaying the necessary action will make it worse not better." The BBC's Robert Peston noted: "there is a whole school of economists . . . who would describe that statement as laughable."

Austerity politics creates work for outsourcers regardless of whether they do things more efficiently than the public sector, or not. The PFI model that accountants have dreamed up keeps capital spending off the government's balance sheet, making the official budget deficit smaller. Pushing public money into private hands shrinks the state and weakens organised labour.

Ruby McGregor-Smith's £730,000 windfall is unlikely to be her last. On top of her £1.5 million-a-year, and assuming Mitie's share price keeps rising, this year she is due another mighty windfall. Next year, same again . . .