One of our commenters broke the news yesterday, but now we have confirmation and the details in the Guardian. A4e has pulled out early from a £17m contract to provide prison education (OLASS) in 12 London prisons. The contract had almost two more years to run, so we can assume that pulling out has cost the company dear. But it claims that it couldn't run the contract at a profit. Without any more details from the company, there is speculation that the reason is that overcrowding and under-staffing in prisons is resulting in prisoners being unable to attend classes, and this impacts on the private companies which are paid according to the number of classes they run. To add to A4e's embarrassment, the contract was initially delayed by the extended audit of its activities which followed fraud allegations. And, as the Guardian points out and as we reported at the time, it's not the first time A4e has done this. In 2008 it pulled out of 8 OLASS contracts in Kent prisons because it was making huge losses. It had then severely underestimated the costs of providing a pension scheme for the professional teachers it took over from the previous providers. Presumably it factored all that in to the London bid.
Maybe it's an indication that A4e now can't withstand the losses it might once have absorbed. It adds to the sense that this is a company in trouble.