A rise in “dark and very troubling” sexual offences among children, including the recent conviction of an 11-year-old rapist, has sparked concerns among justice ministers.

Youth justice minister, Dr Phillip Lee, told MPs on Tuesday that the “uptick” in sexual offences among children was troubling enough for the ministry of justice to consider setting up a special unit in the youth custody estate to tackle the problem.

“It is very small numbers but the crimes are quite dark and very troubling,” Lee told the commons justice select committee.

MPs on the committee suggested that the growing use of sex as a form of violence among gangs might be one possible factor behind the increase in serious sexual crimes among children.

Michael Spurr, chief executive officer of Her Majesty’s Prison and Probation Service, said the number of children held in youth custody in England and Wales had fallen from 3,000 to 900.

But he told the MPs that those held in young offender institutions and secure training centres had been convicted of more serious offences and were serving longer sentences, with elements of the gang culture in the community being imported into the youth estate.

Spurr acknowledged to MPs that the levels of violence inside YOIs and STCs were 10 times the levels of those in adult prisons. The chief inspector of prisons recently revealed a “staggering” decline in standards and safety in youth jails across England and Wales.

The prison service chief acknowledged it had been “very challenging” with some “very stressed” institutions. But he insisted that the situation in the scandal-hit Medway secure training centre had improved since it was taken into the public sector earlier this year. There were plans to start recruiting more highly skilled specialist youth justice workers from next year, he added.

Pressed by Labour’s former prisons minister, David Hanson, over the contractual penalties that the private security firm G4S had faced for its failures in running Medway STC, Spurr would only confirm that their contract had not been renewed.

He revealed that G4S had also failed to find a buyer for its 25-year contract to run Oakhill secure training centre in Milton Keynes and it had been taken off the market. The private security company announced its intention to sell its UK “children’s services business” in February last year, including its secure training centres and 13 children’s homes. The Oakhill contract was signed 2004 and has a further 12 years to run.