At night, the shouting starts. When the lights go out at Hindley, the young offenders institute, you can hear the intimidating shout-outs, the insults and threats from other boys kept there. Staff have tried to stop it, but they've failed.

The shouting is part of an atmosphere of violence and fear which permeates the institution. On average, there is one fight or assault every day. There were 251 reports of bullying and 167 incidents of self-harm in six months.

In January 2012, Jake Hardy, a 17-year-old at Hindley, was found hanging in his cell. He was one of 16 children to die in custody since 2000. The inquest into his death detailed a dozen failures by the state which contributed to his death.

While the inquest was taking place, the inspector of prisons was conducting an unannounced inspection. The report, released today, documents some improvements but it paints a stark picture of an institution which is failing young people and a custodial operation which is unfit for vulnerable young people.

Jake's mother, Liz Hardy, said:

"Reading this report, it appears that not enough has changed at HMYOI Hindley, two-and-a-half years on from my son dying.

"The recommendations that the inspectorate are making are the same as those that came out of the inquest: in particular in relation to the problem of shout-outs at night, bullying incidents, the need for better internal recording and passing on of information; and the need for improved care of vulnerable young people with learning difficulties.

"It is distressing knowing that another family may have to go through the heartache, and heartbreaking experience that we as a family had to suffer."

Inspectors watched CCTV footage showing a boy, who appeared to have fallen out with others, meekly "reporting" to a side room where he was punched and kicked by assailants. The incident only came to light when the CCTV footage was watched later on.

While there was some improvement in education and staff treatment, the overall picture is bleak. Inspectors identified a number of instances where boys were strip searched under restraint. "National policies" had reduced the amount of time boys spent out of their cells, so many had less than 15 minutes a day to exercise in the open air. Foreign nationals had had legal aid taken away from them and were "confused, anxious, in panic or in denial" about their immigration status. Litter in the exercise yard had accumulated over time. Cells were cramped with "smelly, inadequately screened toilets" which boys had to eat their food next to.

About half the boys were in touch with mental health services. The availability of quality services for boys suffering from brain injury, who had learning disability or needed speech and language therapy was insufficient to meet demand. Three out of five boys held had at least a medium need of substance intervention. Two out of five had been local authority care.

Deborah Coles, co-director of Inquest, said:

"Many of the failings and concerns exposed at the inquest into the death of 17-year-old Jake Hardy mirror the findings of this Inspection report. Despite improvements, once again, questions have been raised about the ability of the prison service to keep children in its care safe. The children and young people incarcerated are some of the most vulnerable with histories of mental ill health, drug and alcohol problems, learning difficulties, abuse, and trauma. Can prisons, as currently managed and resourced, ever keep vulnerable children and young people safe and offer any meaningful rehabilitation or therapeutic intervention?"

What few signs there are of improvement are welcome, but policy is set, as ever, to get rid of what of works and build on what doesn't.

The Willow Unit, an "essential, effective" psychologically-informed resource for boys with the most complex problems, is facing having its funding taken away. "It was a vital service that kept some of the most vulnerable boys safe and in my view, closure of the Willow Unit would be a reckless and dangerous development," Nick Hardwick, the chief inspector of prisons, found.

In a move which baffled child safety experts and penal reform groups, the institution, which previously held only 16- to 18-year-olds, started admitting young adults between the ages of 18 to 21. During the inspection it was announced the number of young adults was to increase significantly. "In my view there was a real risk that this would detract attention from the safe management of the very vulnerable and challenging younger boys that the establishment held," the chief inspector found.

As Frances Crook, chief executive of the Howard League for Penal Reform, commented:

"It is completely inappropriate to put young adults together with children in such a dangerous environment, and the government should reverse this decision immediately. "This report illustrates how the government is putting children at risk with its plan to build a huge new jail that will mix younger boys, and girls, with older teenagers with too few staff. Prisons are dangerous places for children."

Finally, as Helen Stone, a solicitor who acts for Jake Hardy's family, argues on this website today, the government needs to include children aged 16-18 in the ongoing Harris review and the Equality and Human Rights Commission inquiry into deaths in custody.

Their exclusion is baffling. There is no conceivable moral or intellectual argument which justifies it. We know we have a significant problem with this very vulnerable age group in custody. As the coroner's Prevention of Future Deaths report after the death of Jake Hardy said:

"The placement of vulnerable children and young persons with complex needs in YOIs [youth offenders institutes] may result in increased risk of self-harm and suicide, which are often difficult for staff to manage effectively, even with the benefit of the policies and procedures which are in place."

And yet the government refuses to budge. We need a radical rethink of how children are treated when they fall foul of the law. The current system puts them in greater danger, in unsafe environments, where the shouting at night and the beatings in side rooms constitute the reality of their daily life.