The doomed privatisation by the Imperial War Museums of their visitor services and security department should stand as a warning for all museums under pressure from grant cuts and political masters. IWM, a national collection of museums, including IWM London, IWM North, IWM Duxford, Churchill War Rooms and HMS Belfast, has gambled with its reputation, resulting in handing over its department to a vulture capital firm.

By IWM’s own indicators of “effectiveness, efficiencies and also opportunities for staff development,” the 2013 decision to outsource visitor services to Shield Guarding has been a failure, with the main victims being the museum staff that looked after the 2.5 million visitors received by its five branches over the last year.

The move was opposed by the Public & Commercial Services union (PCS) whose members were amongst the affected employees. PCS General Secretary, Mark Serwotka said, “We believe that gifting this work to a profit-making company will lead to jobs and standards being cut, and risks a knowledge-drain from these highly prized visitor attractions.”

Only two years into the £10-11 million contract with IWM, Shield Guarding, part of the Indian conglomerate, Topsgrup, went into administration. The business and assets were purchased by Noonan Services Group and the Dublin-based company became IWM visitor services staff’s third employer in less than three years.

It has since been reported that Shield Guarding made a £3.5 million loss in 2014 and, for some time, stopped paying staff pensions contributions, resulting in the Public and Commercial Services Union (PCSU) reporting them to the Pensions Regulator.

IWM had predicted efficiency benefits to arise from Year 2 of the Shield contract, with an estimated savings of £1.5 million over 6 years. They were relying, they said, on “reduction in staff numbers; the benefits of providing additional staff from their (Shield) reserve and support teams; and the natural turnover in staff will enable them to employ on their terms and not IWM terms (estimated that this could save £6-8,000 per post).”

In other words, IWM were relying on Shield’s use of zero hour contracts, without contractual sick pay and other inferior staff terms to make savings. Clearly, IWM’s concern for “staff development” was disingenuous from the outset.

Supposed “effectiveness and efficiencies” have also fallen by the wayside. IWM had estimated annual savings of £250,000 from the contract with Shield. It is not clear that such figures were credible as Shield was not required to offer cost estimates beyond Year 1 of the contract. Nonetheless, since the acquisition by Noonan, IWM’s costs have increased. In two months, IWM declared paying out over £980,000 to the new contractor.

For IWM’s talk of “staff opportunities,” zero hour contracts with limited contractual rights have become the norm in visitor services at the Museums. Hopes of meaningful “efficiency” savings are up in the air as they work with a new contractor, Noonan, owned by private equity firm, Alchemy Partners.

Noonan and Alchemy Partners

Noonan was set up in 1977 as a family business by Noel Noonan, a Limerick-born Irish businessman. In those days, it had a handful of staff and specialised in cleaning services. It grew dramatically but was still primarily a cleaning and maintenance firm until 2002 when it purchased an Irish security firm. In 2006, Noonan made a pretax profit of €4.3 million from a turnover of €103 million.

In 2008, Noonan was sold for €90 million in a management buy-out backed by a private equity firm, Alchemy Partners, described by Bloomberg as a “vulture firm.”

Alchemy Partners specialises in achieving “superior risk-adjusted returns in private equity and distressed investing.” Its fund management company, Alchemy Partners (Guernsey) Ltd, is based in Guernsey and has businesses based in London. Between formation in 1997 and 2004, Alchemy was reported to have made a return of £1bn for investors, including Goldman Sachs Asset Management and British Aerospace investment fund.

The Deal

Alchemy’s acquisition of the defunct Shield Guarding, for an undisclosed sum, bears similarities to their purchase of another distressed business, Belfast-based outsourcing firm, Resource.

In 2014, Resource went into administration after an order requested by a Guernsey-based company, known as R3768723 Ltd, which is thought to be owned by Alchemy Partners.

John Hansen and Stuart Irwin, of KPMG in Ireland, were appointed as administrators of the defunct company and Noonan Services Group came in to purchase the business and assets.

Likewise, after Shield Guarding went into administration in April 2016, KPMG’s John Hansen and Stuart Irwin were appointed as administrators (by which time, Shield Guarding were known as Jameson and Harrison Security Limited). Noonan Services Group took over the business of Shield Guarding.

The Future

From finding themselves working for a firm owned by an Indian conglomerate, Imperial War Museum Visitor Services and Security are now employed by a company, Noonan, headquartered in Dublin, whose registered office is in Surrey and whose parent company is a vulture capital firm registered in Guernsey.

More significantly, the contractual rights of IWM staff, from all five branches, are in jeopardy and the policy of hiring staff on zero hour contracts at the Museum is likely to continue.

Noonan, like their predecessors, Shield, have no experience in providing visitor services. Therefore, the visitor experience at IWM is likely to deteriorate from inadequate support and training for staff that are the “frontline, public face” of the Museums and not simply security guards.

The PCS has called for IWM to learn the lessons from this episode and bring the contract back in-house – and, as a minimum, re-tender the contract to include an in-house bid.