Construction giant Carillion has collapsed. In 2014, Jonathan Derbyshire asked: are the firms that take on the government’s work just too big?by Jonathan Derbyshire / January 23, 2014 / Leave a comment
A mechanic in the north London workshop of Barclays Cycle Hire, a scheme operated by the outsourcing company Serco
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In a few weeks, the Cabinet Office will pass judgement on a “corporate renewal plan” from Serco. Many people will have hardly heard of the company that provides a bewilderingly wide range of public services, from “Boris bikes” to nuclear weapons. The Whitehall review may be couched in the language of management consultancy but the stakes are high, for Serco, for British taxpayers, and for a belief in how to run government that stretches back decades.
Shortly before Christmas, Serco announced that it had agreed to return £68.5m to the taxpayer. An audit carried out by the Ministry of Justice (MoJ)—which also examined “anomalies” in contracts held by one of Serco’s competitors, G4S—had uncovered systematic overcharging on its contract for “electronic monitoring” (or tagging) of offenders. In a statement, Serco accepted that these “contract issues… should never had happened” and apologised “unreservedly” for them. It also said it was confident that the proposals in its renewal plan would be “sufficient to restore the confidence of its government customer,” with whom it holds contracts worth £6.2bn. As well as being forced to reach a settlement with the government, Serco was now the subject of an investigation by the Serious Fraud Office. (The Ministry has also referred two G4S contracts for court services to the SFO. G4S noted that “the Ministry has no evidence of dishonesty in relation to these contracts.”)
This was not an isolated incident. Earlier last year, Chris Grayling, the Justice Secretary, referred Serco’s handling of another contract—for escorting prisoners to court—to the City of London police. It appeared that Serco staff had wrongly recorded the number of prisoners they were delivering. (The company has since agreed to make repayments on that contract too, although it still has the business after giving an undertaking to “improve performance.”) Nor were the dysfunctions restricted to Serco’s contracts with the justice department. A few days before it issued its mea culpa for the tagging fiasco, Serco revealed that it was withdrawing from an NHS contract to provide out-of-hours GP services in Cornwall. An investigation by the National Audit Office (NAO) published in March had revealed chronic under-staffing and regular manipulation of “performance data,” findings corroborated in a forensic…