Government rewards Serco for failure: Management Today asks: “Scandals? What scandals?”

Gill Plimmer in the Financial Times reports the continued lunacy (or worse) of our government in rewarding failure.

northern rail header

The largest UK government contract awarded so far this year – a £520m deal to continue operating the Northern Rail franchise until 2016 – has gone to Serco in partnership with a Dutch rail operator.

The company is the subject of an ongoing investigation by the Serious Fraud Office for alleged charging for monitoring criminals who were dead, in prison or had not been tagged at all. It has already agreed to repay £68.5m to the government.

A Reuters report said that this had led to a ban on new work, managerial departures and big hits to shares and profits, but a detailed article by Management Today adds that the ban has now ended. Serco’s CEO resigned and Rupert Soames, Winston Churchill’s grandson has been appointed to the position.

Management Today (“Scandals? What scandal) links to an article on outsourcing which notes UK central government payments to outsourcers – each one with multiple failures – including:

£700m to France-based Atos (axed by DWP)
£1.6bn to Capita (MoD computer failure)
£1.3bn to G4S (Olympics)
£3bn to Serco (see above)
And local government spent £506bn with Capita in 2012/13.

Why are companies rewarded for failure?

Though the aim of outsourcing is said to be saving money, other voices – including Management Today’s Jeremy Hazlehurst – allege that it is ‘risk transfer”: “Politicians are keen to shift the risk for some services into the private sector. It’s nice to be able to blame an outsourcer when there’s a prison riot”.

Or is it simply another undesirable, unaccountable, undemocratic feature of the British corporate-political nexus?


Posted on May 19, 2014, in Conflict of interest, Corporate political nexus, Democracy undermined, Government, Lobbying, Local government, Parliamentary failure, Reward for failure, Taxpayers' money, Vested interests and tagged , , , , , , , , . Bookmark the permalink. Leave a comment.

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