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James Moore: So have the outsourcers become too big too fail?

  • @TheIndyBusiness

Outlook An outbreak of sanity at G4S, which yesterday belatedly decided to follow Serco's lead by assuming the position in an attempt to draw a line under the criminal-tagging scandal.

The outsourcing company coughed up £24.1m and admitted to some overcharging (but nothing really serious). While the Ministry of Justice hasn't immediately accepted the offer, a deal will be done.

The new chief executive, Ashley Almanza, doesn't want this millstone hanging around his neck, and in his honeymoon period he can cheerfully pay up while blaming his predecessor.

He is aware that while G4S is a multi-national business, the British Government is still a major customer, and it is one that could make life difficult for him.

However, it doesn't want to do that – as Francis Maude, the minister in charge of a review of G4S contracts, makes clear in The Independent.

What he, and his colleagues, want to do is "move on", because despite a succession of scandals, they think that G4S can save them money. They still believe, as an article of faith, that private is better than public when it comes to the delivery of services.

Which raises questions about whether they really want to heed some of the points raised by the National Audit Office at the behest of the House of Commons Public Accounts Committee – such as whether companies like G4S have become too big to fail, whether their profits are too high and whether they genuinely provide good value for money.

Just because other parts of the public sector do a poor job (as Mr Maude has correctly identified) doesn't mean that it isn't time to take a very careful look at whether the contracted-out part of it, dominated as it is by four or five big companies, is healthy.

The Government's stance is a happy one for G4S, as it gears up to bid for a new lot of contracts with ministers' blessing, and a happy situation for its shareholders. Whether the outlook is quite as cheerful for the taxpayer is more questionable.