Mark Leftly: Never in the field of outsourcing has so much been owed to so many


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The Independent Online

Westminster Outlook Sir Winston Churchill once said: “To build may have to be the slow and laborious task of years. To destroy can be the thoughtless act of a single day.”

I wonder if Rupert Soames ever considers his grandfather’s words when he surveys the wreckage of Serco.

Referencing Mr Soames’ great forebear is obligatory in any article about the 55-year-old, but maybe there are some parallels between the two men. 

If you mangle the notions that history repeats itself and talent skips a generation, Mr Soames took it upon himself to lead a once-powerful entity that was in dire trouble. Instead of demanding that he lead Britain at a time of war, Mr Soames decided he was the man to guide Serco to safety earlier this year.

Comparing an outsourcing company – one with a nasty habit of charging the taxpayer for electronically tagging dead criminals – to rescuing Britain from Adolf Hitler might sound a little forced. But taking on Serco means this industrialist has more influence over the state than his elder brother, the Conservative MP Sir Nicholas Soames, ever has.

From running the Defence Academy in Wiltshire to housing asylum seekers in Liverpool, from training thousands of headteachers to cleaning our streets, Serco is as powerful as the government departments that are its major clients.

The company is one of the biggest players in the hidden state: the outsourcing industry that has received £87.7bn of government contracts since the Coalition came to power four years ago, according to the research firm IGS.

Yet, from all this potential bounty, Mr Soames announced this week that Serco had made a £7.1m pre-tax loss in the first half of the year, against a £106m profit over the same period in 2013.

It appears, then, that Serco has been punished by the Government since the group’s various contractual failings started unravelling in the wake of the tagging scandal last summer.

On that contract alone, Serco repaid £70m as it went through “corporate renewal”. But, as I’ve argued here before, ministers can hardly use the ultimate punishment of never using Serco, as it is now part of the fabric of the state.

Mr Soames concluded this week: “With several of the contracts that we won over the last three years, it’s turned out they’ve cost a lot more to run [than they were priced at]. The taxpayer is getting a spectacular deal at the expense of the shareholders of Serco.”

And that’s why I wonder if Mr Soames has considered his grandfather’s words.

Building the state is a never-ending, laborious task and is now largely in the hands of men like Mr Soames.

Serco performed a number of thoughtless acts over many, many days in the pursuit of profit. The taxpayer never demanded a “spectacular deal” from the company. He or she instead just wants the basic jobs of the state, such as supervising criminals, done well and at the first time of asking. Even as unelected masters, Serco and its rivals should now consider themselves as responsible to us as it is to its shareholders. 

If Mr Soames doesn’t ingrain that principle into Serco, then he might have cause to recall his grandfather’s part in a less illustrious event during the First World War; it could be his own Gallipoli.