MPs seek to lift the veil on terms of Government outsourcing deals

Scandals over Serco and G4S spark move for greater public disclosure of financial details

Associate Business Editor

A powerful group of MPs will today push top civil servants to agree to sweeping reforms of how Government contracts are run by the private sector following headline-grabbing failures at outsourcing giants Serco and G4S.

Margaret Hodge, the Public Accounts Committee chairman, wants to see financial information on all Government contracts revealed under what is known as open-book accounting. The former Labour minister is also demanding that the National Audit Office has full access to  contractual and financial details of these  deals, which should also be subject to  greater public disclosure under Freedom of Information laws.

Stephen Kelly and Bill Crothers, chief operating officer and chief procurement officer respectively at the Cabinet Office, will face the committee this afternoon. They will be joined by top Ministry of Defence civil servants who could be questioned over the semi-privatisation of the £14bn agency that buys tanks and guns. Plans to let the private sector run such a sensitive part of national security have been widely criticised and the process is on the brink of collapse after one of only two bidders pulled out last week.

Government contracts are under scrutiny after outsourcing giant Serco and security group G4S overcharged the taxpayer tens of millions of pounds on a contract to electronically tag criminals. It emerged in the summer that 3,000 offenders they had charged for were living abroad, in custody or dead. G4S admitted last week  it had overcharged the taxpayer by £24m for tagging.

On the same day, the Public Accounts Committee secured agreements from Serco and G4S broadly to back the proposed reforms, concessions it is not thought to have been expecting. Executives at IT provider Atos and Capita, which recently won a contract to manage enquiry lines for the Department for Work and Pensions, also suggested they were relaxed about making Government contracts less obscured from public examination. Those four groups hold Government contracts worth £6.6bn last year. The Capita chief executive Paul Pindar said he had “no problem whatsoever” with open book contracts. Serco chairman Alastair Lyons claimed he would be “completely happy to co-operate with FOI being extended to our own contracts”.

However, these pledges were overshadowed by the G4S chief executive Ashley Almanza apologising for his company’s role in the tagging scandal and Mr Lyons conceding that Serco’s actions had been “ethically wrong”.

The scrutiny facing the outsourcing industry coincides with a period of great management change. Long-serving Mr Pindar announced last week he will leave Capita by the end of February after 22 years as managing director and chief executive. Mr Almanza is still getting to grips with G4S.

He replaced Nick Buckles, whose reputation was damaged following the London Olympics security fiasco, which cost it £70m. Serco is hunting for a new boss after the departure of Christopher Hyman.

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