Serco says Government 'keen' to put tagging scandal to rest

The scandal-struck firm sunk to a  £7.3 million pre-tax loss for the first half of the year

Serco boss Rupert Soames has claimed the Government is back on its side a year after the emergence of the multi-million tagging scandal, adding that ministers are "very, very keen to help us get through this".

The scandal-struck firm sunk to a  £7.3 million pre-tax loss for the first half of the year, after a £106.1 million profit in the same six months of 2013. That was because Serco paid for a massive clean-up operation after overcharging its biggest customer — the taxpayer — tens of millions of pounds by claiming it had tagged criminals who were actually dead or imprisoned.

“This is a company that’s been badly traumatised by the events of last year; my job is to try and steady the ship,” said Soames, who was bought in from Aggreko to run Serco in the wake of the scandal. Today he appointed Angus Cockburn, currently interim chief executive at Aggreko, to become his finance director at Serco.

“I can’t decide whether it’s like the Blues Brothers reforming or the Odd Couple coming back together,” said Soames, who added the first three months in the job had been “on the busy side of absolutely bloody hectic”.

Serco was slapped with a six-month ban on new government contracts last summer and repaid £70 million for over-charging for tagging criminals.

Soames said although “a reputation is in the eye of the beholder, my sense is that as far as the Government is concerned, they are keen to see  us rehabilitated”.

He added: “The decision my chairman [Alastair Lyons] took last year to ‘fess up, go for the absolute maximum co-operation and start a programme of corporate renewal has been vindicated. When I’ve been going round various government departments, I find them very, very keen to help us get through this.”

Serco is now running some government contracts at a loss, Soames said, including £14 million in the first half providing housing for asylum seekers.

“It’s costing us a humongous amount of money to deliver these obligations to the government, because we mis-priced them,” he said.

“We offered the prices on our own free will. Now we’ve got to man up and deliver what we said we would. 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. The taxpayer is getting a spectacular deal at the expense of the shareholders of Serco.”

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