£24m G4S fraud claims won’t stop government from outsourcing lucrative new public sector work to company

Security firm offers to give the Government a £24.1m 'credit note for amounts incorrectly billed'

Whitehall Editor

Allegations of fraud against G4S and Serco will not stop the Government from outsourcing lucrative new public sector work to the companies, the minister in charge of contracts says today.

The Cabinet Office is currently reviewing 28 contracts held by G4S and Serco worth around £9bn. The review follows allegations they systematically overcharged the Ministry of Justice millions of pounds for electronic tagging contracts over many years.

But in an article for The Independent, Francis Maude, the minister in charge of the review, indicates that he does not want it to result in either company being prevented from bidding or winning more work.

Instead he says he expects the firms to emerge “renewed and stronger” from the process and confirms that the Government is preparing to outsource more public-sector work before the next election. “People ask if our reviews of contracts are Government ‘getting tough’ on suppliers who had it too easy for too long,” he says.

“It’s not that simple. Question marks about their performance are not good for any of us. Our reviews into G4S and Serco’s contracts are rigorous and extensive. But when they report we will move on quickly.”

Mr Maude’s comments suggest that ministers are trying to draw a line under the damaging row with the companies over tagging contracts.

Privately, senior Government sources admit there is a “danger of attacking these companies too much” and that there are fears in Whitehall that the row could discourage both Serco and G4S from bidding for future work – making future outsourcing less competitive.

Mr Maude makes clear in his article that the Coalition will “not step back” from the “outsourcing marketplace” claiming it will provide “savings for taxpayers” and “drive up productivity”. Today, executives from both Serco and G4S will face a grilling by MPs on the Public Accounts Committee.

They are expected to be asked about a National Audit Office report, released today, that found both contractors continued charging the Ministry of Justice for months or years after electronic monitoring activity had stopped.

The charging continued in cases where offenders had been sent back to prison or even died.

The NAO suggests that the overcharging may have been the result of failings by the Government formally to notify the company when tagging contracts should cease, rather than being deliberate fraud.

G4S, which with Serco is being investigated by the Serious Fraud Office over the affair, said today it was offering to give the Government a £24.1m “credit note” for amounts “incorrectly billed”.

Mr Maude also hinted that the Government now accepts that failures in the contracts may inadvertently have led to the overcharging and accepts the company’s own external reports that found no evidence of “dishonesty or criminal conduct” by any employees. 

But Sadiq Khan, Labour’s shadow Justice Secretary, said: “With the Serious Fraud Office still investigating, neither company should be awarded any more public contracts by David Cameron’s government unless and until both have been given a clean bill of health.

“Failure to do so will further undermine the public’s confidence in our justice system under this out-of-touch government.”

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?

Day In a Page

Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project
Diana Krall: The jazz singer on being friends with Elton John, outer space and skiing in Dubai

Diana Krall interview

The jazz singer on being friends with Elton John, outer space and skiing in Dubai
Pinstriped for action: A glimpse of what the very rich man will be wearing this winter

Pinstriped for action

A glimpse of what the very rich man will be wearing this winter
Russell T Davies & Ben Cook: 'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'

Russell T Davies & Ben Cook: How we met

'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'
Bill Granger recipes: Our chef serves up his favourite Japanese dishes

Bill Granger's Japanese recipes

Stock up on mirin, soy and miso and you have the makings of everyday Japanese cuisine
Michael Calvin: How we need more Eric Cantonas to knock some sense into us

Michael Calvin's Last Word

How we need more Eric Cantonas to knock some sense into us