G4S will not be fined for blunder over recruitment

British troops on patrol at the Olympic Park in Stratford yesterday (EPA)

Private security company G4S will not be fined for failing to recruit enough security guards for the Olympic Games, it emerged last night.

Two weeks before the Games, soldiers have been forced to cancel family holidays to ensure venues are protected. But a senior government source told i that the contract with G4S did not include a penalty clause. The revelation appears to contradict a statement by the Home Secretary, Theresa May, who told MPs she understood there were penalties in the contract between G4S and the Games organisers, Locog.

A source said that under the agreement G4S was paid for each extra security guard they supplied – and not penalised if they did not make the overall target. "The person who negotiated the contract should be shot," the source said.

It is also understood that the Ministry of Defence – which only found out about the troop request on Monday – has demanded that all the additional cost is borne by the Home Office.

Last night it was also claimed that G4S's recruitment problems may have been exacerbated by the Home Office's delays in vetting candidates.

Ms May, pictured, told the Commons yesterday she was only informed that the firm could not honour its contract on Wednesday, although ministers had been aware that extra troops might be needed for a couple of weeks.

A spokesperson for Locog, which negotiated the £284m contract with G4S, said: "If G4S are not providing the same number of staff as they were before, they will not be being paid the same amount of money."

Senior armed forces officers fear the extra demands on troops will have a damaging effect on morale. Some will be forced to cancel family holidays while others have recently returned from deployment and will be going almost directly into checking bags at Olympic venues. Some of the troops put on Olympic duty have just received redundancy notices.

Meanwhile some of the people who had applied for security jobs with G4S – more than 10,000 were on offer – complained that they had not been sent security passes to access Olympic venues before training, while other had.

A spokesperson for G4S said: "We have encountered some delays in progressing applicants through the final stages but we are working extremely hard to process these as swiftly as possible."

As athletes begin arriving in London, ministers are drawing up emergency plans in case the fault which closed the M4 between Heathrow and central London is not fixed by Monday, when the Olympic Village opens.