19 Dec 2013

Serco to repay £68m for wrongly billed electronic tagging

Security giant Serco agrees to repay the government £68.5m wrongly charged for electronic tagging of offenders. G4S is referred to the Serious Fraud Office for a second time over another contract.

Serco prison van arriving at court (Getty)

An analysis of the government’s contracts with both Serco and their rivals G4S earlier this year revealed that they had been overcharging for tagging offenders, some of whom were in prison, abroad or even dead.

A forensic audit of the tagging contract – including examination of related emails – by independent accountants PwC led to today’s repayment agreement between Serco and the government.

A criminal investigation by the Serious Fraud Office (SFO) into their conduct in relation to these tagging contracts is still underway.

G4S referred to SFO

A Ministry of Justice (MoJ) audit of G4S contracts has uncovered problems with two more contracts it holds for managing court facilities, relating to invoicing, delivery and performance reporting. The Ministry has now referred G4S for a second time to the SFO to establish whether any dishonesty has taken place.

Unlike Serco, G4S has yet to agree to any repayment to the government. In a written statement, Justice Secretary Chris Grayling said “discussions are ongoing and I am determined to pursue all legal options to recover the taxpayer’s money.”

In a statement G4S said “we take the MoJ’s concerns very seriously” and insisted it had strengthened management controls of its courts facilities contracts.

Probation reform

Mr Grayling has now said that neither G4S nor Serco will be bidding for contracts to run a controversial outsourced probation service, known as Transforming Rehabilitation.

However, while neither would be “lead providers” of such services, he did leave open the possibility of either supplier working with smaller businesses or voluntary sector groups to deliver a reformed probation service.

Frances Crook, chief executive of The Howard League for Penal Reform, responded in a statement:

“The withdrawal of G4S and Serco as prime contractors from the Transforming Rehabilitation programme is welcome news for the taxpayer, given these firms’ exceptionally concerning record running justice services.”

“Given the abject failure of the Ministry of Justice to look after taxpayers’ money when managing contracts, this must surely be the death-knell for the government’s dangerous gamble with justice privatisation.”

Cross-government review

A government-wide review of all its contracts with Serco and G4S, worth a total of £5.9bn, was also published today. It found no further evidence of wrongdoing or malpractice.

However, it conceded that government skills were not yet up to scratch. The man who led the review for the Cabinet Office, the government’s Chief Procurement Officer Bill Crothers, said:

“Opening up public services to a diverse range of suppliers means that we can access the innovation that the public sector, private companies and the voluntary sectors can bring.

“We need the very best commercial skills to be able to make the most of these opportunities and we know that these skills are not yet strong enough across the government.”

Prison transfer refund

In August Serco was referred to the City of London Police after it was discovered that Serco staff had been recording prisoners as having been delivered ready for court when they had not.

At that time Serco agreed to repay past profits and forgo future profits earned on its prisoner delivery contract. It has now confirmed that it will refund £2m. It retains the contract.