Coalition is warned off ‘quasi-monopoly’ firms

Bad choices: This infographic (from the Daily Mail's 'This Is Money' column) shows the effect on Serco of its involvement in overcharging for tagging prisoners.

Bad choices: This infographic (from the Daily Mail’s ‘This Is Money’ column) shows the effect on Serco of its involvement in overcharging for tagging criminals.

The government should be less reliant on a handful of “quasi-monopoly” private sector contractors like Serco and G4S in future, if it has any sense – according to the Commons’ Public Accounts Committee.

Isn’t it a shame that we already know the Coalition Government doesn’t have any sense – the committee’s report said as much when it criticised government departments for continuing to hand work over to the named companies while they were being investigated for overcharging.

We can bank on the Coalition awarding further contracts to these big firms, too.

The Public Accounts Committee said in its report that there needed to be more competition in the £90bn market for private outsourcing of public services.

Some might say that public services should not be performed by private contractors at all, but it seems there is a logic to it. Why create a government department for cleaning services when you can hire an existing firm more economically?

This seems to be the way the PAC is thinking, as MPs said contracts should be split up to give small and medium-sized firms a better chance of getting business – and to prevent a situation where a handful of firms were “too important to fail” despite questions about their performance (a clear reference to the financial crisis, in which the government had to use public funds to shore up “too big to fail” banks).

Government departments trust contractors too much and rely too heavily on their information, the PAC stated. This clearly provides opportunities for corruption – in a country where PricewaterhouseCoopers can provide advisors to both the government’s Mark Hoban and the opposition’s Rachel Reeves, one is inexorably drawn to the conclusion that the firm’s advice will be to its own advantage and that of its clients – not the nation’s.

But the committee said the government should be taking a much harder line on firms whose “ethical standards have been found wanting” and criticised departments including the Ministry of Justice (MoJ), the Ministry of Defence, the Department of Health, the Department for Business, Innovation and Skills and HM Revenue & Customs for continuing to award them additional work while a criminal inquiry by the Serious Fraud Office into overcharging was continuing.


It said the electronic tagging contracts were not isolated cases, with two other G4S contracts with the MoJ having been referred to the SFO while another Serco contract with the MoJ was being investigated by the City of London Police.

In response, the Cabinet Office said changes made to the government’s procurement and commercial management since the last general election in 2010 had brought savings of £5.4 billion last year, indicating clearly that ministers don’t understand the problem.

There is no point in saving money if the job is not being done properly!

A spokesman told the BBC: “Our action over the past year shows how seriously we take breaches of those high standards.”

Not very seriously at all, then.

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1 thought on “Coalition is warned off ‘quasi-monopoly’ firms

  1. Jeffery Davies

    Over five million saved were we now they fiddle the figures
    if that amount was left over it would go straight back into the
    pot so that these companies could get a bite at it and of course
    our minister’s could get more backhanders given em for their
    ordacity funny isnt it when crooks in power just push it around
    so some falls into their laps jeff3

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