G4S and Serco criticised by MPs for asylum contracts

24th Apr 2014 11:15

Government outsourcing deals to G4S and Serco have been harshly criticised by a powerful group of MPs. The contracts to run asylum centres were outsourced to the pair in 2012 despite neither having experience in running such schemes, as well as Clearel, a joint venture between Clearsprings and Reliance.With the process having not achieved anywhere near the intended savings, the Public Accounts Committee of MPs blamed poor performance by the companies as well as a lack of oversight from the civil service. The three operators agreed, as demanded by the terms of the agreement, to have their centres operational by May of 2012, but none was ready.Committee Chair, Margaret Hodge, had special criticism for FTSE 100-listed G4S and FTSE 250-listed Serco. "G4S and Serco failed to inspect and check the properties before taking them over. This lack of information contributed to delays, extra cost, and disruption and confusion for a very vulnerable group of service users," she said.The Home Office incurred extra costs as it was forced to extend the previous contracts, eventually levying penalties on G4S and Serco in January 2014, agreed by all parties at £3m. Hodge attacked the Home Office for its role in the debacle, adding: "Instead of brokering a smooth transition between outgoing and incoming contractors and with local authorities, the Home Office shortsightedly decided to take a hands-off approach and only allowed three months to get the new contracts up and running."G4S and Serco argued that they were not provided with accurate information about the sites before they took them on.G4S added that it had "worked hard" and made "significant investment" to meet the Home Office requirements.Serco agreed that it "should have done more" and said it had since improved inspection and maintenance procedures.Shares in G4S were down 0.29% to 239.90p and Serco was up 0.64% to 409.70p by 11:20 on Thursday. OH