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Markets for Government Services

Volume 579: debated on Wednesday 9 April 2014

The Government are committed to opening up public contracts, with a wide, diverse range of providers competing to deliver high-quality services.

Following the material concerns that emerged last year, relating to overcharging on Ministry of Justice electronic monitoring contracts, G4S has engaged constructively with the Government.

The Government’s approach has been rigorous, and on 12 March my right hon. Friend the Secretary of State for Justice was able to announce that G4S has agreed to repay £108.9 million, excluding VAT, to reimburse the taxpayer for overcharging found in an audit of Ministry of Justice contracts, and to cover direct costs to Government arising from these issues. This also included £4.5 million to cover the cost of overpayments made on two contracts for facilities management in the courts. This was a significant announcement and a positive step for G4S.

Throughout, the Government have engaged closely with G4S to understand its plans for corporate renewal. These discussions have been constructive; and following scrutiny by officials, review by the oversight group and reports from our independent advisers (Grant Thornton), the Government have now accepted that the corporate renewal plan represents the right direction of travel to meet our expectations as a customer.

This does not affect any consideration by the Serious Fraud Office, which acts independently of Government, in relation to the material concerns previously identified. However, we are reassured that G4S is committed to act swiftly should any new information emerge from ongoing investigations.

The changes G4S has already made and its commitment to go further over coming months are positive steps that the Government welcome. However, corporate renewal is an ongoing process and the Government place a strong emphasis on their full and timely implementation of the agreed corporate renewal plan. The Crown representative together with Grant Thornton will continue to monitor progress as their plan is implemented, reporting to Government on a regular basis. I hope this will enable our confidence to grow.

The public rightly expects Government suppliers to meet the highest standards, and for taxpayers’ money to be spent properly and transparently. Since 2010 the Government have been working to reform contract management and improve commercial expertise in Whitehall. These reforms have had a substantial impact, saving £3.8 billion in 2012-13 alone. But much more is required, which is why we are redoubling efforts over coming months, including working to build commercial skills across the civil service and create a world-class Crown commercial service that supports all Departments.