Serco

Statement

My Lords, with the leave of the House, I shall repeat in the form of a Statement an Answer to an Urgent Question asked in the other place earlier today. The Statement is as follows:

“We very much welcome the fact that by court approval today the Serious Fraud Office has reached a conclusion in its investigations of Serco. These historical contracts ended in 2014 and were awarded as long ago as 2004. The agreement allows the parties to draw a line under the matter. Following the successful conclusion of this process, we see no reason why Serco should not continue to be a strategic supplier to the Government and compete for government contracts.

We conducted an investigation of the matters raised in the agreement announced yesterday and we are content that the matters were resolved in 2013-14, when Serco reached a financial settlement of £68.5 million with the Ministry of Justice and undertook an extensive self-cleaning exercise. While we deplore the wrongdoing identified in the deferred prosecution agreement announced yesterday, we have confirmed that since 2013 Serco has thoroughly overhauled its management, governance and culture, and that these changes continue to be effective today.

Serco is and will continue to be a strategic supplier to Her Majesty’s Government, working across the defence, justice, immigration, transport and health sectors”.

My Lords, this issue arises out of the Government’s infatuation with the concept of privatising public services—in this area, largely in connection with prison and the probation service. In these areas, privatisation has been a signal failure. Why has it taken six years from the revelation of Serco’s fraudulent charging for the offender tagging contract between 2010 and 2013 to secure the payment of £19.2 million? Deloitte has also been fined £6.5 million for its role in the scandal. Why do the Government apparently intend to continue to allow these companies to tender for government contracts of this or other kinds?

My Lords, the noble Lord refers to an infatuation of this Government. I remind him that the contracts with which we are concerned go back to 2004, at a time when, at least as I recollect, there was a Government of a different complexion. It was that Government who let these contracts to Serco in 2004 and for many years thereafter.

The resolution of the matter between the Ministry of Justice and Serco took place in 2013-14, when there was a financial settlement of £68.5 million. As to why it took six years for the criminal matter to be concluded by DPA, that is of course a matter for the SFO, to which we lent all our assistance during the course of this very complex inquiry.

My Lords, could the Minister confirm that this is not the first time that allegations of this nature have been made against Serco and G4S? Is he aware that it is alleged that they were charging the Government for electronically tagging and monitoring people who were either dead, in jail or had left the country? Could he confirm whether any further contracts are being offered to Serco and whether it is a fit and proper organisation to undertake these tasks? Why have no criminal charges so far been brought against this organisation?

My Lords, I will not comment upon suggested other allegations. There has been a thorough investigation by the Serious Fraud Office with regard to events between 2004 and 2014, and that has resulted in the deferred prosecution agreement, as indicated earlier. We are content that Serco, having carried out a thorough and extensive exercise in cleaning out those involved in this matter, is in a position to accept further contracts from the Government going forward, subject to the same rules and regulations that apply to other third parties. Therefore, it will continue to do so. I make no comment on G4S. It may be the subject of continuing inquiries, and it is not appropriate for me to say any more.

My Lords, I declare my interest as the law officer who introduced deferred prosecution agreements into our criminal justice system when I was in government, and I have also been instructed by the Serious Fraud Office on two of the deferred prosecution agreements—with Standard Bank and Rolls-Royce—since they came into force. Does today’s news and the Statement not illustrate the good sense of the deferred prosecution agreement system? It allows companies to come to terms with their wrongdoing, to compensate the victims of their wrongdoing and to pay a suitable penalty for that wrongdoing, while at the same time not causing collateral damage to the contractors, employees and pensioners of those companies who are not affected by, for example, a company being shut down. The events which caused the criminal conduct are to be much regretted, but surely the new board and management have in this case done precisely the right thing in coming to terms with the wrongdoing and making account of it to the public, and, having cleaned its debts, can now get on.

My Lords, I entirely concur with the observations of my noble and learned friend. The underlying purpose of deferred prosecution agreements is as he has set out, and the consequences are as he has referred to. It would have been wholly inappropriate to see the jobs of many employees put in jeopardy because of the nefarious activities of some in management, who have now been removed.

My Lords, with the Carillion scandal, the Capita scandal and the Serco scandal, do the Government not see a pattern? Will they not learn a lesson and realise that these services—particularly in the NHS—are better in public ownership?

My Lords, there is no pattern indicated by the parties to which the noble Lord referred.

My Lords, does my noble and learned friend not accept that many of us feel that penal matters should not be in any way administered by private companies? It is about as appropriate to have a private prison as it would be to have G4S guarding Buckingham Palace. I have held that feeling all my political life. Will my noble and learned friend accept that I am not unique in that?

My Lords, I am prepared to accept that the noble Lord is not unique. Be that as it may, we currently have no proposals to contract out the guarding of Buckingham Palace or any other royal institution.

My Lords, when the Government are approaching these matters, do they evaluate or take into account the invaluable contribution to the quality of the service when people are working for it directly and taking pride in that, rather than feeling that they are working for the profits of a private company?

With respect to the noble Lord, people can quite rightly take pride in the fact that they are working for a service even where it is privatised.

My Lords, what lessons have the Ministry of Justice and other government departments learned from this instance? In particular, are the Government satisfied with the adequacy of the contract management arrangements that they have in place, and have they enhanced them as a result of the various incidents that have been discussed in your Lordships’ House today?

I am obliged to the noble Lord for his question. In December 2018, the Chief Executive of the Civil Service wrote to central government departments asking each to include contract audit activity as part of the implementation of their outsourcing review. As part of this programme of audits, the Ministry of Justice, the Home Office and the Ministry of Defence have invoked contractual audit rights on five contracts with Serco, and those audits are under way.

My Lords, is the Minister aware that private prisons are 47% more violent than publicly run prisons? How does he explain this? Is this to do with the difficulties facing those prisons or is it something to do with the culture within private prisons?