Plans to privatise three prisons have been scrapped as lead bidder Serco faces a criminal investigation into allegations of overcharging on electronic monitoring contracts.
Chris Grayling, the lord chancellor and secretary of state for justice, told Parliament the prisons in South Yorkshire would instead be run by HM Prison Service.
In July, when Grayling announced that an audit had uncovered overcharging on the tagging contracts with G4S and Serco, he said the award of a contract to run HMPs Lindholme, Moorland and Hatfield, where Serco was the lead bidder, would be delayed pending the outcome of investigations.
Today, he said: “The investigations remain ongoing. The impact of the delay and the uncertainty this had created mean that for operational reasons we cannot postpone the outcome of the competition process any further. I have therefore decided that the competition for these prisons will cease and that all three prisons will be managed by HM Prison Service.”
The Serious Fraud Office is currently investigating both Serco and G4S over the tagging contracts, while the police were called in over “potentially fraudulent behaviour” on Serco’s contract to provide prisoner transport services.
A government review of all contracts held by Serco and G4S is continuing.
Grayling said the government “remains fully committed to a mixed market for public services, drawing on the best of public, private and voluntary providers to improve the quality and secure value for money”.
Ed Casey, Serco acting group CEO, said: "From meetings with the UK government it is clear that the operational needs of the prisons will be best served by the necessary changes being implemented without further delay. We are also continuing to make good progress across the various audits, reviews and our proposed corporate renewal programme within the timing previously communicated by government."