Government insists public services unaffected by Interserve administration

15 March 2019

Major government contractor Interserve is set to go into administration after failing to secure investor backing on a rescue plan.

Interserve is expected to file for a “pre-pack” administration deal which will see its business and assets sold to a new company, controlled by the firm’s lenders.

Shareholders in the firm voted 59% against the rescue deal, which would have seen lenders handed 97.5% ownership in order to cancel out company debts of over £480m.

Following the sale, Interserve will proceed with a debt reduction plan, similar to the one rejected by the firm’s shareholders, including an additional injection of £110m of new money into the group, to avoid a Carillion-style collapse.

A Cabinet Office spokesman said: "This announcement will not affect jobs or the provision of public services delivered by Interserve. We are in close contact with the company and we are confident a positive way forward will be found."

Interserve confirmed that all other companies in the group, other than the parent company, will remain solvent to continue providing services for its customers.

It said: “The board believes this is the best remaining option to preserve value, protect the jobs of employees and ensure the group can carry on as normal with minimal disruption.”

As a major government contractor, Interserve currently employs up to 45,000 people in the UK, covering a wide range of services from construction to probation services. Government contracts make up 70% of Interserve’s £3.2bn turnover. 

Following the collapse of Carillion last year, the government’s continued use of outsourced firms to provide public services has met criticism.

Kevin Brandstatter, national officer for GMB said: “Ministers have learnt absolutely nothing from the Carillion fiasco and are hell-bent on outsourcing public sector contracts.

“Shambolic mismanagement is putting jobs put on the line and services in jeopardy. Our public services can't go on like this.”

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