Written statement to Parliament

Markets for government services: G4S

Francis Maude, Minister for the Cabinet Office, made a statement on G4S.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

The Rt Hon Lord Maude of Horsham

The government is 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 honourable 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 2 contracts for facilities management in the courts. This was a significant announcement and a positive step for G4S.

Throughout, the government has engaged closely with G4S to understand their plans for corporate renewal. These discussions have been constructive; and following scrutiny by officials, review by the Oversight Group and reports from our independent advisors (Grant Thornton), the government has 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 welcomes. However, corporate renewal is an ongoing process and the government places 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 has 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 to 2013 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.

Published 9 April 2014