Urgent Review Of £300m Contract Needed In Wake Of Carillion, Say MPs
A £300m state contract to pay private firms to arrest people for not settling court fines must urgently be reviewed in the wake of Carillion’s collapse, MPs on an influential committee have said.
Both Conservative and Labour members warned the new deal risks creating a “monolithic” nationwide provider, unable to properly monitor staff who will probably be physically restraining members of the public.
MPs on the Justice Committee also told The Independent the deal could put service delivery at risk, by potentially putting “all our eggs in one basket”, with a single firm enforcing warrants across the country.
Their call to review the process comes as the Ministry of Justice (MoJ) tries to reduce spending following years of deep cuts, with civil servants hoping the new deal can deliver £3m of annual savings.
But the department’s outsourcing activity has repeatedly come under fire, with millions of pounds wasted and lucrative contracts handed to firms like G4S, which landed a 2017 deal despite having been fined amid a fraud inquiry.
Monday’s collapse of Carillion has led to checks across Whitehall to ensure further public service providers are not at risk, leading members of the Justice Committee to shine a light on the MoJ’s current tendering processes.
Civil servants are expected in February to announce winners for the new contracts, which will see either several regional firms or one large national company paid some £290m to enforce warrants of debt collection and arrest for the courts.
The Independent has already reported how business insiders sounded the alarm over the tender which they say is skewed towards favouring a big national company.
Labour Justice Committee member and former police minister, David Hanson said there is now enough concern to merit the department looking at the tender again.
He said: “In the light of the collapse of a major single provider, it is right that there is more due diligence done on the tender for this prior to the issuing of any contract.
“We do not want a situation whereby one huge provider tenders for business, at a rate that offers a low profit margin and then finds themselves struggling to meet the obligations as has Carillion.”
He was joined by Conservative committee chair Bob Neill who said there is a “genuine worry about putting all our eggs in one basket with a single provider”.
The collapse of Carillion saw the Government forced to step in and prop up a raft of services being run by the company under more than 400 public contracts.
But Mr Neill also pointed to reports from charities of private bailiffs intimidating people and failing to take account of vulnerable clients.
He went on: “You have to be very sensitive in areas like this where you are dealing with arrest and restraint, and there has been concern in Parliament in the past about making sure there is proper regulation of bailiffs.
“Firstly because of the sensitivity of the area – but also rolling everything into a single monolithic contract – raises concerns about how effectively the behaviour of bailiffs can be monitored at a local level.
“Secondly there is the inevitable element of things then being too big to fail. For both those reasons, financial risks and the operational risk of a larger rather removed organisation employing people in quite sensitive matters – I think that it is something the department should take a look at again.”
In a bid to prevent too many public services being handed to single providers, the Cabinet Office said in 2015 that Whitehall departments should aim to hand a third of their contracts to small and medium-sized businesses.
But the economies of scale possible when dealing with a big national provider are tempting for civil servants under pressure to spend less.
The MoJ’s Permanent Secretary Richard Heaton, whose department has been asked to cut its administrative spending by 50 per cent over the course of the parliament, has told how it aimed to “achieve efficiency through contracts and use of contracting services”.
Freedom of Information documents seen by The Independent suggest the collection and arrest warrants deal could save the MoJ £3m a year, with industry insiders saying initial savings can rise higher if a bigger provider is chosen.
The department has also reduced staffing and let out an area of its London headquarters to the Crown Prosecution Service to increase incomings.
But its attempts to work with private firms have not always led to lower spending, with a failed bid to outsource the collection of court fines to an American conglomerate costing the taxpayer nearly £9m in 2015.
In 2014, G4S agreed to repay £109m in compensation for overcharging the MoJ for the electronic tagging of offenders, only for the department to hand the firm another £25m contract for tagging last year.
A spokesman for Her Majesty’s Courts and Tribunals Service, the MoJ’s executive agency responsible for the court fines contract, said all enforcement officers would have to wear body cameras and “comply to the same rigorous standards of conduct as HMCTS employed staff.”
He went on: “The contract process is focused on ensuring we deliver an improvement in the service by making best use of industry expertise and modern technology.
“Any decisions taken will be fully in line with Cabinet Office procurement principles.
“We take the recovery and enforcement of court fines very seriously. Courts already have the power to issue warrants through enforcement agencies, and we have robust processes in place to ensure enforcement agents comply to the same standards as HMCTS staff.”
The spokesman added that it would be inappropriate to comment on potential bidders as it is “commercially sensitive”.