Leaders: Privatisation | MP pay rise

Concerns over the Royal Mail sell-off have intensified after revelations from G4S. Picture: Getty

Concerns over the Royal Mail sell-off have intensified after revelations from G4S. Picture: Getty

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AMID public concern over plans to privatise the Royal Mail, revelations that private security companies Serco and G4S have been overcharging the taxpayer tens of millions of pounds for tagging criminals could scarcely have come at a worse time.

They play directly to widespread fears of abuse of government contracts and overcharging on a most troubling scale. Not only has evidence come to light of charges submitted for tagging people who were abroad or in jail – and in some cases where people had died – but G4S has also declined to take part in a forensic audit by accountants PwC.

It is scarcely credible that G4S, so roundly humiliated in a Commons inquiry last year on its failings over security arrangements for the Olympic Games, should once again be at the centre of major controversy over the conduct of its business. Such a public roasting of its chief executive should surely have driven home to management the imperative to be squeaky clean and to ensure that such damage to its business reputation was never repeated. But barely a year on, G4S is once again facing such serious and searching questions as to prompt the Justice Secretary Chris Grayling to ask the Serious Fraud Office to consider a criminal investigation.

The overcharging revelations are not only a betrayal of the taxpayers’ interest, they also undermine public confidence in the vaunted efficiencies attributed to privatisation of key government services.

G4S argues that it is conducting its own inquiry and is not aware of any indications of dishonesty or misconduct. But public trust and confidence demands a wholly independent and thorough inquiry, one with which G4S has a basic obligation to co-operate, as Serco has agreed to do.

The affair also leaves searching questions at the door of the Justice Ministry: who was supervising these contracts and why was abuse allowed to develop on such a scale? A wider review of all contracts held by the two companies across government is the least that is now required. Recent figures showed government spending on contracts with G4S alone had risen by more than £65 million last year to £394m. Mr Grayling has also launched a disciplinary investigation into the way the contracts had been managed inside the Ministry of Justice after uncovering evidence that civil servants knew as far back as 2008 that there were problems with how both companies were billing for tagging. Stewardship has clearly been inadequate in relation to these contracts.

This appalling affair cannot but have wider repercussions across government. And they will trigger detailed scrutiny over government plans for the privatisation of Royal Mail and will play badly for David Cameron and probably be pounced upon by the unions. Handing over key services to the private sector must never be allowed to become a charter for rip-off.

11% pay rise for MPs is unacceptable

An enforced 11 per cent pay rise for MPs whether they like it or not seems to be the stance of the Independent Parliamentary Standards Authority (IPSA). Either its chairman Sir Ian Kennedy has been standing too long in the sun or he has quite lost touch with reality. He is correct to stress that IPSA is an independent body and its proposals are above political influence.

But independence does not mean freedom from context. The government is wrestling with a crippling level of public debt. It is barely halfway through an austerity programme which has involved, amongst other things, a firm and continuing limit of one per cent on public sector pay rises. Tens of thousands of central and local government jobs have been lost. The idea that MPs can stand apart from all this and should be obliged to accept an 11 per cent pay rise, albeit delayed to 2015, is utterly unacceptable to a substantial majority of voters and indeed would expose MPs to widespread public ridicule and contempt.

This proposal should be firmly parked until the public finances have so improved as to allow current pay caps across the public sector to be relaxed. Even then, however, MPs need to be mindful of fuelling a spate of similar claims across government. Sir Ian might usefully be encouraged to cool down with a firm requirement that any pay rise proposals should as far as possible be self-financing. Generous meal allowances, pension perks and elaborate expenses have been subject to notable curtailment in the private sector in recent years. That is another reality from which IPSA should not at all be independent. Memories of the MPs expenses scandal seem to have faded. Among MPs anyway.

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