Union anger over £660m contracts for troubled firm

Troubled UK Government contractor Interserve was handed £660 million of additional work despite a series of profit warnings, a union claimed today.

Interserve's Scottish projects include a major revamp of the National Galleries in Edinburgh. Picture: Jon Savage
Interserve's Scottish projects include a major revamp of the National Galleries in Edinburgh. Picture: Jon Savage

The company, which employs 45,000 people, was sold last week after filing for administration after building up debts of nearly £650m.

Its Scottish projects include the £22m redevelopment of the Scottish National Gallery in Edinburgh, upgrading the A737 in North Ayrshire and overnight security of the pandas at Edinburgh Zoo.

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The GMB union said figures from data firm Tussell showed Interserve was awarded public contracts worth £432m in 2017 and £233m last year.

It said the biggest contract last year was awarded by the Foreign and Commonwealth Office (FCO) in July, of £66m for facilities management services.

The union said Interserve published profit warnings in each of the past three years, yet its public contracts now total £2.1 billion.

National secretary Rehana Azam said: “Awarding hundreds of millions in taxpayer- funded contracts to troubled outsourcing companies is the height of irresponsibility.

“Interserve was clearly in trouble and yet ministers saw fit to hand it hundreds of millions of pounds of public money.

“What on earth were they thinking?

“This Government’s obsession with outsourcing has now put another 45,000 jobs at risk, along with thousands more in the supply chain.

“Ministers have still not taken on board the lessons from the collapse of Carillion.

“The outsourcing sector is descending into chaos as companies underbid each other for contracts in a race to the bottom, which will see a serious decline in public services.”

However, the UK Government said Interserve’s largest contracts were awarded before the major profit warnings in 2017 and the FCO contract was awarded after it secured refinancing in 2018.

It also said the firm had not “collapsed” as its operations had not been interrupted.

A Cabinet Office spokesman said: “Our priority is to deliver quality public services while ensuring value for money for taxpayers. The awarding of contracts follows a robust process, including financial checks, and we are reforming our approach to outsourcing, so services are set up to succeed.

“The refinancing process that Interserve executed led to the smooth continuation of public services and safeguarded thousands of jobs.”