The contracts to run the 21 new Community Rehabilitation Companies (CRCs), which will see over 70 per cent of the work of probation services handed over to private and voluntary sector providers, have a hidden clause which guarantees bidders their expected profits over the 10 year lifespan of the contracts. The clause means that taxpayers would be expected to pay £300m to £400m to the winning bidders if cancelled.
Margaret Hodge, Chair of the Public Accounts Committee, received confirmation from the Ministry of Justice about the ‘unprecedented’ clause, and has asked the National Audit Office to challenge any politically contentious contracts that are signed in the dying months before the general election.
The Public Accounts Committee also found that the outsourcing companies G4S and Serco, currently subjects of serious fraud inquiries, had signed new contracts and extended existing ones between July 2013 and January 2014. Secretary of State for Justice Chris Grayling now stands accused of misleading parliament, as he told the House of Commons last year that the government would not award or negotiate with G4S or Serco until they had been given a clean bill of health by auditors.
See the Guardian article ‘Poison pill’ privatisation contracts could cost £300m-£400m to cancel‘, The Guardian, 11 September , 2014
