Focus on Serco

Government spend with Serco: 2014–2016

Between 2014–2016 the UK public sector published a total spend of £953.9m with Serco, the outsourcing giant. However, there was a year on year spend increase of only 0.9%, below the rate of inflation, echoing the problems Serco has had in the public sector.

In 2013, Serco was in trouble, hit by multiple scandals involving public sector contracts in electronic tagging,1 prisoner transport,2 and out-of hours healthcare support.3 Serco was investigated for fraud and banned from bidding on government contracts for six months.4 With a quarter of its global revenues coming from the UK government, this hit Serco hard. Its chief executive quit and share price plummeted by £500m.5

Since then, Serco has made structural changes and has begun to win new contracts, including an IT-enabled services deal with St Bart’s NHS Trust worth £600m over 10 years, a renewal of a shared healthcare services contract for Anglia Support Partnership, and a digital support services contract for Public Health England.6

From 2014–2016, Serco’s top ten public sector buyers were:

1. Ministry of Defence: £249,014,158

2. Home Office: £203,221,389

3. National Offender Monitoring Service: £198,090,196

4. Department of Work and Pensions: £75,517,199

5. Child Maintenance and Enforcement Commission: £47,536,849

6. Bexley London Borough Council: £29,996,683

7. Westminster City Council: £27,928,785

8. Hammersmith and Fulham London Borough Council: £26,807,197

9. Richmond Upon Thames Borough Council: £16,825,852

10. Brent London Borough Council: £15,462,887

Serco contracts fall into three main categories:

Management advisory services: 85.8%

Business and corporate management consultation services: 12.7%

Office machines and their supplies and accessories: 1.5%

In the first half of 2017, its order intake reached £2.4bn,7 although overall revenues remain flat. UK local government revenues fell by 25% and central government revenues, which accounted for 86.2% of overall spend from 2014 to 2016, fell by 9% in FY 2016.8

In September, further changes were announced to the corporate structure. The UK Central Government & UK and Europe Local & Regional Government arms of the company, which both primarily sell to the UK public sector, will be combined to become Serco UK & Europe.9

With orders now at their highest since 2012,10 we’ll be monitoring the government’s transaction data to see how this is reflected in 2017’s spend.