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Serco has to write off £17m from its UK health sector

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The giant public services outsourcing contractor, Serco, controversial holder of the contract to deliver ferry services to Scotland’s Northern Isles, has had to write off £17 million from its UK health sector operations.

It has pulled out of two health service support contracts and taken a loss on a third.

One of the two it has pulled out of is the subject of earlier reports of ours on the Guardian’s revelation that, in its ‘delivery’ of out-of-hours GP care in Cornwall, Serco had falsified data to the NHS to show that it was meeting its targets, where the reverse was the case. Serco had to admit to this – with, of course, explanations and excuses.

Serco is terminating this contract a year early, at a hit of £7 million in costs.

It is also ending its contract to run Essex’s Braintree Hospital – saying that ‘opportunities to improve’ its performacne were ‘limited’ – meaning that the opportunities to improve its profits from the contract were limited. This looks like good contract management on the part of the relevant NHS Trust. A supplier bids for a tender and if that bid is successful, it should see reasonable profit to the successful bidder. A tender is not obliged to offer or deliver additional future profit opportunities – and it could run foul of competition law if is attempted to do so,

That Serco is retiring from the Braintree Hospital contract because it does not offer the hoped-for opportunities to ‘improve its performance’ is not an honourable reason to avoid completing the term of the contract it had accepted – and, of all things, in  the domain of ‘public service’.

What ‘opportunities’ are there to ‘improve its performance’ in the Serco contract with the Scottish Government for the Northern Isles ferry services contract?

The upcoming Clyde and Hebridean Ferry Services contract perhaps?

Does the company’s performance on the  Northern Isles contract justify the extension of its dominion in Scotland?

Do we welcome carpetbaggers who admit, as Serco has done with Braintree Hospital,  that if they can’t see the way to making more profit than their current contract offers, they will dump their responsibilities to that current contract and walk away?

Serco is currently under investigation, along with G4S, for falsification of data in respect of contracts with the UK Justice Ministry, relating to prisoner tagging. A, shall we say ‘casual’ relationship with actuality in the submission of performance data on public service contracts would appear to be a feature of Serco’s corporate culture.

The company’s shares, which had already fallen by 33% since this summer, fell a further 1.5p to 440p on the news of its retirement from two contracts and taking a loss on the third – running community care in Suffolk. Its reason to continue to deliver on this loss-making contract? No nonsense about fulfilling responsibilities but an admission that community care is an area on which Serco wants to increase its focus.

And we all know what that means.


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