Britain sees more competition in G4S, Serco's markets

LONDON Thu Nov 7, 2013 12:23pm GMT

A Serco flag is seen flying alongside a Union flag outside Doncaster Prison in northern England in this December 13, 2011 file photograph. REUTERS/Darren Staples/Files

A Serco flag is seen flying alongside a Union flag outside Doncaster Prison in northern England in this December 13, 2011 file photograph.

Credit: Reuters/Darren Staples/Files

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LONDON (Reuters) - The British minister who launched a review into G4S and Serco's government contracts said on Thursday he expected increased competition in the markets where the outsourcing firms operate.

"There will be new entrants coming into that market, both international players but also new entities coming into existence and suppliers who currently don't supply central government," Cabinet Office Minister Francis Maude said at a presentation to analysts.

"It's really important that there is a really vibrant, competitive marketplace and that's our primary concern."

The political spotlight is firmly on Britain's use of private outsourcing groups to run public services like prisons and hospitals after a series of high-profile contract failures.

The Serious Fraud Office this month launched a criminal investigation into two electronic monitoring contracts held by G4S and Serco.

For now, neither firm is able to win new central government work until receiving the all-clear from a Cabinet Office inquiry into the biggest contracts with the companies.

G4S and Serco hold some of Britain's largest outsourcing contracts and get 10 and 25 percent of their revenue respectively from central government.

The Cabinet Office, the department in which the government's spending on contractors is being increasingly centralised, said on Thursday it had saved the taxpayer 5.4 billion pounds in the six months to the end of September as part of Britain's austerity drive.

Most of this had come from shedding civil service jobs, the Cabinet Office said, but around a third were commercial savings partly made by renegotiating with suppliers.

Maude said he expected future savings to come through putting more government systems online and entering into new types of contracts such as joint ventures with suppliers.

The government spent 39 billion pounds, around 3 percent of Gross Domestic Product, on goods and services in 2012/13.

(Reporting By Christine Murray; editing by Tom Pfeiffer)

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