Serco

Serco Group plc is a British labour hire company with headquarters based in Hook, Hampshire, England.[3] Serco operates in six sectors of public service provision: Health, Transport, Justice, Immigration, Defence, and Citizens Services. Serco primarily derives income as a contractor from the provision of government services.[3]

Serco Group plc
Public limited company
Traded asLSE: SRP
ISINGB0007973794 
IndustryGovernment Services
Founded1929 (1929) (as RCA)
1987 (1987) (as Serco)
HeadquartersHook, Hampshire, England, UK
Key people
Sir Roy Gardner (chairman)
Rupert Soames (CEO)
Revenue£3,248.4 million (2019)[1]
£102.5 million (2019)[1]
£50.6 million (2019)[1]
Number of employees
50,000 (2019)[2]
Websitewww.serco.com

It is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index. The majority of Serco's turnover is generated from UK operations, but the company also operates in Continental Europe, the Middle East, the Asia Pacific region and North America.

History

Serco was founded in 1929 as RCA Services Limited, a United Kingdom division of the Radio Corporation of America and initially provided services to the cinema industry.[4] Following the takeover of RCA by General Electric in late 1985, RCA Services Limited was bought out by its local management. It changed its name to Serco in 1987 and has been a London Stock Exchange listed company since 1988.[4]

On 29 December 2008, Serco acquired SI International.[5]

In November 2014 its share price, which stood at 674p before the taxpayer scandal broke in 2013 [6] collapsed to 218.7p, after four profit warnings. The new chief executive Rupert Soames sold off "scores of divisions". He said the company was suffering from ministers’ improved ability at driving a bargain, and claimed that “the Government has got much more adept at writing contracts and transferring risk to the private sector”.[7] On 17 November 2014, it was announced that Alastair Lyons would resign from his position as chairman of Serco.[8] Lyons referred to “operational mis-steps” for which he took “ultimate responsibility”, but said he had not been forced out.[9] Serco made a loss of £991 million in 2014, reducing to a loss of £69.4 million in 2015.[10]

Sir Roy Gardner was appointed as Non-Executive Chairman on 28 May 2015: he is also a senior adviser to Credit Suisse Group AG.[11] In September 2017, Serco announced that it would be combining its UK and Europe operations.[12]

UK operations

Border security

Serco operates the National Border Targeting Centre for UK Visas and Immigration and provides the carrier gateway—the interface between carriers and the agency.[13]

Work and pensions

Serco is contracted to the Department for Work and Pensions (DWP) to provide telephone advice on behalf of DWP to recipients of Support for Mortgage Interest (SMI), which ends in April 2018.[14][15]

Transport
Serco speed camera

In London, Serco operates the London Cycle Hire Scheme for Transport for London and operated the Docklands Light Railway from 1997 until 2014.[16][17][18]

Serco has operated a number of train operating companies. It has a 50% shareholding in Serco-Abellio that has a concession to operate the Merseyrail franchise in Liverpool until 2028, and previously operated the Northern Rail franchise from December 2004 until March 2016.[19][20] Serco has a contract in its own right to operate the Caledonian Sleeper between London and Scotland until 2030.[21]

In 1997 Serco purchased the Railtest business as part of the privatisation of British Rail.[22] Included in the sale was a management contract for the Old Dalby Test Track.[23][24] From 1997 until 2004, Serco operated the National Rail Enquiry Service under contract to the Association of Train Operating Companies.[25] It maintains Network Rail's fleet of infrastructure and maintenance trains at the Railway Technical Centre.[26]

In Scotland, Serco has operated the NorthLink Ferries ferry service since July 2012.[27] In September 2018 it commenced operating a bicycle-sharing system under contract to Transport for Edinburgh.[28]

Serco's Home Affairs division operates speed camera systems throughout the UK and, until November 2013,[29] designed, wrote and tested the software that controls the matrix message signs, signals, emergency roadside telephones (SOS) and traffic monitoring on England's motorway network including, until 2011,[30] the National Traffic Control Centre.[31]

Science

Serco managed the UK's National Physical Laboratory until 2015[32] and also provides IT Services, Industrial Support and Cryogenic Operations Support and Maintenance at CERN.[33] Serco also was part of a consortium running the National Nuclear Laboratory under contract, until October 2013.[34]

Prisons and justice
A Serco van

In Britain Serco supplies electronic tagging devices for offenders and asylum seekers.[35] Serco, as well as its rival G4S, was accused of overcharging the Ministry of Justice on its contract to tag offenders. The firm issued a profit warning for 2014 as a result of the costs of becoming embroiled in an electronic tagging scandal. Serco repaid £68.5 million to the government for its overcharging on the contract.[36] In May 2014 a Survation poll for campaign group We Own It, found that 63% of respondents thought Serco should be banned from bidding for any new public contracts after the firm was investigated for overcharging on government contracts.[37]

It runs four prisons, a Young Offenders Institution and a Secure Training Centre.[38] It has also operated two Immigration Removal Centres since 2007.[39][40] Serco is also responsible for the contracted-out court escort services in the south-east area (formerly a role undertaken by HM Prison Service).[41]

In September 2013, Serco was accused of extensive sexual abuse coverups of immigrants at Yarl's Wood Immigration Removal Centre prison in Bedfordshire, England [42] In August 2014, Serco was criticised for using immigrant detainees as cheap labour, with some being paid as little as £1 per hour.[43] The decision to give the firm a new £70 million eight-year contract to run Yarl's Wood has been criticised. Natasha Walter, of Women for Refugee Women, said "Serco is clearly unfit to manage a centre where vulnerable women are held and it is unacceptable the government continues to entrust Serco with the safety of women who are survivors of sexual violence."[44]

A fine of £19.2m was imposed on Serco following the delayed legal action that began in 2013, for practicing fraudulent accounting of electronic tagging service for the Ministry of Justice.[45] Serco was also ordered to pay the full amount of the Serious Fraud Office's investigative costs (£3.7m). In his judgment, Mr Justice Davis said: “SGL (Serco Geografix Ltd) engaged in quite deliberate fraud against the Ministry of Justice in relation to the provision of services vital to the criminal justice system."[46]

Housing

In Glasgow, in August 2018, it was disclosed that Serco had been planning to evict asylum seekers before their appeal procedure was completed. Lawyers questioned whether this was legal under Scottish law.[47] Two asylum seekers started hunger striking.[48] Serco confirmed that it was serving a notice of eviction on many tenants causing alarm and lawyers challenged one asylum seeker's eviction at the Scottish Court of Session. Councillor Jennifer Layden, equalities and human rights convener for Glasgow, said, "The lock change announcement by the Home Office and Serco has caused widespread fear and alarm among asylum seekers in Glasgow. There is confusion and panic among the community – some of whom have limited English and who may not be affected by Serco’s announcement. Both Serco and the Home Office have a responsibility to put this vulnerable group at ease".[49][50]

In January 2019, it was reported that Serco had lost the contract to provide housing to asylum seekers in Glasgow.[51]

A Freedom of Information request by the Scottish Refugee Council showed that Serco had been charged nearly £3m by the Home Office for repeatedly breaching its contract to house asylum seekers in Glasgow and Northern Ireland.[52]

Defence

Serco held defence contracts in 2004, including the UK Government's contract for the maintenance of the Ballistic Missile Early Warning System at RAF Fylingdales;[53] contracts are also held for the operation and maintenance of RAF Brize Norton,[54] RAF Halton,[55] RAF Northolt[55] and RNAS Culdrose [56] in the UK and RAF Ascension Island in the mid-Atlantic.[55] Serco also provides support services to garrisons in Australia.[57] Serco also manages many aspects of operations at the Defence Academy of the United Kingdom in Shrivenham.[58] Serco is one of three partners in the consortium which manages the Atomic Weapons Establishment.[59] Serco also has a 15-year contract worth £400 million to provide facilities management services to the Defence Science and Technology Laboratory (Dstl).[60]

Serco Marine Services is responsible for fleet support at the three main UK naval bases, HMNB Portsmouth, HMNB Devonport and HMNB Clyde.[61]

Aviation

Serco provides air traffic control services at international airports in the United Arab Emirates[62] and at some smaller airports in the United States and Canada.[63][64] Starting in 2004 Serco had a £5m a year contract from the US government to manage airports in Iraq for 18 months.[65] Serco also operate Scatsta Airport in Shetland.[66] In June 2010 Serco signed a £4 million contract to operate all air traffic control services for Coventry Airport.[67]

Health

Serco provide facilities management services at the Norfolk and Norwich University Hospital,[68] Leicester Royal Infirmary,[69] Wishaw General Hospital[70] and at Plymouth's Derriford Hospital.[71]

The company had the contract for out-of-hours GP services in Cornwall from which it withdrew in December 2013 after the company left the county short of doctors. The company also said it would stop running Braintree hospital in Essex as it pulled out of managing GP services and large hospitals.[72]

In health services, Serco's failures include the poor handling of pathology labs and fatal errors in patient records. At St Thomas' Hospital, the increase in the number of clinical incidents arising from Serco non-clinical management has resulted in patients receiving incorrect and infected blood, as well as patients suffering kidney damage due to Serco providing incorrect data used for medical calculations.[73] A Serco employee later revealed that the company had falsified 252 reports to the National Health Service regarding Serco health services in Cornwall.[74]

It emerged in November 2013, Serco, which won a contract for Suffolk Community Healthcare in 2012, had 72 vacancies after earlier cutting 137 posts. Problems identified by Ipswich and East Suffolk Clinical Commissioning Group include “staff capacity, skill mix, workload, succession planning and morale, training, communication, mobile working, care co-ordination centre processes, incidents and near miss incidents”.[75]

In April 2014 Serco revealed that it would lose almost £18 million on three of its NHS contracts. The firm has made provisions for losses in its Braintree and Cornwall contracts, which were cancelled early. It has also made provisions for losses in its contract for services in Suffolk. The company claims it will take longer to deliver the operational efficiencies it hoped for, despite saying in May 2013 that it expected to make a profit on the three-year, £140 million contract for community services.[76] It said that staff had not recorded activity accurately on the Electronic health record and that activity had increased significantly during the course of the contract.[77]

In August 2014 it was reported that the company had decided to withdraw from the clinical health services market in the UK after a review of the cost of delivering “improved service levels” and meeting the performance requirements of several existing contracts.[78]

On 24 October 2017, it was reported that Serco was preparing to buy healthcare contracts from facilities management business Carillion. The deal included 15 contracts, with annual revenues of approximately £90m, for which Serco would pay £47.7m, with Carillion losing £1bn from the value of its order book.[79]

In May 2020, Serco accidentally shared the personal email addresses of nearly 300 trainee COVID-19 contact tracers.[80]

Education

Serco held a ten-year contract with Bradford City Council between 2001 and 2011 to manage and operate the local education authority,[81] providing education support services to the city's schools. This period was marked with "real problems" according to senior council officials and was taken back in house by the local authority after this period.[82] Serco similarly manages and operates Walsall[83] and Stoke-on-Trent local education authorities.[84] Serco is one of Ofsted's three Regional Inspection Service Providers, responsible for school inspections in the English Midlands.[85]

Leisure

Serco Leisure Operating Ltd works with clients throughout the UK, running gyms, swimming pools, cycle hire schemes and National Sports Centres.[86]

Information technology

Serco administered the publicly funded UK Business Link website from 2005 until its closure in 2012.[87] It won a five-year tender in 2007 to run the IT Infrastructure for the London Borough of Southwark.[88]

Waste and recycling services

Serco also operates recycling and waste collection services for local councils.[89]

Outside the UK

Drivers' licensing

Serco, through a purpose-made division Serco DES, holds a ten-year, $114 million contract with the Ministry of Transportation of Ontario to operate the Ontario's DriveTest driver examination centres. These tests include vision, road, and knowledge tests for all persons seeking to become a licensed automobile driver in the province.[63]

Parking meter servicing

Serco has a contract with the City of Chicago, Illinois, to enforce parking meter regulations.[90]

Health in the United States

In July 2013 Serco was awarded a $1.25 billion contract to manage the implementation of the Patient Protection and Affordable Care Act, which makes Serco one of the most highly paid government contractors in the US.[91]

Patent classification

Serco does the classification for all incoming US patents.[92]

Prisons and justice

Serco runs partly privatised Hünfeld Prison in Hesse, Germany.[93]

As of July 2020, Serco operates Acacia Prison in Western Australia, Australia's largest prison facility, as well as the Adelaide Remand Centre in South Australia.[94][95]

It ran the Borallon Correctional Centre in Queensland for 22 years between 1990 and 2012, and Wandoo Reintegration Facility in Western Australia from 2012 to 2018.[96]

It has also had the national contract for various immigration detention centres since 2009, including Christmas Island and the Villawood detention centre in Sydney.[97][98] The Union of Christmas Island Workers highlighted the systemic failure by Serco to manage the Christmas Island Immigration Reception and Processing Centre. The centre detained a large number of refugees at its peak around 2013, including 1,000 children. Under Serco, there was an increase of deaths in custody and self-harm in the years leading up to 2013, as well as a deterioration of facilities, leading to the decline of the physical and the mental health of detainees and of staff. Ombudsman Allan Asher said "In the first week of June when I visited Christmas Island, more than 30 incidents of self-harm by detainees held there were reported". Serco, in a staged memo leaked to The Australian, blamed the detainees for "creating a culture of self-harm", in order to use it as a "bargaining tool". The former manager of the detention centre stated the centre was grossly understaffed.[99]

In Auckland, New Zealand, Serco operated the Mount Eden remand prison[100] and in March 2012 was awarded a contract to build and operate a 960-bed prison at Wiri.[101] Serco was heavily criticized for the existence of 'fight clubs' within Mount Eden prison that were not investigated until after they became public knowledge on 16 July 2015 when footage emerged online and was reported by TVNZ.[102] On 24 July 2015, Serco's contract to run the Mount Eden prison was revoked and operation was given back to the New Zealand Department of Corrections.[103] Serco was ordered to pay $8 million to the New Zealand government as a result of problems at Mount Eden Prison while it was under Serco's management.[104] The New Zealand government did not accept that this was a failure of governmental contracting and oversight. It brought in correctional officers from afar to provide adequate staffing at Mount Eden, and by December 2016 had spent NZ$2 million housing up to 40 of them in Auckland hotels.[105]

Transport

Australia

From 1996 until 2005, Serco operated TransAdelaide bus services in Adelaide.[106][107][108] In November 1995 Serco commenced a contract to provide transport information services for Transperth and in May 1996, a contract to maintain all of its bus stations.[109][110]

From 1997 until 2015, Serco owned Great Southern Rail that operated The Ghan, Indian Pacific and The Overland passenger trains.[111][112] In March 2015, the business was sold to Allegro Funds.[113][114]

In Sydney, Serco has operated transport information services for Transport for NSW since 1 July 2010.[115][116]

Denmark

Serco formerly operated the Copenhagen Metro in Copenhagen, Denmark, with Ansaldo STS, until it sold its share with effect on 1 January 2008.[117]

Hong Kong

Hong Kong's Cross-Harbour Tunnel operations has been contracted out to Serco since 2010.[118]

Middle East

Serco operates the Dubai Metro,[119] the Dubai Tram[120] and the Palm Jumeirah Monorail in Dubai.[121]

Sweden

Serco secured an eight-year contract in 2013 with its Swedish joint venture partner Strömma Tourism & Maritime to operate four Djurgården ferries on behalf of Stockholm County Council and public ferry company Waxholms Ångfartygs.[122]

Offshore holdings in Mauritius

The 2017 Paradise Papers revealed that Appleby carried out a risk assessment of Serco and noted it had a "history of problems, failures, fatal errors and overcharging" and had faced allegations of fraud and cover-ups.[123]

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