Embarrassment grows further for Serco

Steve Dinneen
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EMBARRASSMENT grew at government contractor Serco last night after it admitted two of its suppliers gave in to its bully-boy tactics.

The firm received condemnation after a letter demanding a rebate from its suppliers was leaked to the press. It was shamed into issuing a grovelling apology and says the “relatively small” amount of money has been returned.

It insisted that it had not attempted to mislead the government – its biggest client – after saying it would not make savings by cutting costs with suppliers. Serco also faced fresh criticism over the weekend when it emerged some smaller suppliers have been liable for an extra £500 charge in order get contracts.

Its stock has dropped eight per cent since the letter was leaked.

In August Serco posted a 21 per cent increase in half-year pre-tax profit and said government spending cuts would boost sales in areas where outsourcers would be hired to achieve savings.

Serco, which runs Boris Johnson’s new cycle hire scheme, reported in August pre-tax profits for the first half to 30 June was £101.4m, against £83.4m last year.