Serco wins £415m contract to build a new London prison
SERCO has signed a contract to run a new London prison, despite concerns that public spending cuts could mean fewer deals for support services firms.
Serco, which runs the DLR and detention centres in Australia, said its consortium signed a contract worth £415m with the Ministry of Justice to build and manage a prison at Belmarsh West in London.
“Construction works will begin immediately, with completion expected in the first half of 2010. Equity and debt finance has been secured from third parties,” the company said
The prison will be built with Serco’s construction partner, Swedish firm Skanska, for whom the deal is worth £100m. The consortium also involved voluntary sector organisations Turning Point and Catch 22.
The company said last year that its consortium had been named preferred bidder to run the prison along with another prison in Liverpool. It expects to sign that contract later this year. The Belmarsh contract will run for 26 years.
Serco’s signing of the contract could allay worries among some investors that the Treasury’s planned belt-tightening for prison funding will have a direct impact on big outsourcers which depend on bulky government contracts.
Last week Justice secretary Kenneth Clarke said deep cuts in public spending will require a new approach to dealing with crime and punishment with more emphasis on community sentences to curb re-offending rates. Britain’s prison population reached a record high in May of 85,201.