Serco under fire for subbie cash rebate demand

Aaron Morby 13 years ago
Share

The Government has ordered Serco to explain why it contacted suppliers to demand a 2.5% “cash rebate” on their work this year or risk losing future contracts.

Serco made the demand to help it deliver multi-million pound savings on Government contracts, despite giving earlier assurances that suppliers payments would not be cut, according to a report in the Sunday Telegraph.

The Government’s concern has prompted Carillion and other big suppliers like Capita and G4S to reiterate their pledges not to seek savings by choking off cash to their supply chains.

Cabinet Office minister Francis Maude is leading the Government’s efficiency drive to find £800m of savings from contracts with 19 leading Government outsourcers in 2010.

In setting the challenge, he stipulated that the savings presented by firms could not come from suppliers’ payments.

But a letter sent by Serco finance director Andrew Jenner last month made it clear that the company’s call for cash was related to the Government’s demand for contract savings this year.

The later stated: “I am asking you to offer us a rebate of 2.5pc [exclusive of VAT] on Serco’s full-year spend with you for the 2010 calendar year in the form of a credit note.

“Like the Government, we are looking to determine who our real partners are that we can rely upon. Your response will no doubt indicate your commitment to our partnership but will also be something I will seriously consider in our working relationship as Serco continues to grow.”

A spokesman for Serco said that only its largest suppliers had been contacted.

“In the UK we have a supply base of 15,500 and this specific process is with our largest 193 suppliers, less than 2% of the total.

“This specific process has also evolved over the weeks to one around developing partnering arrangements with a number of our very largest suppliers,” the spokesman added.

Latest news

Bouygues/Murphy JV confirmed for £2.3bn Thames tunnel job

BMJV clinches 4.2km Lower Thames Crossing road tunnel job
1 day ago

Berkeley keeping close eye on subbies as market softens

Supply chain insolvency now bigger threat than build cost rises
14 hours ago

Roofing firm fined £881,000 after double fall

Court hears of two falls on sites involving same contractor
1 day ago

Plans in for £450m Coventry city centre regeneration

Work is expected to start next summer on City Centre South scheme
14 hours ago

Galliford Try to upgrade Red Arrows base

Contractor seals quartet of RAF base upgrades
15 hours ago

Strabag tunnel drive in Yorkshire sets new world record

Woodsmith potash mine tunnelling project to be included in Guinness World Records
1 day ago

McLaren and Arlington to develop York Central site

Developer deal signed for one of the UK’s largest city centre regeneration schemes
2 days ago

Watkin Jones plans 36-storey Glasgow tower

The Ard student rooms scheme will be Glasgow's second tallest building
2 days ago

Balfour Beatty on track for solid set of results

Country's largest contractor on course to meet financial targets
2 days ago

Brymor Group Southern heads for CVA

Hampshire builder applies for Company Voluntary Arrangement with its creditors.
2 days ago

Former Costain transport chief joins Aecom

Sue Kershaw takes up US-based vice president job with consultant
2 days ago

Industry’s best construction managers revealed

More than 80 now in the running for delayed awards: Full list
2 days ago

Materials prices plummet as housing demand slumps

Buyers report biggest fall in purchasing costs for 14 years
3 days ago

Welsh contractor Andrew Scott targets £90m turnover

Profit and revenue up at Port Talbot-based civils and building firm
3 days ago

M-AR buyer starts round of redundancies

30 jobs at risk after modular firm bought out of administration
3 days ago

First HS2 viaduct completes deck beam installation

EKFB completes beams for first of project's 50 major viaducts
3 days ago

Fatal accident at Laing O’Rourke Oxford site

Work suspended on site after tragedy
4 days ago

Homes lead the way as Bancon Group boosts turnover

Homes and contracting group looking to further growth in 2024
3 days ago

L&G Modular Homes scheme replaced by traditional build

Wolverhampton council chooses new partner and build method for £150m project
3 days ago

£33m Plymouth city centre homes scheme approved

Spring start for Bath Street scheme in Millbay regeneration area
3 days ago

Balfour renews £330m Lincolnshire highways deal

Firm will use its new operational control hub to promptly address network issues
4 days ago

Three Caledonian Modular-built schools to be demolished

DfE confirms Essex, Somerset and Northampton schools will be bulldozed and rebuilt
4 days ago

Gilbert-Ash takes £30m Tate Liverpool revamp

Work to start in the New Year on remodelling of iconic 1846 warehouse
4 days ago

HS2 Solihull mass transit enabling works out to bid

Bidding for £60m main works to start early next year
4 days ago

Modular health specialist Vanguard rescues M-AR

Deal with administrators sees Vanguard add production capacity with 100,00 sq ft offsite factory
4 days ago

Torsion forms JV to build £90m Leeds resi tower

Construction to start in January on one of Leeds' tallest towers
4 days ago

Approved change to concrete ‘recipe’ to slash carbon emissions

New approved concrete mixes will be able to blend finely ground limestone and fly ash
5 days ago

Network Rail unveils Cardiff South Central masterplan

Plans being drawn up for major housing-led mixed-use scheme
4 days ago

McLaren Living to revamp Watford police station site

Developer to submit plans for a major mixed-use development
4 days ago

National Grid £12.8bn HV civils framework hits market

Firms needed for major power line links and high voltage direct current converter stations
5 days ago

Contractor services