Punishment

I notice that disgraced Olympic security contractor G4S has been roundly punished by the government and have not only lost the contract to run HMP Wolds, but in addition have not made it onto the shortlist for contracts to run a further four prisons.

Interestingly, the Ministry of Justice has decided to keep three other prisons in the public sector, having previously included them in the tendering process. Accordingly HMP Coldingley, Durham and Onley will not now be up for grabs, but Sodexo, Serco and MTC/Amey are still in the race for the four remaining prisons namely HMP Northumberland, Moorland, Hatfield and Lindholme. 

As the government's largest security contractor and representing 10% of G4S income, there is no doubt that this decision has sent shock waves through the company and is clear evidence that 'reputational' damage has been caused. Their share price was hit significantly and apparently the company is urgently seeking feedback as to why their bids failed. The Chief Executive Nick Buckles must surely be considering his position.

Losing control of HMP Wolds is extremely significant because it was Britains first private prison 20 years ago. Added to the recent woes associated with train franchising, it's at last becoming clear that there are major problems with so-called outsourcing and privatisation of public services generally. Interestingly it seems that shares of other companies in the sector such as Interserve and Serco fell with investors hearing of the news. Oh, and the CBI is very critical apparently, so this really is beginning to look like a watershed moment in terms of a government rethink.