A company took billions from privatisation contracts and paid millions to its bosses before collapsing

“In March 2019, outsourcing giant Interserve collapsed and went into administration. This came little more than a year after fellow outsourcing services provider Carillion crashed in 2018.

Interserve had an annual turnover of £3.2bn, around 70% of which came from government contracts. In the run-up to its collapse, the company received an eye-watering £660m in public sector contracts. This was despite warnings that the company’s financial situation was precarious. 

Now the Financial Times has revealed the company was also funnelling millions into the pockets of its bosses in the year running up to its collapse. 

Mega bonuses

According to the Financial Times, two senior executives at Interserve received massive bonuses in 2018/19. Totalling £1.99m, they added up to more than half of their annual salary. 

Chief executive of the company, Debbie White, pocketed £1.26m, over £404,420 of which was in the form of a bonus. And Interserve’s finance director Mark Whiteling made £735,849. His bonus was £251,991. 

Interserve described these payouts as “determined against rigorous criteria set by the remuneration committee”. 

Disaster outsourcing

Interserve has been a major player in the UK’s outsourcing market. In 2017, it won the contract to provide cleaning services for Network Rail. The company raked in £35m from a contract to provide cleaning, catering and facilities services to a London hospital. And it also provided maintenance work for water companies. 

Interserve also extended into the privatised probation system. It ran five community rehabilitation companies, responsible for supervising some 40,000 people on probation. 

The privatisation of probation has been hugely controversial. In just a month, over a third of private probation contracts were put in jeopardy as two companies – Working Links, and then Interserve – went into crisis. 

Worse still, a damning report from the HM chief inspector of Probation, Glenys Stacey, released in March exposed the scale of the crisis in probation. It found that probation staff were forced to take on unsafe workloads; private companies were unsatisfactory in half of all cases, and some companies were providing support to 40% of the offenders they were responsible for over the phone.”

Read more in thecanary.co.uk

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