Serco faces public contracts freeze

The group, which runs a vast range of services from prisons to rail services, admitted revenues would be hit and new deals delayed following the latest controversy, which centres on its £285m prisoner escorting service.

Justice Secretary Chris Grayling said it was clear there was a culture in parts of Serco that was “totally unacceptable”. Shares were down by as much as 17 per cent, reducing the company’s value by £500m. Mr Grayling warned that unless there was a “rapid process of major change” the group would not win public contracts in the future.

Serco, which was announcing half-year results, said upcoming bids included tenders to run Ministry of Defence infrastructure and support organisations as well as probation outsourcing and community health services.

The prisoner escorting scandal centred on allegations that Serco employees allegedly recorded inmates as having been delivered ready for court when in fact they were not.