Interserve: UK outsourcing giant loses rescue vote


A cleaner at Liverpool Street station

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Interserve has a cleaning contract for Network Rail stations

Outsourcing giant Interserve has failed to persuade shareholders to approve a rescue plan for the company.

Interserve is expected to go into administration later today, although its contracts are likely to continue as normal and no job cuts are expected.

But its failure is likely to prompt further debate over the use of private sector contracts for public services.

Interserve has 45,000 UK staff, and 65,000 globally, cleaning schools, and running catering and building projects.

Shareholders voted 59.38% against the plan, which would have seen their stake reduced to just 5%, with lenders being handed the lion’s share of the business.

Interserve said: “The board of directors of the company is convening an urgent board meeting to consider its options.” However, the company added that “in the absence of any viable alternative” it is likely to formally apply to go into administration.

Accountants EY have been lined up as administrators. Interserve’s shares will be suspended on the London stock market immediately, the company said.

Interserve accumulated debt after construction project delays and a failed energy-from-waste project in Derby and Glasgow.

Concern for jobs

The GMB union said Interserve’s problems, which come after the failure of Carillion last year, showed it was “time to turn the tide on the disastrous experiment” of outsourcing public services.

Kevin Brandstatter, the union’s national officer, said: “Ministers have learnt absolutely nothing from the Carillion fiasco and are hell-bent on outsourcing public sector contracts.

“Shambolic mismanagement is putting jobs put on the line and services in jeopardy. Our public services can’t go on like this.”

Although Interserve’s contracts are expected to continue, there is still concern for jobs in the supply chain.

The National Federation of Builders (NFB) said there would be thousands of workers wondering whether they still have a job, and called for changes in the way the government hands out contracts to big national companies.

Richard Beresford, chief executive of the NFB, said: “This decision on Interserve’s future shows why we need to reform the procurement process from its foundations to ensure that more regional contractors can compete and win work, the damaging trend to work within wafer thin profit margins does not continue, and spread risk across fiscally responsible businesses who reinvest profits and are not bound by shareholders.”

What is Interserve?

The outsourcing firm is one of the UK’s largest public services providers. The firm started in dredging and construction, and from there has diversified into a wide range of services, such as healthcare and catering, for clients in government and industry.

It sells services, including probation, cleaning and healthcare, and is involved in construction projects.

Interserve is the largest provider of probation services in England and Wales, supervising about 40,000 “medium-low risk offenders” for the Ministry of Justice.

Its infrastructure projects include improving the M5’s Junction 6 near Worcester, refurbishing the Rotherham Interchange bus station in Yorkshire, and upgrading sewers and water pipes for Northumbrian Water.

Hospital contracts include a a £35m contract at King George Hospital in east London for cleaning, security, meals, waste management and maintenance.



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