Serco in Scotland
On Friday 4th May at teatime, whilst the Scottish media’s eyes were firmly fixed on the local election counts being totted across the country, the Scottish Government slipped out the announcement that the preferred bidder for the contract to run lifeline ferries to and from the Northern Isles (Orkney and Shetland) was Serco Ltd. (see Bella on Serco here)
The contract, due to start from July 2012 and which in line with European procurement rules, runs to six years, is estimated to be worth a total of £254 million. The preferred bidder “ is the bidder who is selected by the vendor, usually to some predetermined criteria, as being the party to whom it intends to sell the business, or award a contract, subject to the completion of negotiations and legal arrangements”. The announcement was subject to a ten day standstill during which the contract cannot be let, until the contract was due to take effect from today, Tuesday 15 May.
Serco were granted preferred bidder status above the other companies bidding, namely: the current operator, NorthLink Ferries Ltd, Pentland Ferries Ltd (biding for the Scrabster – Stromnes route) Sea-Cargo, P&O Ferries, Serco Limited and Shetland Line (1984) Ltd.
A life less ordinary?
So who exactly are Serco Ltd? According to the Guardian, they are “the biggest company you’ve never heard of” – a company of which 98% of its turnover and revenue are derived from contracts outsourced by public bodies. As their own website states: “The scale and scope of the services we operate are extensive”, and quite breathtaking.
Serco are involved in operating speed cameras across the UK; the electronic tagging of offenders; running the Manchester Metrolink; together with Abellio they operate the UK’s largest passenger rail franchise, Northern Rail, and Merseyrail; they operate the Docklands Light railway in London; provide care services in Cornwall; run the local education service in a contract with Bradford Council; manage 192,000 square miles of airspace in five countries; provide computer and software support service to all 66 UK law enforcement agencies; and have recently been awarded the controversial contract to review the cases of over 3.2million people in the UK who receive Disability payments. Serco employ over 100,000 people and have a have a forward order book that stands at a record £16.7 billion. 
Serco Ltd. aren’t just cheerleaders for privatization, they are privatization.
They are involved in 20 different nuclear power sites in the UK, and are part of Atomic Weapons Establishment (AWE) group (with Lochheed Martin and Jacobs) who provide and maintain nuclear deterrent in UK. Serco is now directly responsible for maintaining the UK’s nuclear warheads and dismantling redundant weapons – a £1.7billion contract: “Our work at AWE covers the entire life cycle of nuclear warheads; from initial concept, assessment and design, through to component manufacture and assembly, in-service support, and finally decommissioning and disposal.”
In Scotland, Serco has “a strong and growing presence in Scotland, working on behalf of the Scottish Government, local authorities and the UK Government. [Their] contracts include operating Scatsta Airport on Shetland, the ACCESS joint venture with Glasgow City Council providing IT and property services, the management of a fleet of support vessels for the Royal Navy at Faslane, CCTV and roadside emergency phones for Transport Scotland, the operation of HMP Kilmarnock and offender tagging for the Scottish Prison Service, and facilities management for NHS Scotland” at the controversial PFI Forth Valley Royal Hospital in Stirlingshire and Wishaw General Hospital in North Lanarkshire. In a scene worthy of the film A Life Less Ordinary, where Ewan McGregor finds his cleaning role usurped by robots, Serco have developed robot operatives, which “will be used to move the hospital’s waste, linen, patient food and clinical supplies.”
From 2001 until 2003 Serco jointly ran the Dungavel Immigration Centre, where they aware criticized for treating refugees like prisoners and for incarcerating children. There is nowhere that Serco won’t go – if euthanasia ever does become legal in Britain, you can be sure Serco would provide the service to knock off your granny.
Full steam ahead?
So why are they interested in the ferry service to Orkney and Shetland?
According to current opertator Northlink, the service is increasingly busy. Passenger numbers to and from Aberdeen have all but doubled from 79,854 in 2001 to 157,495 in 2009.  Northlink themselves are a subsidiary of David Macbrayne, whose history providing ferries services in Scotland “go back to 1851 with the formation of the steamer company David Hutcheson & Co which had three partners – David Hutcheson, Alexander Hutcheson and David MacBrayne.
Since 1851, there have been several organisational changes, one of the most significant of which took place in 1969 when Caledonian Steam Packet Company Ltd., operating Clyde services, and David MacBrayne, operating Western Isles services, became subsidiaries of the state-owned Scottish Transport Group.
In 1973, the Caledonian Steam Packet Company Ltd. was renamed Caledonian MacBrayne Ltd. and took over responsibility for both the Clyde and Western Isles ferry operations and in 1990, the ownership of Caledonian MacBrayne Ltd. was transferred to the Secretary of State for Scotland.
In 2000 Caledonian MacBrayne Ltd. and the Royal Bank of Scotland formed a joint venture, NorthLink Orkney & Shetland Ferries Ltd., which was successful in the tender for the contract to operate the Northern Isles ferry services. Three splendid new ships were built for the routes and NorthLink Orkney & Shetland Ferries Ltd. took over the contract in 2002.
In 2006, major corporate restructuring related to the provision of both the Northern Isles ferry services and the Clyde and Hebrides ferry services took place. David MacBrayne Ltd., which had lain dormant for a number of years, was reactivated and became parent company to the companies which, following tender processes, took over operation of the Northern Isles services, NorthLink Ferries Ltd., and the Clyde & Hebrides ferry services, CalMac Ferries Ltd.”
The most recently audited accounts (201/11) shows Northlink turning a 1.4 million profit, resulting in a £1m payback to the company’s sole shareholder, the Scottish Government.
So the awarding of the Northern Isles ferry contract gives rise to a number of questions:
1. Why is the SNP government willing to give the license to private company Serco, who would retain all profits, at the expense of the Scottish company, Northlink – a subsidiary of David MacBayne Ltd, a company whose sole shareholder is the Scottish Government? Whilst the exisiting 71 exmployees will be transfered under TUPE arrangements, there will no doubt be job losses at David MacBrayne’s central support functions.
2. Why is the SNP happy to hand over the contract to a company the Norwegian government has banned from making investments in from the Oljefondet (Oil Fund), as they are ‘unethical’ due to their role in the Atomic Weapons Establishment?
3. How is the SNP’s stance on a nuclear free Scotland consistent with the Scottish Government awarding contracts to the company that maintains the nuclear deterrent at Faslane?
Postscript: The deal which would see Serco take over the running of the lifeline ferry services that link Shetland and Orkney to the mainland has been put on hold.  The Scottish government said it had to postpone plans to sign a six-year contract with the firm after one of the other bidders mounted a legal challenge. Streamline said it had a stronger case for running the route. The General Secretary of the shipping Union, Bob Crow said:
“This whole botched privatisation plan has descended into chaos with one private bidder mounting a legal challenge to another. This is no way to run essential, lifeline ferry operations that are a fundamental public service.