Prisons privatisation cancelled amid Serco probe 22 November 2013 Last updated at 11:19 Plans to privatise three prisons have been cancelled because of an ongoing investigation into the leading bidder. The justice secretary said the prison service would remain in charge at Hatfield, Lindholme and Moorland, all in South Yorkshire, while allegations against Serco remained outstanding. The contractor is accused of over-charging the government for electronically tagging criminals. Chris Grayling said he was cancelling the plans for "operational reasons." "The investigations remain ongoing," Mr Grayling said in a statement. The impact of the delay and the uncertainty this has created mean that for operational reasons we cannot postpone the outcome of the competition process any further. I have therefore decided that the competition for these prisons will cease and that all three prisons will be managed by HM Prison Service. Need for change Serco and G4S are both subject to an investigation by the Serious Fraud Office. An audit suggested they took money for criminals who were either dead, in jail or never existed. Both firms have been excluded from new government contracts while a review of their operations is carried out. Serco said it understood that, given "the urgent need for change" at the prisons, the privatisation plans as they stood were not in the institutions' best interests. Acting group chief executive Ed Casey, said: "From meetings with the UK government, it is clear that the operational needs of the prisons will be best served by the necessary changes being implemented without further delay. Mr Casey took over when Christopher Hyman resigned last month after almost 20 years with the company. The Ministry of Justice said it still planned to press ahead with plans for "mixed market in public services."