Mr Soames – a grandson of Sir Winston Churchill – claimed the Government has previously tried to pass off controversial and “unreasonable” contracts to outsourcing firms, while also routinely expecting suppliers to shoulder the risk of major law and policy changes. In a Commons hearing on lessons learned from the collapse of Carillion, chief executive Rupert Soames told MPs that a raft of “well run and well respected” outsourcers have lost vast amounts of money in recent years working on government contracts with “unmanageable amounts of risks”. “It’s a monopoly buyer, it’s also the regulator, the referee and the giver out of business.”

He said the recent woes in the outsourcing sector, which led to the collapse of Carillion and forced a number of its rivals to raise emergency capital to bolster their finances, was “astonishing”. “It’s been a massive, massive disruption in the supplier sector, the likes of which I’ve never seen – £8 billion written off of the supplier sector and billions of pounds being raised to recapitalise.”

He added: “A lot of this is management’s fault, but … the Government as a monopoly buyer cannot stand idly by and say ‘nothing to do with me, Gov’.”

“There’s a very good PIN (prior information notice) saying how departments should behave and what’s reasonable to ask firms to do and it is widely ignored among departments,” he said. Both bosses also said the bidding process was also flawed, with the Government under pressure to choose the cheapest supplier, rather than focusing on quality and expertise. He also said that the Government's process for deciding when to outsource and its decisions on contract bids were 'shrouded in opaqueness', but should be transparent and audited by the National Audit Office. The bosses of Mitie and Serco will appear in front of Parliament’s Public Administration and Constitutional Affairs committee today as the Government gathers evidence in an attempt to avoid another high profile collapse of a business providing core services to ­institutions such as schools and hospitals. He gave the example of the asylum seeker contract handled by Serco, which he said saw the numbers of asylum seekers 'massively underestimated' and led to hefty losses on the work. Both company chiefs said the Government had tried to pass on the extra cost of the national living wage on some contracts, while also expecting suppliers to take the hit from any future policy changes from Brexit law changes. Mr Soames has already publicly called for “living wills” and a new code of conduct as part of an overhaul of the public sector contracting market following Carillion’s collapse.
The heads of Serco and Mitie are expected to appear before the UK's Public Administration and Constitutional Affairs Select Committee to testify over the collapse of Carillion.