Another outsourcing giant goes bust

A MAJOR government contractor has gone into administration 14 months after the collapse of rival outsourcer Carillion.

Interserve, which provides services from building bridges to running probation schemes and cleaning hospitals, buckled under the weight of a £631million debt pile.

Its demise will raise fears over the future of 45,000 UK workers and followed a disastrous expansion into new lines of business including energy-from-waste plants. Interserve’s administration was completed within hours yesterday, and it has now been sold to its lenders.

It said the sale would not affect current government contracts – valued at £2.1billion. The firm’s fate was sealed after shareholders rejected a rescue deal.

News of Interserve’s administration sparked criticism from unions and prompted calls for more reform in the sector. Rachel Reeves MP, chairman of Parliament’s business committee, tweeted: ‘The Government model of outsourcing services to cut costs has failed.’