It was a shocking announcement. Chris Grayling, looking more rattled than at any other time since he became Justice Secretary, told the House of Commons yesterday that Serco and G4S had overcharged his department by tens of millions of pounds for electronic monitoring services.

Flabbergasted MPs heard that the government had been invoiced for the monitoring of people who had been sent back to prison. For people who had left the country. For people who had never been monitored at all. Even for people who had died.

As a result, Serco will undergo a forensic audit to uncover the extent of the wrongdoing. G4S, perhaps calling the Justice Secretary’s bluff, refused to cooperate and now find themselves the subject of an investigation from the Serious Fraud Office.

The scandal has already shone a light on the extent to which our public services are provided by these two companies. Combined, Serco and G4S receive around £1.5 billion of taxpayers’ money each year through contracts with ten different government departments – with almost £500 million worth of contracts from the Ministry of Justice alone.

There needs to be much more public debate about the privatisation of justice as well as access to detailed information about how these companies operate, the profits they make and whether privatisation is providing the taxpayer with value for money. Here are five points that I think ought to be central to any such debate.

1. Handing the justice system to private security firms is Plan A – and there is no Plan B. While the huge number and value of government contracts G4S and Serco already hold will have surprised many, it is highly likely even more public money will be paid to these companies in the coming years. The Ministry of Justice (MoJ) are currently planning to massively expand the number of people subject to electronic monitoring, privatise approximately 80 per cent of the probation service and outsource much of the court service to private companies. Without the involvement of large private security companies like Serco and G4S, these reforms will be impossible.
2. The Ministry of Justice is not very good at outsourcing services. This is the second time this year that huge failings have been uncovered in contracts between private companies and the MoJ. Just a few months ago, the department’s handling of the court translation services contract was the subject of damning criticism, with a Justice Select Committee report concluding that the ‘Ministry of Justice's handling of the outsourcing of court interpreting services has been nothing short of shambolic.  It did not have an adequate understanding of the needs of courts, it failed to heed warnings from the professionals concerned, and it did not put sufficient safeguards in place to prevent interruptions in the provision of quality interpreting services to courts.’
3. There is no real market in criminal justice. The tagging scandal makes it plain that when the MoJ talks about competition in criminal justice services it only really means competition between Serco, G4S and, at a stretch, one or two other large private companies. If they are to continue to pursue their ambitious privatisation plans the MoJ should at the very least take steps to ensure that this discredited oligopoly is broken down.
4. Privatisation leads to less transparency and accountability. The removal and restriction of liberty are some of the most powerful tools at the state’s disposal – and should therefore be a crucial area of public inquiry and democratic oversight. But private companies are exempt from freedom of information legislation even when providing public services. Further, contracts between government departments and corporations can often not even be scrutinised by parliament, let alone the public, on the grounds of commercial confidentiality.
5. Privatisation can lead to growth in the wrong areas. The MoJ is planning to greatly expand electronic monitoring, with some predicting that the number of people tagged will rise from 30,000 to 100,000 under current proposals. However, it should be remembered that despite many studies and evaluations there is yet no evidence that tagging reduces reoffending or improves public protection. Electronic monitoring might be highly profitable, but is most definitely not highly effective. As in many other sectors, marketisation provides producers with an incentive to try and push up demand, clearly conflicting with the public good or taxpayer value.