The National Audit Office estimates another £90 million could have been raised through the privatisation of QinetiQ.

A report by the UK Public Accounts Committee (PAC) has heavily criticised the sell-off of defence firm QinetiQ, accusing the deal of “profiteering at the expense of the taxpayer.”

According to the PAC report, the Ministry of Defence (MoD) allowed the deal to go through at “the worst possible time”. The National Audit Office has also estimated that another £90 million more could have been raised for taxpayers through the deal.

QinetiQ was privatised in two stages, generating £800m of proceeds for the taxpayer. The first stage included the sale of a minority stake in the business to the private equity firm the Carlyle Group (Carlyle) in 2003, followed by a flotation on the London Stock Exchange in 2006. The MoD continues to hold a 19% shareholding in the company.

The MoD has responded by claiming the PAC report is “pure speculation” and reiterated that the deal had raised £800m for taxpayers.

Minister for Defence Equipment and Support, Baroness Taylor, commented: “I welcome the Committee’s recognition that the privatisation of QinetiQ succeeded in generating £800m of proceeds for the taxpayer, and created a successful British-based technology business providing a sustainable future for 13,000 staff.

“I do not accept the PAC’s conclusion that a further £90m could have been achieved from the sale. This is pure speculation, and fails to take into account the realities of what could be achieved in negotiation.”

In a statement, QinetiQ said it strongly refutes the claims made by the PAC report.

“QinetiQ’s Compliance Regime is the most stringent in the industry and meticulously audited by both QinetiQ and the MoD, whilst ensuring that the UK’s defence interests are maintained,” it said.

“The taxpayer has received approximately £1 billion worth of value from QinetiQ, an organisation which was previously considered a substantial financial liability,” the company added.

To read the PAC report in full, click here

By Natasha Piscitelli