Under-fire government contractor, Serco, has made progress in its efforts to restore commercial credibility with ministers and officials, after the Cabinet Office approved its corporate renewal plan.

The news comes less than two months after the firm agreed to repay the Ministry of Justice £68.5m for overcharging on prisoner tagging contracts.

In a statement issued 30 January, Francis Maude, minister for the Cabinet Office, said Serco had ‘engaged constructively with the Government' and developed ‘a thorough plan for corporate renewal'.

‘Following scrutiny by officials and a detailed review by the oversight group as well as our independent assurers, Grant Thornton, the Government has accepted this plan represents the right direction of travel to meet our expectations as a customer.'

However, he added the approval would not affect any consideration by the Serious Fraud Office, whose investigations into Serco and G4S's role in the prisoner tagging deals remain ongoing.

A Serco statement said the assessment marked ‘a significant milestone in a process that has been a major focus of management and has had a near-term negative impact on the firm's commercial pipeline and profitability'.

Ed Casey, Serco's acting chief executive said: ‘The significant steps we are taking demonstrate our commitment to rebuilding the confidence of our UK Government customer and ensuring that the issues that emerged last year will not occur.'

He said Serco could now compete on an equal basis with other suppliers for current bids and extensions for major contracts, including the Northern Rail Franchise and the Defence Infrastructure Organisation overhaul.