Outsourcing giant Serco apologises and retracts demand for cash rebates from its suppliers.

Serco has "apologised unreservedly" for requesting a cash rebate from suppliers to help it meet Government demands for savings on public sector projects this year.

In a statement issued today Serco said it had "retracted" the demand. The statement said: "We decided not to seek or accept any contributions from our suppliers, who had recently received letters asking for rebates. As a company that values our relationships with all our supply chain partners, large and small, we deeply regret this action and apologise unreservedly to them for the concern that this has caused. We are now communicating this to our supply chain partners and retracting the letters."

The company, which runs prisons, nuclear facilities, schools and ports for the Government, cited the Cabinet Office's drive to save £800m this year from central government contracts as the reason for its demand.