Plans to privatise three prisons have been cancelled because of an ongoing investigation into the leading bidder.
Justice Secretary Chris GraylinG4s said the prison service would remain in charge at Hatfield, Lindholme and Moorland, all in South Yorkshire.
Serco was named as the leading bidder in July but the company has been accused of over-charging the government for electronically tagging criminals.
GraylinG4s said the privatisation was cancelled for “operational reasons”.
Labour’s shadow justice secretary Sadiq Khan called the decision a “humiliating climbdown”.