A 22% hike in payments to courtroom interpreters is set to knock a large hole in savings forecast by the government under its ill-starred initiative to contract out the service.

The Ministry of Justice revealed last week that it would foot the bill for the extra payments, in its response to a damning report from the House of Commons justice committee into the contract with Capita Translation and Interpreting (formerly Applied Language Solutions).

In February 2012 the Gazette was first to report that the central arrangements were causing problems for courts, partly because interpreters were refusing to work under the contract’s terms.

In a parliamentary statement, Helen Grant, courts minister, tacitly admitted that the contract was not acceptable to interpreters by saying the new terms ‘will have a direct effect on performance levels by attracting more interpreters to register to work as well as encourage those already registered to undertake more bookings’.

A spokeswoman confirmed that the MoJ rather than Capita would pick up the bill for the improved terms, which Grant said would have ‘a direct impact on take-home pay’.

The MoJ awarded the contract to Applied in August 2011, on a bid £50m lower than the nearest rival. Within weeks the company was acquired by Capita. The government had expected the deal to save £125m over five years.