Even before the dust had had a chance to settle from the Carillion collapse, catastrophe struck another massive company grown fat on lavish government contracts.
Following the admission on 31 January by the firm’s CEO Jonathan Lewis that its finances were shot to hell, requiring drastic measures to stave off collapse, Capita’s share value was halved, at a stroke reducing its stock market value by £1.1bn.
Capita’s pension scheme is now in deficit to the tune of £381m and the company’s debts are projected to rise to £1.15bn by year end. Thousands of jobs and pensions will be under threat and major disruption is probable to scores of public-service contracts.
The range of government contract pies into which Capita has its fingers is breathtaking, giving a snapshot of the way in which a handful of monopoly outsourcers like Virgin, Serco, Carillion and Capita have invaded every nook and cranny of public service.
Capita runs helplines for the state pension, jobseeker’s allowance and winter fuel allowance; does the IT for UK air traffic control; supplies blood transfusion systems to hospitals and runs checks on the data security standards of suppliers to the NHS. It is also involved in recruitment to the army, asbo tagging and disability workplace assessments. And that is only a fraction of its operations.
Labour’s Frank Field offered some pithy commentary on this fresh disaster, bemoaning: “Another day, another outsourcing firm with massive debt, a huge pension deficit, a KPMG audit and the big four popping up at every turn in the company’s chequered history.” (The big four to which he alludes are the four massive financial services monopolies: KPMG, PwC, Deloitte and EY. Their job is to audit/cook their fellow monopolists’ books).
However, it is worth remembering that back in 2006 when Capita joined the hallowed ranks of the FTSE 100, the then-CEO Rod Aldridge resigned when it came out that he had lent the Labour party £1m. He left amid accusations that the loan had been instrumental in securing lucrative contracts for his company from Blair’s Labour government. (See Capita: more than £1bn wiped off value of UK government contractor by Rob Davies, Angela Monaghan, Graham Wearden, The Guardian, 31 January 2018 and UK officials met Capita bosses to discuss its financial problems by Rob Davies, The Guardian, 1 February 2018)