Capita

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Capita plc
Public limited company
Traded as LSE: CPI
Industry Business process outsourcing
Professional services
Founded 1984
Headquarters London, England
Key people
Sir Ian Powell (Chairman)
Jonathan Lewis (Chief Executive)
Products BPO & service transformation
Back office administration
Customer service
Finance & treasury
Claims & policy administration
HR, staff support & training
ICT & software
Corporate services
Advisory services
Property & infrastructure
Offshore outsourcing
Revenue £4,167.9 million (2017)[1]
£447.4 million (2017)[1]
£(110.7) million (2017)[1]
Number of employees
70,000 (2018)[2]
Website www.capita.com

Capita plc (LSECPI), commonly known as Capita, is an international business process outsourcing and professional services company headquartered in London.

It is the largest business process outsourcing and professional services company in the UK, with an overall market share of 29% in 2016, and has clients in central government, local government and the private sector.[3] It also has a property and infrastructure consultancy division which is the fourth largest multidisciplinary consultancy in the UK.[4] Roughly half of its turnover comes from the private sector and half from the public sector.[3] Whilst UK-focused, Capita also has operations across Europe, Africa and Asia.

Capita is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index.

History

Capita was formed 1984 as a division of the non-profit CIPFA (Chartered Institute of Public Finance and Accountancy). In 1987 it became an independent company with 33 staff as a result of a management buy-out, led by Rod Aldridge, and was first listed on the London Stock Exchange in 1991.[5]

In March 2006, Executive Chairman Rod Aldridge resigned in the aftermath of claims that contracts awarded to the Group were influenced by his loan of £1 million to the Labour Party. Aldridge resigned saying that he denied the claims, but to avoid any lingering doubts about it, he was leaving the company. Aldridge had overseen the company's growth from a small company in 1987 to a FTSE 100 member in 2006.[6] He was replaced by his longtime associate Paul Pindar.[7]

In February 2007, a Capita office in Victoria, London was subject to a letter bomb attack. One person was injured.[8]

On 2 October 2009, one of Capita's businesses (Capita Financial Group) announced plans to move some of its operations from London to Leeds.[9][10][11]

On 1 July 2011, Capita acquired Ventura, a customer contact specialist for a cash consideration of £65 million.[12] On 28 February 2013, Capita bought the Fire Service College from the Department for Communities and Local Government for £10 million.[13]

In 2014 Pindar stepped down as chief executive.[14] He was replaced by Andy Parker.[15]

The company acquired Avocis, a German call centre business, in 2015,[16] Orange Bus, a specialist digital interaction agency, in 2016[17] and NYS Corporate events and travel agency in 2017.[18]

In October 2017, the company announced that former Amec Foster Wheeler CEO Jonathan Lewis would take over as CEO from 1 December 2017 following departure of Andy Parker.[19] After completing an initial assessment, on 31 January 2018 Lewis announced a profits warning, dividend suspension, a £700m rights issue, cost-cutting and a disposals programme, as net debts were predicted to hit £1.15bn and a pensions deficit reached £381m. The announcement knocked 47% off Capita's shares, reducing its market value by over £1.1bn.[20][21] The share price slide continued the following day, losing a further 13%.[22] On 3 April 2018, Capita shares fell 6% to a 20-year low after British Airways decided to retain in-house operation of two UK call centres rather than award contracts to run them to Capita.[23] On 23 April 2018, Capita launched a cash call to raise £701m and reported a £513m loss for the previous financial year.[24] On 1 August 2018, Capita announced its profits in the six months to 30 June had dropped to £80.5m (from £195m in the same period in 2017), while revenues were down 4% to £1.98bn; the company's shares fell almost 9% after markets opened, to 148p a share.[25]

Operations

In 2006 Capita Financial Administrators (CFA) was fined £300,000 by the Financial Services Authority for having poor anti-fraud controls .[26]

Capita entered the healthcare recruitment market during May 2011[27] through acquisition of Team24, a healthcare recruitment specialist - extending the services they offer within the recruitment industry.[28]

Capita also intended to enter into the legal services market and entered into a funding arrangement with the Law Firm Optima Legal Services Limited which saw them, in the period between May 2006 to the end of 2009 invest a total of £36,700,000 by way of investment loans into Optima.[29] As part of the funding arrangement Capita Group had the option of acquiring the shares of Optima Legal Services for the nominal sum of £1 upon the full implementation of the Legal Services Act 2007 which would make ownership of law firms by the likes of Capita possible. It is thought that such Alternative Business Structures ("ABS") could be lawful around October 2011.[30] However, on 9 August 2010 it was reported that the Solicitors Regulatory Authority ("SRA") had found that the arrangement breached its rules in that it effectively amounted to an ABS.[31] As a consequence, Optima Legal Services Lead Litigation and Property Partners, Philip Robinson and Anthony Ruane respectively were both severely reprimanded by the SRA for what was found to be professional misconduct and only narrowly avoided referral to the Solicitors Disciplinary Tribunal[32] and Adrian Lamb, former CEO of Optima Legal Services Limited, left the business in June 2010.[33]

Constructionline

In 1998, Capita won the contract to run Constructionline, the newly created Public-Private Partnership owned by the Department for Business, Innovation and Skills (BIS).[34] In January 2015, Capita acquired Constructionline outright from BIS for £35m.[35] Three years later, on 31 January 2018, Capita announced it wanted to sell Constructionline as part of a transformation programme including disposal of non-core assets and cost cutting.[36][37] In June 2018, it was reported that Constructionline had been sold to private equity investor Warburg Pincus for £160m.[38]

NHS Services

In June 2014 it was reported that at least five of eight Liverpool NHS Trusts which had contracted their payroll and recruitment to Capita in 2012 were withdrawing because of concerns about the quality of the service provided.[39] Several NHS trusts contracted with the company for human resources services. West London Mental Health NHS Trust cancelled their contract in September 2014 after the company proved "unable to meet acceptable ‘time to hire’ targets", particularly for nurses. At the same time Alder Hey Children's NHS Foundation Trust and Liverpool Heart and Chest Hospital NHS Foundation Trust terminated their contracts.[40]

In November Mersey Care Trust revealed that "information governance issues" had been uncovered when the services were taken back in house. Details of staff at other Merseyside trusts were sent to Liverpool Community Health Trust’s HR department.[41]

The company was awarded a 4-year contract to become sole provider of administrative services including payment administration, management of medical records and eligibility lists of practitioners for GPs, opticians and dentists across the UK by NHS England in June 2015.[42] In July 2016 it was reported that there was "a large backlog of unprocessed correspondence relating to patients". It was earlier reported that the company was unable to deal "effectively" with the movement of paper records between practices.[43]

In 2015, an undercover Daily Telegraph investigation showed that in some cases locum agencies, Medicare and Team24 owned by Capita were charging some hospitals higher fees than others and giving false company details. The agencies were charging up to 49% of the fee. Health secretary Jeremy Hunt criticised agencies who sought "big profits" at the expense of the NHS and taxpayers and promised to "reduce the margins rip-off agencies are able to generate."[44]

The company established Primary Care Support England in September 2015, replacing former regional services provided by each local health authority. The new service was described as shambolic by the Local Optical Committee Support Unit and the Optical Confederation. [45] A deal was negotiated to enable optician practices to claim interest, administrative costs and bank charges on late payments of General Ophthalmic Services fees by Capita.[46] In August 2016 a survey of GPs found 85% were missing records of recently registered patients, 65% had experienced shortages of clinical supplies or delays in deliveries, and 32% had suffered from missed or delayed payments. Delays in the payment of GP trainees’ salaries were also reported.[47] The situation was repeated in October 2017 with The Guardian reporting that "hundreds" of trainee GPs had not been paid. Capita was unable to say how many were affected in what the Cameron fund - a GP hardship charity - blamed on "another botched privatisation."[48] Inadequacies by Capita may have put patients at risk. The National Audit Office maintains almost 90 women were told incorrectly they were no longer in the cervical screening programme. Patients could have been at risk due to trouble with the 'performers list' a list of NHS dentists, GP's and opticians. "The failure to update performers lists may have compromised patient safety in cases where practitioners should have been removed," the report authors maintained. Roughly 1,000 dentists, doctors and opticians could not work in 2016 due to delays processing new applications.[49] Further failures included a backlog of 500,000 patient registration letters, failure to deliver medical supplies, and patients’ medical records being lost or delayed.[50]

Education services

  • SIMS.net – Schools Information Management Software a Management information system used in 70% of primary and secondary schools across England and Wales to record many aspects of pupil data.[51] In March 2009, Capita SIMS was said to be responsible for sending a truancy warning notice to the family of a Cheshire school pupil who had died two months before.[52] SIMS also links with Capita One (through a process called B2B), which is a database used within Local Education Authorities for general analysis and overview of pupil and school data.[53]
  • Individual Learning Account – A £290million scheme intended to give financial support to adult learners that was opened in 2000 and scrapped in 2001 following widespread and massive fraud.[54]
  • Connexions Card – A £109million scheme that involved issuing 16- to 19-year-olds with smart cards that recorded their lesson attendance and rewarded them with discounts on consumer goods. It ran from 2002 until it was terminated in 2006 owing to lack of uptake.[55]
  • Education Maintenance Allowance for the Learning and Skills Council[56]
  • Capita Education Resourcing - Capita Education Resourcing is an education recruitment specialist with a large networks of schools, colleges and nurseries across England and Wales. They have 19 offices covering teaching jobs operating throughout the UK.[57]

Irish Postcodes

In 2014, Capita were awarded the contract to introduce postcodes to the Republic of Ireland. The Irish communications minister has welcomed the implementation saying that the Irish code is the first in the world to be unique to each individual address. The scheme was launched in July 2015.[58]

The emergency services have expressed concern that the new system may lead to responders having difficulty getting to incidents.[59] Further, the Irish Data Protection Authority has raised concerns over the design of the code as information about individuals will be made more accessible.[60] Liam Duggan, CEO of Capita Ireland stated at a Government enquiry in 2014 that they had thoroughly tested the new system for unsuitable words and even used a game of Scrabble for this purpose.[61]

The project is generally running to programme and budget: roll out, which was originally planned to start in March 2015, will now take place in "mid-2015" and the cost, which was originally budgeted at €25 million has increased to €27 million.[62]

Financial performance

The Company's results are as follows:[1]

Year People Turnover (£ million) Pre-tax profit (£ million)
1984 2    
1987 33    
1991 320 25  
1992 687 33  
1996 3,500 112 12.3
1998 5,000 238 27.1
1999 7,000 327 36.3
2000 8,500 453 51.2
2001 13,000 691 72.1
2002 17,000 898 98.2
2003 19,000 1,081 121.2
2004 23,000 1,282 148.6
2005 24,000 1,436 177.2
2006 27,000 1,738 193.2
2007 29,000 2,073 228.7
2008 32,600 2,441 226.6
2009 34,600 2,687 258.1
2010 35,400 2,744 309.8
2011 46,500 2,930 302.9
2012 52,500 3,352 281.4
2013 65,000 3,851 215.0
2014 68,000 4,372 292.4
2015 75,000 4,674 112.1
2016 73,000 4,898 74.8
2017 80,000 4,168 (513.1)

Criticism

Capita Group has not been received well by the public and in the media. It has gained the nickname "Crapita", particularly from the coverage in the satirical and current affairs magazine Private Eye, which routinely documents the company's many failures and setbacks in the public sector.[63][64]

Pindar himself has attracted criticism for complaining about being called a 'fat cat', due to his a £770,000 per annum salary and ownership of an Aston Martin DB9. "It really takes the biscuit—especially when you consider his workers are fighting for a rise equivalent to just four pints of milk a week", said a workers' representative. The average Capita employee salary at the time was £28,000 per year.[64]

It was revealed in January 2013 that Capita was embroiled in a scandal over misinforming people that they had to leave the U.K. as they had no valid visa. One such person was in fact the holder of a U.K. passport.[65]

In 2014, a leak to The Guardian revealed that the Department for Work and Pensions (DWP) had to send civil servants in to help the company process personal independence payments for the seriously ill and the disabled. "Waiting times for assessment," the newspaper noted, "have been so long that in some cases people with terminal conditions have died before receiving a penny."[66]

The 2015 sale of a government research operation charged with overlooking food safety to Capita has been criticized by Tim Lang, an advisor to the U.K. government and the WHO on food safety issues.[67] Arguing that a for-profit operation will be under pressure to ignore low-paying projects vital to public safety and the environment, he indicates that there is no profit in public research concerning food and biodiversity or food and pesticide residues, and predicts "commercial concerns will skew Fera's priorities"[67]

Former Liberal Democrat leader Tim Farron questioned how Atos and Capita could have been paid over £500m from tax payers money for assessing fitness to work as 61% who appealed won their appeals. Farron stated, "This adds to the suspicion that these companies are just driven by a profit motive, and the incentive is to get the assessments done, but not necessarily to get the assessments right. They are the ugly face of business."[68]

References

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  2. ^ "Who we are". capita.co.uk. Retrieved 22 March 2018.
  3. ^ a b "The Capita Group Plc Annual Report and Accounts 2016" (PDF). The Capita Group Plc. Retrieved 22 November 2017.
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  8. ^ Woman hurt in letter bomb blast BBC News, February 2007
  9. ^ Jobs boost as Capita looks North Yorkshire Post, 2 October 2009
  10. ^ Capita Financial's London staff placed in consultation process Archived 11 July 2011 at the Wayback Machine. FT Advisor, 30 September 2009
  11. ^ FTSE 100 financial group in Yorkshire move The Business Desk, 2 October 2009
  12. ^ Contracts/Deals: Capita buys Ventura Archived 3 July 2011 at the Wayback Machine. Recruiter, 1 July 2011
  13. ^ UK Fire Service College sale completed to Capita BBC News, 28 February 2013
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  51. ^ Supplier feels the hand of Becta Guardian, 4 October 2005
  52. ^ Dead girl given truancy warning BBC News website, 25 March 2009
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  60. ^ "The Data Protection Commissioner is very worried about the new postcode system. Here's why…". The Journal. May 2014. Retrieved 26 November 2014.
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  63. ^ Simon Bowers Capita deals with £3.3bn of government spending as more work is outsourced, The Guardian, 19 November 2010. Retrieved 2011-11-17.
  64. ^ a b How dare you call me a fat cat, I only earn £14,500 a WEEK, Daily Mail Online, 15 December 2010. Retrieved 2011-11-17.
  65. ^ BBC News - Migrants wrongly told to leave UK by firm hired by UKBA, BBC News, 3 January 2013. Retrieved 2013-01-03.
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  67. ^ a b Tom Bawden (25 March 2015). "Capita and the great British food safety sell-off". The Independent. Retrieved 28 October 2015.
  68. ^ Private firms earn £500m from government's fit-to-work scheme The Guardian

External links

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