CAPITA shares plunged over 40% yesterday, provoking speculation that the huge conglomerate privateer is going the way of Carillion and is set to crash.
Over the eight years of Tory and Tory-LibDem governments, Capita has picked up many health service contracts and operates widely in the NHS. It also runs the London congestion charge, the government’s Jobseeker’s Allowance helpline and administers the teachers’ pension schemes as well as collecting the TV licence fee on behalf of the BBC.
New chief executive Jonathan Lewis, who only arrived two months ago, warned yesterday that the company is ‘too complex’, relies too much on acquisitions and has seen weakness in new contracts.
It has suffered a calamitous fall in the share price of over one third, reducing the company’s stock market price by £800m. Neil Wilson, senior analyst at ETX, said signs of problems had been building at the firm, including the loss of ‘a lucrative and profitable contract with the Prudential’ in January.
Capita customers include O2, M&S, John Lewis, local councils, the Army and the Department of Work and Pensions. The firm’s biggest contract is its management of O2’s call centres. The 10-year deal which was signed in 2013 is worth £1.2bn.
It is also the UK’s leading provider of software to emergency service control rooms, and also runs the Ministry of Justice’s tagging of ‘offenders’. Responding to Capita’s share price dropping 40 per cent in early trading following a profit warning yesterday, Dr Richard Vautrey, BMA GP committee chair, said: ‘This news is extremely concerning, but not altogether surprising considering the continued warnings the BMA has given over Capita’s shambolic running of backroom services in GP practices throughout the country.
‘Just this month our own research found multiple failings across all areas operated by Capita in surgeries, including the handling of patient data. GPs will be rightly worried about the future of these services – which have a real impact on patient care – and the government must provide assurances of what plans are in place to protect them should Capita suddenly be unable to deliver.
‘With the collapse of Carillion earlier this month, we saw the problems that can arise when public services are outsourced to a private company, and this must not be allowed to happen again.
‘I will be meeting with the chief executive of NHS England Simon Stevens today to discuss these issues.’
Unite called on the Ministry of Defence to halt the privatisation of its firefighters and defence workers after the Capita profit warning. The two companies bidding for the work are Capita and Serco, who were previously barred from bidding for government contracts following a Serious Fraud Office investigation over fraudulent charging over tagging, losing the contract to Capita.
Frances O’Grady, general secretary of the TUC, which is part of the government Task Force handling the Carillion disaster, said: ‘We can’t afford another Carillion. The TUC is calling for an urgent risk assessment of all large outsourcing firms. It’s essential the government completes this quickly and is prepared to bring services and contracts in-house if they are at risk.’