Capita

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 (LSE: CPI), 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 heath 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]

YearPeopleTurnover (£ million)Pre-tax profit (£ million)
19842  
198733  
199132025 
199268733 
19963,50011212.3
19985,00023827.1
19997,00032736.3
20008,50045351.2
200113,00069172.1
200217,00089898.2
200319,0001,081121.2
200423,0001,282148.6
200524,0001,436177.2
200627,0001,738193.2
200729,0002,073228.7
200832,6002,441226.6
200934,6002,687258.1
201035,4002,744309.8
201146,5002,930302.9
201252,5003,352281.4
201365,0003,851215.0
201468,0004,372292.4
201575,0004,674112.1
201673,0004,89874.8
201780,0004,168(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

  1. 1 2 3 4 "Annual Report 2017" (PDF). Capita. Retrieved 23 April 2018.
  2. ↑ "Who we are". capita.co.uk. Retrieved 22 March 2018.
  3. 1 2 "The Capita Group Plc Annual Report and Accounts 2016" (PDF). The Capita Group Plc. Retrieved 22 November 2017.
  4. ↑ "Capita facts and stats – year end 2009" (PDF). The Capita Group Plc. Archived from the original (PDF) on 24 September 2010. Retrieved 30 August 2010.
  5. ↑ "Capita". London Stock Exchange. Retrieved 20 March 2016.
  6. ↑ "Capita boss quits over Blair loan". BBC News. 23 March 2006. Retrieved 12 February 2007.
  7. ↑ Simon Bowers (18 November 2010). "Capita deals with £3.3bn of government spending as more work is outsourced". The Guardian. Retrieved 28 October 2015.
  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
  14. ↑ "Paul Pindar: the man who took the "r" out of Capita". Daily Telegraph. Retrieved 28 October 2015.
  15. ↑ "CEO of bloated outsourcing firm Capita quits after 26 years". The Channel. 18 November 2013. Retrieved 28 October 2015.
  16. ↑ Wallace, Tim (2015-12-11). "Capita profits from acquisition spree". Telegraph. Retrieved 2017-11-22.
  17. ↑ Consultancy.uk (2016-04-01). "Capita picks up digital design consulting studio Orange Bus". Consultancy.uk. Retrieved 2017-11-22.
  18. ↑ Consultancy.uk (2017-05-15). "Capita acquires NYS Corporate events and travel agency". Consultancy.uk. Retrieved 2017-11-22.
  19. ↑ "Capita's new chief executive plans strategic overhaul". FT. 10 October 2017. Retrieved 5 January 2018.
  20. ↑ "Capita shares plunge after warning on profits". BBC News. BBC. 31 January 2018. Retrieved 31 January 2018.
  21. ↑ Davies, Rob; Monaghan, Angela; Wearden, Graeme (31 January 2018). "Capita: more than £1bn wiped off value of UK government contractor". Guardian. Retrieved 1 February 2018.
  22. ↑ "Interserve shares slide amid Capita woes". BBC News. BBC. 1 February 2018. Retrieved 1 February 2018.
  23. ↑ Pooley, Cat Rutter (3 April 2018). "Capita drops 6% to new 20-year low". Financial Times. Retrieved 3 April 2018.
  24. ↑ Kollewe, Julia (23 April 2018). "Capita seeks to raise £700m as losses deepen". Guardian. Retrieved 23 April 2018.
  25. ↑ Samson, Adam (1 August 2018). "Capita 'confident' in turnround despite drop in underlying profit". Financial Times. Retrieved 1 August 2018.
  26. ↑ Capita Financial fined for Fraud accessed 26/05/06)
  27. ↑ "Capita Group Purchase Team24 and Enter Healthcare Recruitment Industry". Team24 website. 31 May 2011. Retrieved 1 July 2011.
  28. ↑ "Healthcare Jobs & Medical Careers From Recruitment Agency Team24". team24.co.uk. Retrieved 15 March 2015.
  29. ↑ "Capita: Annual Report 2009". Capitareport2009.co.uk. Archived from the original on 11 September 2011. Retrieved 18 April 2011.
  30. ↑ Dowell, Katy. "Neuberger MR calls for regulatory reform as ABS timeline is unveiled". Thelawyer.com. Retrieved 18 April 2011.
  31. ↑ Dowell, Katy (9 August 2010). "Optima reprimanded by the SRA over Capita investment". Thelawyer.com. Retrieved 18 April 2011.
  32. ↑ "Solicitors Regulatory Authority". Sra.org.uk. Archived from the original on 18 February 2011. Retrieved 18 April 2011.
  33. ↑ "SEO Adrian Lamb leaves Optima – 8th June 2010". Todaysconveyancer.co.uk. Archived from the original on 5 May 2013. Retrieved 18 April 2011.
  34. ↑ "CAPITA WINS CONTRACT TO RUN ONLINE CONSTRUCTION REGISTER". lgcplus.com. Retrieved 15 March 2015.
  35. ↑ "Capita announced as new owner of Constructionline". gov.uk. Retrieved 2 April 2015.
  36. ↑ "Capita to sell Constructionline". The Construction Index. 31 January 2018. Retrieved 31 January 2018.
  37. ↑ Prior, Grant (31 January 2018). "Capita puts Constructionline up for sale". Construction Enquirer. Retrieved 31 January 2018.
  38. ↑ Prior, Grant (19 June 2018). "Capita sells Constructionline to private equity giant". Construction Enquirer. Retrieved 19 June 2018.
  39. ↑ "Trusts exodus from Capita HR contract". Health Service Journal. 18 June 2014. Retrieved 14 July 2014.
  40. ↑ "Three trusts end Capita HR contracts". Health Service Journal. 30 September 2014. Retrieved 24 October 2014.
  41. ↑ "HR firm reviews protocols after NHS staff data breach in Liverpool". Nursing Times. 9 February 2015. Retrieved 10 March 2015.
  42. ↑ "Capita is awarded NHS England admin contract worth up to £1bn". City AM. 23 June 2015. Retrieved 26 June 2015.
  43. ↑ "NHS England investigates primary care support service after 'serious incident'". Health Service Journal. 21 July 2016. Retrieved 28 July 2016.
  44. ↑ Lyndsey Telford; Claire Newell; Edward Malnick; Luke Heighton (22 Dec 2015). "NHS hit by locum agency nurses' pay scandal". Daily Telegraph. Retrieved 25 December 2015.
  45. ↑ "Optical leaders demand urgent Capita action". Optician. 3 August 2016. Retrieved 27 October 2016.
  46. ↑ "CAPITA LATE PAYMENT SAGA CONTINUES". Optometry Today. 14 July 2016. Retrieved 27 October 2016.
  47. ↑ Baines, Emma (1 December 2016). "Derailing the NHS". London Review of Books. Retrieved 1 December 2016.
  48. ↑ Louise Tickle (2 November 2017). "Hundreds of trainee GPs facing hardship as outsourcing firm fails to pay". The Guardian. Retrieved 3 November 2017.
  49. ↑ "Patients 'could have been harmed' after Capita outsourcing". BBC. Retrieved 17 May 2018.
  50. ↑ "Capita put NHS England patients at risk, says watchdog". The Guardian. Retrieved 17 May 2018.
  51. ↑ Supplier feels the hand of Becta Guardian, 4 October 2005
  52. ↑ Dead girl given truancy warning BBC News website, 25 March 2009
  53. ↑ "Capita One and SIMS overview". Capita-cs.co.uk. Archived from the original on 15 April 2011. Retrieved 18 April 2011.
  54. ↑ Schools scandal hits Capita accessed 26/05/06
  55. ↑ "Evaluation of Connexions Card" (PDF). Dcsf.gov.uk. 20 December 1932. Retrieved 18 April 2011.
  56. ↑ Liberata axed from school grant contract IT Pro, 19 November 2008
  57. ↑ "Capita Education Resourcing - Proud Supporters of National Supply Teacher Week 2014". The Supply Teacher. Retrieved 24 July 2014.
  58. ↑ "Eircode, Ireland's postcode system is launched". 13 July 2015. Retrieved 5 April 2016.
  59. ↑ "Claims that Eircode will 'confuse emergency services and cost lives' denied". The Journal. October 2014. Retrieved 26 November 2014.
  60. ↑ "The Data Protection Commissioner is very worried about the new postcode system. Here's why…". The Journal. May 2014. Retrieved 26 November 2014.
  61. ↑ "Your new postcode won't say 'F1CK' or 'IRA'. Here's why". The Journal. November 2014. Retrieved 26 November 2014.
  62. ↑ "New €27 million postcode system promises significant benefits". Offaly Independent. 19 November 2014. Retrieved 26 November 2014.
  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. 1 2 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.
  66. ↑ "Civil servants deployed to help Capita clear PIP assessments backlog". The Guardian. 6 April 2014. Retrieved 7 April 2014.
  67. 1 2 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
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