Govt contract beneficiary to initiate ‘shake-up’

A FIRM with masses of Government contracts is set to scale back on public sector work after plunging more than £500million into the red.

Outsourcing giants Capita announced a big shake-up yesterday to “simplify” the sprawling company.

Plans include shunning smaller Government deals and only bidding for those where “commercial terms are acceptable”.

Capita raked in £900million of taxpayers’ money last year for everything from running London’s congestion charge and collecting the BBC licence fee to the tests for the Personal Independent Payments (PIP).

But the company have been left reeling by a series of profit warnings plus concerns following the collapse of outsourcing and construction firm Carillion.

Capita yesterday announced full-year losses had risen from £90million to £513million after slashing the value of their businesses by £850million. Chief executive Jonathan Lewis responded with a major overhaul, including raising £300million from sell-offs and cutting costs by £175million a year.

Capita, who have 50,000 UK employees, also went cap in hand to shareholders for £701million to cut their £1.1billion debt mountain and to invest in the business. However, they had to slash the value of the new shares to get investors interested.

Lewis, on a £725,000 a year salary, said: “There is a lot to do but I am confident the plan is clear and prudent.” In February, their Army recruitment deal was branded “unacceptable” by Defence Secretary Gavin Williams. They also decided not to rebid for a Home Office contract to escort deportees on flights. The controversial PIP contract with the Department for Work and Pensions is up for renewal next year. Share Centre analyst Helal Miah said: “The good news is that Capita’s management have succeeded in keeping the business going.” Capita’s annual report, out yesterday, revealed former boss Andy Parker, who quit last year, got a £667,000 pay-off – including a year’s salary.

Amount Capita raked in from taxpayers last year

Oil Royal Mail RSA RBS J Sainsbury SSE Severn Trent Serco Sports Direct Shell Sky Smith & Nephew 565.6 656.2 275.9 266.7 1319.5 1860.0 98.0 391.1 2575.5 1308.5 1389.0 +5.6 +3.2 +1.7 +2.8 -8.0 -21.5 +0.3 +3.7 +27.5 -3.5 +37.0