May denies another key contractor is in meltdown

THERESA May last night denied another major government contractor was in meltdown after a shares crash wiped £1billion off the value of Capita.

A profits warning from the giant firm sparked fears it could become the next Carillion, the construction firm that dramatically collapsed just weeks ago.

But the Prime Minister rejected comparisons between them and insisted ministers were not concerned.

Mrs May’s spokesman said: ‘The British government monitors the financial health of all its strategic suppliers and does not believe any, including Capita, are in a comparable position to Carillion.’

Shares in Capita, which collects the BBC licence fee and provides computer services to UK air traffic control, yesterday plummeted by nearly 50 per cent to lows not seen since 1998. The fall came after bosses revealed weak sales and said the company had spread itself too thinly.

Jonathan Lewis, its chief executive, launched a turnaround plan that included raising £700million from shareholders, cutting costs and selling parts of the business.

Capita is the latest big outsourcer to show signs of stress, amid concerns some are taking on too much work for wafer-thin profits.

The turmoil also reignited the row about the government’s use of private companies to run public services.

Labour’s Jon Trickett, the shadow minister for the Cabinet Office, urged ministers to watch Capita closely.

The MP added: ‘The Tories’ privatisation dogma risks lurching our public services from crisis to crisis, threatening jobs, taxpayers’ money and leaving people without the services they need.’

Frances O’Grady, general secretary of the TUC workers union, called for an urgent review of all public sector contracts. She added: ‘It’s essential the government completes this quickly and is prepared to bring services and contracts in-house if they are at risk.’

‘Lurching from crisis to crisis’