Capita awarded lucrative NHS contract by Tories

A huge NHS contract has just been awarded to Capita, something we should all be worried about, writes Simon Hardy

Capita, the outsourcing specialists, have been awarded an NHS contract that could be worth up to an eye-watering £1 billion.

Capita is effectively the go-to private company that will manage all local and central public sector outsourcing needs. Whether you are a local council sacking most of its staff, a government minister forcing a new IT system on the NHS or a court that needs translators, Capita is on speed dial.

And it is a money spinner for the bosses at Capita. As more of the public sector is privatised and sold off, Capita steps in to take over the work. In 2014 they had revenue of £4,372 million, with pre-tax profits of £535 million, up 13% on 2013. In 2013 they boasted “We also have frequent meetings with the cabinet office at official level, and occasional meetings at ministerial level.”

Is it any surprise? The firm was founded in the 1980s when Thatcher forced councils to start selling off their services. Capita personifies the waste, profiteering and mismanagement of neoliberalism. But in case you thought it was only an issue with the Tories, Capita made millions under the Blair government – in fact their president Rod Aldridge had to resign in 2006 when it turned out he had given a very generous loan to the Labour party.

Companies like Capita (and Serco and the rest) all thrive because it is a golden rule of neoliberalism that wherever the private sector interacts with the public sector, the public sector comes off worse. In most cases it is simply through ridiculously inflated contracts that public sector executives seem too happy to sign off on. That is why in 2013-14 the UK government handed over £40 billion to the private sector to run services that could easily be handled in-house by professionals.

Is it any wonder that Capita’s share price jumped by 7% after the election after the general election? They knew that the Tory win meant more opportunities for profit, as the snouts in the trough free-for-all of public sector privatisations is making some people very, very rich. Meanwhile the rest of us have worse services and ex-public sector employees suffer under worse contracts and pensions than they had before.

Catalogue of failures

Capita is a particularly worrying entity. They are not only blob-like, taking over more and more of the public sector, but they have a long track record of absolute catastrophe in running services. Their record for providing cost-effective and reliable services is so bad that they are nicknamed “Crapita” by Private Eye, which regularly reports their profiteering.

Capita operations have failed again and again:

  • They took over the systems for running the Personal Independence Payment (PIP) for disabled people, subjected to an independent review for major failings and a huge backlog of payments (link)
  • In 2013 Barnet council announced it was essentially handing over almost its entire local services to Capita under a scheme called One Barnet, forking out £75 million for contracts that should only have cost £37 million (link)
  • “Capita has made more than £100m in just two years for a delayed army recruitment project scarred by IT disasters and missed enlistment targets” – so they effectively run army recruitment as well (link)
  • Capita has a history of failings when it comes to running the HR department of various NHS Trusts, including in Leicestershire, North Merseyside and North Hamptonshire, with hundreds of staff being underpaid (link)
  • Capita was investigated in February 2015 for “abusing government contracts” in a £250m contract for civil service training (link)
  • In 2002 Capita was criticised by Labour ministers for their failures in handling Criminal Record Bureau checks on teachers. The delay was so severe that they were fined £2 million, but then they had been paid £400 million in the first place so wasn’t much of a loss for them.
  • Sefton council cancelled their technical services contract with Capita Symonds (a sub-division of the company) in 2011 after failing to deliver on any of the savings they had promised if the council workforce was transferred over to them.

Not just mismanagement

Despite all this Capita is still getting government contracts – and now more of the NHS is in their hands.

So why did a corporation as incompetent and self-serving as Capita get the contract? Simply because the politicians want their friends in business to make more profits. They claim it is about efficiency and bringing in “private sector expertise” to help run the public sector – but we can see from the long catalogue of failures that this isn’t the real reason. It is about money for the bosses.

And this is why it isn’t just about efficiency. Even if Capita was the best-run company in the world with an unimpeachable record, the fact is that it is wrong for the private sector to be running these services. Why are companies allowed to make money from health, criminal justice, education and public sector workforce management? It introduces a profit motive into areas where people can be most vulnerable, or most directly dealing with vulnerable people. That simply isn’t right.

For mainstream politicians, the ideology of a smaller state sector and a free market that is allowed to run rampant is what drives them. They will make decision that are financially illiterate just so that they can prise more of the state sector into the hands of the private corporations. That is why Capita is now in the centre of so many of the market reforms of the NHS.

The political problem with these outsourcings is clear. They lock the public sector into contracts that can last a decade of more. In Barnet, if you interact with the council then you will most likely be talking to a Capita employee. As Guardian journalist Aditya Chakrabortty points out, “Whoever Barnet residents vote for in local elections, they will always get Capita.”

Democracy is being eroded as the vultures of the private sector get their claws into the essential services that we need to help our society. Outsourcing must be stopped, privatisation must be reversed and those who make money from it should be out of business.



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