Capita’s financial woes raise serious questions about the vulnerability of local authorities – like Barnet and Northamptonshire – who have been suckered into signing decades long outsourcing contracts by inflated promises of ‘private sector efficiencies’
The spectre of Capita’s collapse raises questions about local government. PA
Outsourcer Capita hit the headlines today for all the wrong reasons, its share price collapsing 40 per cent following a profit warning and cancellation of dividend payments to shareholders.
For those already thinking this sounds a bit like Carillion – you are right. A gaping pension deficit, departing CEO, shrinking cash flow and over-reliance on intangible “goodwill” in it’s accounts – signed off by KPMG.
Capita’s profit warning caps a 24 month slide which saw the UK’s largest outsourcing company tumble out of the FTSE 100 index, its share price losing 80 per cent of its value since January 2016, falling from £11.60 to £2.01 today.
Created from humble beginnings in 1984 as a for-profit consultancy arm of the Chartered Institute of Public Finance and Accountancy (CIPFA) – Capita became the Vampire Squid of business process outsourcing, its money grabbing tentacles extending through every layer of Government, from pensions, to council finance, from parking and congestion charges to NHS GP primary care support, funeral services, and even the privatised food safety agency.