Capita's huge role in UK government should go under the spotlight

Analysis Capita’s sheer footprint in the public sector makes it an easy target to some extent. If you run enough notoriously failure-prone government contracts, chances are you'll come under some fire sooner or later.

Added to the company's woes is a market less lucrative than it used to be. Despite its massive turnover of £4.89bn this year, it revealed a steep fall in operating profit to £148.3m from £206.6m, forcing Capita chief Andy Parker to step down. (Yes, OK, cue the world’s tiniest violin).

But as the giant continues to win contracts, concerns are growing that the body’s role in government should be subject to greater scrutiny. Not least as more cash-strapped councils turn to its services.

The giant outsourcer held around 50 per cent of public sector technology services contracts, worth around £1.9bn - an increase of 5 per cent on the previous year. That actually represented a slight slowdown, when it grew by 12 per cent in 2015, according to research by TechMarketView.

Chris Matheson Labour MP for Chester under the last Parliament, who sat on the Culture Media and Sports committee, told The Register he's keen to "put Capita's role in government under the microscope." Obviously with the caveat that his re-election is no guarantee.

Matheson claimed Capita is unfit to carry out a number of public sector contracts, yet it seems to keep winning new ones. His concerns were prompted by Capita's role in the TV licensing debacle, which his committee scrutinised. Along with its audit role in the heavily-criticised Personal Independent Payments contracts. He claims the company is simply not delivering.

Licence for money

Just last week Capita’s role in the TV licensing contract with the BBC was slammed by the Public Accounts Committee. Capita was originally awarded the telly tax contract in 2002 for £500m, and renewed in 2012 for eight years at a cost of £560m. In December last year it was renewed once again until June 2022 for an undisclosed sum.

However, the report said the BBC and Capita have much to do to improve evasion and enforcement performance. That is despite the Beeb having hiked licence fee revenue every year since 2010–11, to £3.74bn in 2015–16, and having reduced collection costs by 25 per cent in real terms between 2010–11 and 2015–16.

Some three million enforcement visits were carried out in 2015–16, but 18 per cent fewer evaders were caught than in 2010–11, when only 2.7 million visits took place. Capita is unclear about the reasons for this and about its plans to improve the situation. "We are also concerned by recent reports of improper conduct by some Capita staff," said the report.

Following an investigation by the Daily Mail that Capita is pursuing targets to catch evaders, including targeting vulnerable people, Capita suspended two members of staff and at the BBC Director-General’s insistence. The firm is carrying out an investigation.

The BBC and Capita are also under fire for disproportionately targeting women. It is concerning that in 2015 70 per cent (133,000) of 189,000 prosecutions for TV licence evasion were against women, up from 64 per cent (70,000) of 110,000 prosecutions in 2002.

The report urged the BBC to act on the review it is carrying out jointly with DCMS into gender disparity in TV licence enforcement.

Legacy issues

Serious tech problems are also yet to be resolved. Over many years, the BBC intended to replace the legacy ICT systems it uses to support the collection of the licence fee, but it has been unable to do so, having recently abandoned its latest programme to upgrade the system.

There is no sign of these problems being resolved, and it is not clear when and how the BBC and Capita will replace their legacy ICT, said the report. "We urge the BBC, in conjunction with Capita, to establish fresh plans to make ICT systems fit for the future as soon as possible,” said MPs.

It said the BBC, in its contract with Capita, aimed to upgrade its legacy systems as part of a transition programme and paid Capita £22.9m for elements of the transition programme that were delivered, including restructuring contact centres, updating the TV Licensing website and upgrading handheld units. However, improvements with a contract value of £27.9 million, mainly related to replacing legacy ICT systems, were not delivered by Capita and its subcontractor, Computer Sciences Limited (CSC).

The report urged the BBC to urgently establish fresh plans to update its ICT systems and, as soon as possible, provide the Committee with a clear timetable, accompanied by estimates of the costs and benefits it expects from these improvements.

A Capita spokesman said: “Capita has a good track record of delivering services to meet its public and private sector clients’ requirements. As the NAO and PAC has found, Capita has helped the BBC to collect more TV licence fee revenue every year since 2010-2011.

"The decline in the number of evaders caught demonstrates that our focus on encouraging people to buy a licence at an earlier stage is very successful. With regards to the provision of PIP assessments, our focus remains on undertaking quality assessments according to Department of Work and Pensions’ guidelines and professional codes of conduct to enable DWP to reach an award decision.”

As Capita seeks to reduce costs by shifting more work offshore, it will be interesting to see how it tackles the perception of the management of its contracts which directly affect large swathes of the public.

But whether the next Parliament will have the time and inclination to examine its role in government post Brexit, remains more uncertain. ®