Tuesday, March 21, 2006

Why it gets called Crapita

Capita - one of Britain's largest public sector outsourcing businesses - is all over the newspapers today, after revelations that executive chairman Rod Aldridge was one of New Labour's hush-hush £1m lenders.

He has yet to cop a peerage, a knighthood, or even a gong. But perhaps he is happy enough with the £1bn or more his company has raked in from central and local government contracts.

Here is a firm that Private Eye - in its inimitable smutty schoolboy way that still makes me smirk - routinely refers to as Crapita. Small wonder, when you look at some of the cock-ups that this lot has been responsible for.

I listed many of them in my 2002 book, Labour Party plc. Capita was sacked by Lambeth after bringing the south London borough's housing benefit service to near collapse, with tens of thousands of unprocessed claims leaving many families in danger of eviction.

One year into a similar 15-year contract in Blackburn - hailed by local MP Jack Straw - claims were taking an average of 74 days to process. Benefit fraud inspectorate checks on Capita operations in Bromley and Westminister found significant shortcomings.

Failures in Capita's IT security contributed to the collapse of Individual Learning Accounts, the government's nationwide £260m flagship training support scheme. Computer disks containing account holder names and PINs circulated on the black market, allowing unscrupulous education providers to cash in. Not for nothing did some wags call it the Great Training Robbery.

It also took over Connexions, the funky new name for the careers advisory service, and promptly used the opportunity to start promoting McDonalds burgers and PlayStation magazine.

Today's Financial Times brings the story up to date:

'Capita also runs the literacy and numeracy strategy for the Department for Education and Skills, runs the Criminal Records Bureau, collects the television licence fee and has operations in almost every part of the public sector.

'Capita says it has so far secured 34% of the market in administration and processing for government departments and local councils. In 2004, 52% of Capita’s revenue came from public sector outsourcing, and its business has grown from a turnover of £112m in 1996, chiefly from local government contracts, to almost £1.3bn in 2004 because of an explosion of demand for its services.

'Many of the contracts have attracted criticism, among them the collapsed individual learning accounts scheme, which was hit by fraud. After ILAs were wound up, the DfES angered teaching unions by going back to Capita for administration services when it introduced education maintenance allowances.

'Last week, the company was fined £300,000 by the City watchdog after an alleged £1.8m fraud attempt by some of its own employees. The fine for a subsidiary of the group was the first time that the Financial Services Authority had penalised a company for a failure of anti-fraud controls.

'But Capita’s public sector contracts continue to grow. Over the next three years, Capita will be running BBC human resources, and Birmingham city council has asked it to provide all its IT with a £424m contract. It has retained a contract with the Department of Trade and Industry to administer its miners’ personal liabilities claims scheme.'

Frightening.

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