States have five contracts with ‘financially troubled’ UK firm

Friday 23 February 2018

The States have five contracts with outsourcing firm Capita, which saw over £1billion wiped off its market value last month - officials they are due to discuss its financial situation at a future meeting.

Concerns were raised on the future of the UK’s biggest outsourcing firm after its shares dropped over 40%, hitting a 15-year low and losing £1.1billion off its market value last month when the company’s boss announced drastic measures to avoid collapsing like its rival Carillion.

The UK Government entered into immediate talks with Capita following the news, as the firm holds some major contracts supplying UK public services.

It’s now been revealed that Capita also has a number of contracts with Jersey’s Government to provide IT and management systems for two departments.  

A response to an Express Freedom of Information request has shown that Capita currently has two contracts with the Education Department worth in excess of £10,000 for a further education administration software solution and one contract to provide a school based management information system for all States of Jersey schools. The department also uses Capita’s services for a library management system. 

The UK firm’s services are not only limited to the Education Department. They also hold a contract to supply Jersey’s Health and Social Services Department with a licence for scanning security.

Pictured: The States of Jersey say Capita's profit warning "does not warrant immediate action." 

When asked what work has been done by the States of Jersey following the news that Capita has reported a severe loss in earnings, the States of Jersey replied that it “is of the opinion that a profit warning, although concerning, does not warrant immediate action - this will be discussed with Capita at future meetings.”

The exact value of the five contracts that the government has with Capita couldn’t be revealed as the information is deemed “commercially sensitive” and revealing contract rates would “affect negotiations of future contracts and the relationship with Capita.”

Their response largely echoed that of Oliver Dowden MP, the UK Minister for Implementation. In a statement earlier this month, he said: “We regularly monitor the financial stability of all our strategic suppliers, including Capita. As I’ve said, we do not believe that any of them are in a comparable position to Carillion.

“The measures that Capita has announced are designed to strengthen its balance sheet, reduce its pensions deficit and invest in core elements of its business. Arguably these are exactly the measures that could have prevented Carillion from getting in to the difficulties that they did.

“And of course the impact of this has been to reduce dividends and shareholder returns in favour of others. This is further evidence of shareholders and not the taxpayer taking the burden.”