Wednesday, 27 July 2011

Barnet is good for Capita but would Capita be good for Barnet?

Capita looks like it is leading the field in the race to win one of the big, fat contracts at London Borough of Barnet, perhaps the £750 million contract for the “New Support and Customer Services Organisation” (NSCSO).

The NSCSO will incorporate revenue and benefits, human resources, finance, procurement, customer services (ie, call centre), and information services. The plan - part of the One Barnet Programme - is that private companies will offer to run these services and in return Barnet Council will pay them £750 million over 10 years. There could be the possibility of extending the contract for another five years, ie, paying them a further £375 million. So, in all, this particular "bundle" of outsourced Barnet council services could represent a wad of cash to the private sector of £1,125 million.

Well, that's got to be good news to this company that isn't doing as well on the stock market as hoped (although it looks like it's doing pretty well to me, but it's all relative I guess). The Financial Times reported on 22 July:
Shares in Capita have underperformed the FTSE 100 by 23 per cent since the 2010 general election... There were signs in Thursday’s figures that Capita had put the worst behind it: £1.1bn worth of contracts and renewals were more than double the value secured in the same period a year ago. Yet a premium to peers would be hard to justify for now. The proportion of profits that Capita had converted into cash – down from 121 per cent to 93 per cent – should be a concern. Investors would also be forgiven for being cautious about the latest financial forecasts given that in February the group guided towards flat organic sales for this year. It was now predicting a 6 per cent decline.
Capita's chief executive Paul Pindar (who is paid £14,500 a week) said the company had turned the corner and commented:
I do think you’ll see substantial amounts of the public sector move into the private sector.
Our services, their profits - whoever they are: Capita, Serco, BT...

2 comments:

Mr Mustard said...

You know I am sure Vicki that you have got their name wrong. In Private Eye I have been reading about Crapita - shum mishtake shurely ? or a different company entirely.

The bit I was wondering about was the idea of entering contracts that extend beyong the end of your mandate i.e. 2 years. Mrs Angry will probably tell you that Cllr Harper's portfolio won't stretch that far ?

vickim57 said...

Harper mentioned his portfolio again at the Cabinet meeting on Tuesday night.

He said that unlike councillor Marshall, opposing the proposed closure of Hamsptead Garden Suburb library, he, Andrew Harper, would resist the temptation to speak as the representative of his ward (well, he has never really done that as far as I can see), but would speak from his Cabinet portfolio - children's services?!

He went on to support the closure of Garden Suburb, Friern Barnet and North Finchley libraries.