Friday, 18 October 2013

Capita and the National Audit Office

Earlier this week I had a private, off the record briefing by a member of the National Audit Office, who has been investigating the practices of outsourcing companies such as Capita. They were keen to assist the Barnet Eye in our research for the film Capita - The Movie. Their input was made under agreement of anonymity and it was a condition that the Barnet Eye explicitly stated that the views expressed were those of a private individual, not of the NAO. The purpose of the meeting was to ensure that the film concentrated on areas of public concern and didn't get bogged down in the details and specifics of the One Barnet project.

The conclusions that my contact has draw are stark and disturbing.

1. Great Britian would be seriously damaged by the failure of a major outsourcing company such as Capita. In effect Capita have us all over a barrel. If the company went bust, the country would cease to function. They have their fingers in so many pies and all of these are vital to the wellbeing of the UK economy. Courts, local government, the borders, central government and many others of the UK PLC are run by Capita. If they got into serious financial trouble, they could simply turn around to the taxpayer and say "Bale us out or else". In the US they recently had a shutdown because the politicians couldn't agree. The failure of Capita would have a far more devastating effect.

2. Capita deliberately decapitate organisations when they are outsourced. When Capita sign a contract such as One Barnet, they deliberately set up the new organisation in such a way that it would be extremely difficult to "inhouse" the services in the event of failure. Different functions are spread around diverse geographic locations and expertise is shipped out. If the contract goes wrong, there is no easy way of putting humpty dumpty together again.

3. Capita view democracy as bad for business. When Capita take on a new outsourcing contract, one of the considerations is the political fallout of the project. Many of their contracts were signed under a Labour government. They realised that in most cases this was an extremely safe bet as the Tories would be even more pro outsourcing than Labour. Organisations such as BAPS are classified as "business risks". Transparency is avoided as this is likely to be used against the company. Capita always consider democratic change as a risk to business and something to be mitigated.This usually means making sure that the opposition is on side as well. It is likely that Capita consider the Labour party in Barnet to be "Tame". It must be stated that Capita are responsible to their shareholders, not the electorate, so there is no reason why they should feel accountable.

4. The outsourcing companies have no interest in transparency and accountability. When they sign a contract, they are not interested in being answerable to the community they serve. They are merely interested in fulfilling the contract as profitably as possible. Any transparency built into the contract is only there because the commissioning organisation has demanded it. The extraordinary secrecy surrounding the One Barnet contract is the norm not the exception.

5. Capita don't lose money on contracts. In effect outsourcing contracts are a license to print money. The risks are all with the taxpayer and the profits are all with Capita. This is very good business for them, but does it provide a good deal for the taxpayer. The NAO employee I spoke to had concluded that case is far from convincing. Whilst some contracts are clearly good for all concerned, as Capita can leverage economies of scale and bring in expertise not available previously, there are many other cases where they have not delivered value for money or good quality services. The fact is that whether the contract is good or bad for the taxpayer, it is great for Capita shareholders.

As I said, these are the private opinions of a member of the NAO. We'd welcome a response to these points from Capita. One assumes that if the comments about democracy are incorrect, we will get a response?

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