Thursday, March 23, 2006


So the Executive Chairman of Capita has resigned over the Labour loans scandal. It seems the stock market is suspicious of the smoke billowing around, and has marked Capita down. So the Chairman has to go, once again demonstrating the superiority of markets over political "judgement". None of the politicians involved has resigned, and unless Plod's investigation throws up charges, there's no way of making them do so. No matter how much smoke we can see.

PS We all know that Capita has been a major beneficiary of Labour's half-baked outsourcing programmes. Just for the record, since Labour came to power the company's value has increased 24-fold: "Capita, whose business is linked to its standing in Whitehall, made its fortune bidding for, and taking, contracts from the public sector. Since the election it secured the payroll provision for the Independent Police Complaints Commission — no value given; but Capita says that it is the third Home Office agency it is now working for. In February it was awarded the £120 million contract to represent the Department for Trade and Industry over miners’ personal injury liability claims. In December it won the contract to administer the British Waterways pension scheme — no value given. In September it was given the contract to provide IT services to the Department of Work and Pensions. It also collects the BBC’s licence fee and administers the London congestion charge.

Capita has been embroiled in controversy. It was involved in the disastrous launch of the Criminal Records Bureau in 2002. The company was fined almost £2 million for its failings in providing criminal checks on people working with the vulnerable. In 2000 Capita was appointed as the customer service provider for the Individual Learning Accounts Scheme, which ran £70 million over budget. After the scheme was wound up, in 2001, the National Audit Office said that it had been introduced too quickly without proper security measures."

Top-down outsourcing is not the way to improve public services. Real reform demands breaking up the monolith and- crucially- putting the spending power back into the hands of customers.

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