Shared Services Connected Ltd: Sale of Cabinet Office Stake
(1 year ago)
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The Minister for the Cabinet Office and Paymaster General (Jeremy Quin)
I am pleased to announce that the Cabinet Office has exercised its option to sell its 25% stake in Shared Services Connected Ltd (SSCL) to its joint venture partner, Sopra Steria Group SA, which owns the remaining 75% stake. The sale is expected to complete in early November. Metric Impact Sale proceeds £82.3 million Hold valuation The price achieved is above retention value Public Sector Net Borrowing The sale will generate cross-Government productivity savings and reduce future debt interest costs for Government, offset by the loss of dividends Government might otherwise have received from its shareholding Public Sector Net Debt Immediate reduction of £25.3 million—£82.3-£57 million Public Sector Net Liabilities Immediately improved by £34.1 million—£82.3-£48.2 million—less the extent to which the £57 million retained by the Cabinet Office is spent Public Sector Net Financial Liabilities Immediately improved by £34.1 million—£82.3-£48.2 million—less the extent to which the £57 million retained by the Cabinet Office is spent
Sale of the stake will generate cash proceeds of £82.3 million payable on completion. Of the £57 million proceeds retained by the Cabinet Office, up to £45 million of the proceeds will be reinvested into accelerating programmes that increase cross-Government productivity. This will include a particular emphasis on digital capability across Government.
The change in ownership arrangements is expected to affect neither the management nor staff of SSCL. Sopra Steria has confirmed that SSCL will remain a key component of Sopra Steria’s UK family of businesses and that there will be no impact on services to customers.
Background and rationale
The SSCL joint venture was established in 2013 as part of a strategy to consolidate and transform the provision of shared business support services to central Government and the wider public sector. Founding customers included the Department for Work and Pensions, the Department for Environment, Food and Rural Affairs and the Environment Agency.
Over the last 10 years, SSCL has successfully expanded its customer base to cover other public sector bodies including the Home Office, Ministry of Justice, Ministry of Defence, Metropolitan Police and the Construction Industry Training Board. Revenue has grown from £123 million in the year to 31 December 2014 to £292 million in the year to 31 December 2022.
It had always been envisaged that the Cabinet Office might one day sell its stake. When the joint venture was established, Sopra Steria granted the Cabinet Office a put option exercisable in 2022 and 2023.
The sale follows a review triggered by the approaching expiry of the put option. The Cabinet Office concluded that SSCL had been a successful joint venture delivering significant savings and value to the Government and the taxpayer, that the business was now well-established and that it was time for it to move to the next stage in its evolution. The sale price was based on an independent valuation advisory report and exceeds the Cabinet Office’s retention value. As at 31 March 2023, the carrying value of the stake and related put option in the Cabinet Office accounts was some £48.2 million.
Fiscal Impacts
The impact on the fiscal aggregates, in line with fiscal forecasting convention, are not discounted to present value. The net impact of the sale on a selection of fiscal metrics is summarised as follows:
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