Capita

Christian Matheson Excerpts

Tuesday 24th April 2018 Commons Chamber

[Oliver Dowden]

I thank my hon. Friend for his question. He is absolutely right that what we discovered yesterday was that the rights issue is proceeding exactly as planned. In terms of the overall market, I have tried to be clear all along that suppliers should expect a decent rate of return—not an excessive rate of return, but one that allows them to run a profitable business, while ensuring that there are savings for the taxpayer. That is why we use private companies. It is not because of ideology; it is because they deliver savings to the taxpayer, which means more money to be spent on health, education and other public services.

[Christian Matheson (City of Chester) (Lab)]

May I thank you, Mr Speaker, for granting the urgent question and congratulate the right hon. Member for Twickenham (Sir Vince Cable) on securing it?

Capita is one of the strategic suppliers to the Government, providing services of particular strategic importance, yet, as we heard from its boss today, it had no strategy aside from mucking up the management of the dental register, leaving hundreds of dentists to stand idle; failing to maintain the primary care support service in England, which supervises GP and patient records; and failing on the Army recruitment contract, among many other failings. Members have been highlighting those and other failures to the Government over a period of years and will not be surprised at the latest news. I echo the call from the right hon. Member for Twickenham for the Minister to outline what contingency plans he has put in place to deal with a possible default on any one of those contracts.

The Government claim to be monitoring the situation and have a Crown representative in place, but do they even know what they are monitoring if they are not sure about the number of contracts Capita runs? I and other Members have asked for a list of Government contracts undertaken by Capita and have not been provided with one. Do the Government know how many contracts Capita undertakes across central Government and, indeed, across local government? Will they publish a list of all those contracts?

Will the Minister confirm what improvement plans have been agreed with Capita since its string of profit warnings or yesterday’s refinancing? What quality thresholds will be built into Government contracts to ensure that Capita and other privateers reach an acceptable standard of service delivery, particularly in view of their precarious financial situation?

This latest episode in the saga of outsourcing scandals again shows the public that the Government’s commitment to this practice is nothing more than ideological. Despite the danger to public services, along with the treats to Capita’s staff and subcontractors, the Government will not shift from their view that these giant multinational firms should make huge profits from the public purse, until the point when they fold, taking our public services with them. The Government act as though these firms should be allowed to privatise the profit of the public sector, while nationalising the risk to the British public. We need a change in direction now. Will the Minister use this latest episode involving Capita to finally introduce a presumption in favour of in-house provision of public services?

[Oliver Dowden]

I have a great deal of respect for the hon. Gentleman, and he could have done a little better than some of the overblown rhetoric in his contribution. Yesterday’s announcement was entirely in line with market expectations.

The hon. Gentleman asks what is being done in relation to strategy. The strategy has been set out clearly by the new chief executive. It includes a revised divisional structure and executive team to better manage and enhance services and client value, as well as a rights issue, which, as I said, has proceeded as planned and will materially improve the company’s financial stability, thereby reducing its debt, enabling it to invest in core services, allowing it to reduce the pensions deficit, which it has done by £21 million—I hope all Members will welcome that fact—and allowing it to reduce its cost base.

The hon. Gentleman asks what contingency planning the Government are doing. As I have said, we undertake appropriate contingency planning in respect of all our strategic suppliers. I take a close personal interest in that as a Minister, and I know that the Chancellor of the Duchy of Lancaster and Minister for the Cabinet Office takes a similarly close interest in it.

The hon. Gentleman asks about contracts that have been awarded to Capita, so let me give him the numbers. Of the current major central Government contracts that have been awarded to Capita, nine were awarded under Labour, which is 20%, 24 were awarded under the coalition, which is about 53%, and 12 were awarded under the current Conservative Government, which is about 27%. This is not a party issue; all three formations of government have decided to use outsourcing companies.

To conclude, I had thought that the hon. Gentleman would agree with the words of a previous Labour leader and somebody who many regarded as being, at least in some senses, a successful leader. Gordon Brown, hardly a rabid right-winger, said:

“It simply would not have been possible to build or refurbish such a number of schools and hospitals without using the PFI model.”—[Official Report, 14 November 2007; Vol. 467, c. 665.]

That was a sensible Labour Government who were committed to delivering public services. We do not see such sense from the current Labour party, I am afraid.