TOP TORY Oliver Dowden denied outsourcing giant Capita’s recently revealed troubles were “in any way in a comparable position to Carillion” yesterday — in spite of key similarities.
In an urgent question yesterday, Labour MP Rachel Reeves accused the floundering Cabinet Office minister of a “woeful response” and “muddled and complacent” thinking on the issue.
Ms Reeves, who chairs Parliament’s business select committee, said there were “more similarities than differences” between Capita and Carillion.
She said both had debts of more than £1 billion, pension deficits in the hundreds of millions and relied on the public sector for half of their contracts.
“I can’t help but conclude that the government’s thinking on this is both muddled and complacent,” she said.
But Mr Dowden retorted: “We do not believe that Capita is in any way in a comparable position to Carillion.
“The issues that led to the insolvency of Carillion will come out in due course, but our current assessment is that they primarily flowed from difficulties in construction contracts, including overseas.
“By contrast, Capita is primarily a services business, and 92 per cent of Capita’s revenues come from within the United Kingdom.”
Both companies also employ accountants KPMG as their auditors.
Outsourcing giant Capita saw its shares plunge to a 15-year low after a profit warning and the announcement of an investor cash-call as part of a major overhaul.
New chief executive Jonathan Lewis, who took up the role on December 1, admitted the group had become “far too complex” and said “significant change” was needed to get Capita back on track.
Controversially, the flagship London Tory council of Barnet has outsourced scores of its services to Capita in a project dubbed Britain’s first “easyCouncil.”
In the Commons yesterday, former Labour minister Diana Johnson asked why Barnet has “put in place contingency plans based on the possible failure of this company.”
This week the council voted to examine emergency back-up operations in case any of its suppliers collapse in the same way as Carillion.
ADDS — Embargoed
Capita was also singled out for blame in a National Audit Office (NAO) report yesterday, which found 1,800 high priority items like patient screening and test results had not been forwarded on.
The backlog identified by NHS England was among 374,000 items of clinical correspondence which were not redirected as they should have been.
Instead of GPs complying with the latest guidance to return wrongly sent records to sender, they instead sent them to Capita, which provides primary care support services for NHS England — even though it was not contracted to forward them on.
The NAO said the issue was not formally reported to NHS England by Capita until October 2016, nearly 18 months after the new arrangements for handling misdirected correspondence were introduced.
At the time Capita estimated that there were 580,000 items of “clinical notes,” which the company admitted with hindsight it could have reported sooner.
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