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150211Capita-logo

How much more corruption must the British taxpayer underwrite?

The latest private firm to face allegations that it took huge amounts of public money and used it corruptly is Capita.

That’s right – the outsourcing giant whose government contracts include taking over the Work Capability Assessment from discredited Atos in some parts of the UK, is facing an investigation into allegations that it used a major government contract to short-change small companies, resulting in some going out of business.

Capita took a minimum 20 per cent cut of the value of all contracts to administer a £250 million civil service training scheme, in a project hailed as a model of how to open up the public sector to small businesses and provide better value to the taxpayer.

But 12 companies involved in the scheme have now teamed up to demand that the Cabinet Office and the National Audit Office launch an investigation into Capita.

If it is found guilty, the company will join a roll-call of shame that includes PricewaterhouseCoopers (helping clients avoid tax while advising the Treasury on its policy to tackle tax avoidance), G4S (failure to provide security for London 2012, criminal tagging fraud), Serco (criminal tagging fraud) and A4e, if anybody can remember that far back.

To its shame, it seems the Coalition Government is still employing all of these companies.

Lucy Powell MP, Labour’s Shadow Minister for the Cabinet Office, said allegations against Capita included claims that firms had gone out of business due to late payments and government departments had been charged more for services than they were under previous arrangements.

“David Cameron promised the Government would pay small business suppliers within five days, yet his failure to act continues to damage our economy,” she said.

“Labour will shine a light on government outsourcing by ensuring firms delivering Government contracts comply with freedom of information requests.

“We will also back small businesses struggling under the Tories by cutting and then freezing business rates.

“And we have put forward a clear plan to tackle the scandal of late payment, ensuring late payers automatically pay interest to their suppliers, and outlawing bad payment practices such as firms being asked to pay for the right to be a supplier.”

That all seems good – and bolsters Labour’s claim to be good for business – but…

In order to make good on its FoI promise, Labour will have to strengthen the law to prevent contractor firms ducking requests in the same way that – for example – the Department for Work and Pensions is currently ducking demands to reveal the number of benefit claimants who have died since November 2011 – the DWP says it already has plans to publish the information, but on an unspecified date that keeps getting pushed further and further into the future.

Any business rate freeze must take notice of local conditions to ensure that no part of the UK is disadvantaged. At the moment there’s a postcode lottery, with businesses based in the most lucrative areas gaining an instant advantage. A blanket freeze would maintain that advantage, rather than levelling the field.

Also late payment controls must be robust enough to prevent firms from finding loopholes in order to delay.

In other words, while the broad strokes are good, the devil’s in the detail.

Follow me on Twitter: @MidWalesMike

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