In the crap-ita: Government contractor responsible for benefit assessments is in deep financial doo-doo

Capita runs London’s congestion charge scheme [Image: Reuters].

Of course we shouldn’t gloat about financial troubles that will affect thousands of people’s jobs.

But Capita is responsible for assessing the fitness for work of thousands upon thousands of benefit claimants, with targets (hidden by the government) to knock a huge proportion of people off the books, so maybe we can be forgiven in this instance.

At mandatory reconsideration, we know that the Tory government set an 80 per cent target for refusal of benefits.

That means thousands of innocent people have suffered for no reason – many of them to their deaths. If the current situation means the assessors who inflicted that suffering get to experience some of it, who can call that anything other than poetic justice?

The company has announced plans to add £700 million to its bank balance. Is this to make up for the now-axed dividend scheme that gave £500 million to shareholders?

What were company execs thinking, when they devised that scheme in the first place? That the government’s magic money tree would keep producing the cash they were funnelling to their rich shareholders?

And was Capita carrying out the same wheeze as Carillion – under-bidding for new government contracts and using the money it received to pay for the old ones?

And what about the firm’s pension fund?

Here‘s Frank Field, chairman of the Commons Work and Pensions committee:

“Another day, another outsourcing firm with massive debt, a huge pension deficit, a KPMG audit and the Big Four popping up at every turn in the company’s chequered history.

“Sadly, Capita goes on the growing list of firms we are investigating to see if their conduct has endangered current and future pensioners’ rights.”

So: First Carillion collapsed. Now both Interserve (remember them?) and Capita are in trouble.

Who’s next? And what will happen to public services while the Tories dither over this crisis?

More than £1bn was wiped off the stock market value of the government contractor Capita on Wednesday, sparking fears of job losses.

Capita, whose major contracts range from collecting the BBC licence fee to electronic tagging of prisoners, saw its share price nearly halve in a day following a grim financial update that reignited concerns over the outsourcing industry and the stability of public services.

Capita’s shares plunged 47.5%, cutting its stock market value by £1.1bn, after new chief executive Jonathan Lewis stunned markets by admitting the company’s finances were in a dire state and announcing drastic measures to repair them.

Lewis, appointed in October last year, downgraded Capita’s profit forecasts and announced plans to raise £700m to shore up its balance sheet. He also axed a dividend that had been worth more than £500m to investors over the past three years.

A cost-cutting programme is expected to result in job losses among Capita’s 67,000 employees, 50,000 of whom are in the UK, while parts of the business will be sold to raise cash.

Source: Capita: almost £1bn wiped off value of UK government contractor | Business | The Guardian

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12 thoughts on “In the crap-ita: Government contractor responsible for benefit assessments is in deep financial doo-doo

  1. Brian

    Sympathy may not be due to Capita, with every chance it will renege on it’s Tory welfare commitments, but will this open the door of opportunity to ATOS? Unlikely given Thierry Breton CEO, is at this moment desperately re-positioning ATOS priorities following Capita’s sharholder exit. Breton’s haste is compounded by his recent approach to expand into digital security, on borrowed money, that has now ‘disappeared’ leaving his fragile books in something of a mess. With dwindling revenue shareholders here will no doubt be reconsidering their ATOS options.

  2. Fibro confused

    I had been wondering why they were selling of various retail parks and shopping centers, now I have the answer, rather concerned that if what I’ve read earlier is correct they also process benefit payments, if they topple the pile of poop this govt are getting us in will be even larger what with the national debt now over 2 trillion too

  3. Nick

    Capita is just like all the others in the uk an agency pure and simple
    they are vast in numbers and cover most types of work

    my view is in that they have a bad record with their employees who in reality not in the job they would have liked to be in had their education been better

    my cousin works for them and he’s stuck with them as there are no other opportunities for work where he lives

  4. Stu

    Question is will it have an adverse affect on PIP and ESA decision outcomes ?

    Whilst they scramble for profits, will they cut corners to make it work in their favour even more than before ?

  5. jeffrey davies

    crapita great it catches on even when I first talked to these their own workers when phoning me about my complaints on their highly trained hcp one even answered me when they phoned me back with crapita here they made me chuckle yet these cowboys who pay them selves vast monies are sinking yet you say about these jobs well these people hade jobs before many with councils or local firms then they go back
    one hopes were they were accountable yet you state KPMG oh dear another arm of atos another one who dodgy ways should I hope head the same way one complains about these highly trained hcp only for your complaint to the nurses head quarters were these KPMG reside working there o h dear. jeff3

  6. Barry

    Perhaps they have run out of sick incapacitated and disabled to get money out of, with their deliberate rejection of valid claims having died.

  7. Martin Odoni

    They’re talking about re-financing by selling new shares. They must be off their trolleys, who’d buy shares whose value have dropped from nearly £10.50 in value a year ago to under £1.75 today, and in a company whose total value is roughly one-third the size of its debt mountain?

    The domino-effect of Carillion’s collapse has started, and it needs a flawless response from the Government to keep the damage contained. And given the general stupidity and incompetence of the present mob, I can only see this ending in disaster.

  8. Terminator

    Crapita Jack of all trades and master on none. They like ATOS and Maximus (CHDA) scrape the bottom of the barrel and employ people with questionable morals and regularly assess claimants where they don’t know about their medical conditions apart from what is written on the form. The nurse who did my last assessment told me she had never heard of the condition and couldn’t pronounce one of the meds I was on

  9. Carol Fraser

    Reduced profit warning means the company will contract. Less jobs and a sell off of assets. This is contrary to what the Tories were saying in parliament today. In other words no cause for alarm business as usual. Have we heard that before?

  10. Pat Sheehan

    What will it take to ‘shift’ these incompetent, scrounging, good for nothing individuals and the ‘type’ of ‘government’ and ‘government minister’ that patronizes, succors and underpins their every devious and scheming turn?
    What will it take to ‘ensure’ these people are never permitted to govern or manage anything, ever again?
    Voting for ‘political parties’ in a corrupt democratic procedure is patently not working as ‘ideally’ as it should.

  11. rotzeichen

    The private sector has had every incentive a government could bestow on it, yet they still can’t make work pay.

    The private sector is in a monopoly position right now, they have been given massive tax reductions, low wages, poorer working conditions, zero hours, and still they can’t make it, but what they are doing is taking the piss out of the people of Britain.

    Someone please tell me people are waking up in this country.

Comments are closed.