Norfolk councils will monitor contractor Capita after news of group's woes
PUBLISHED: 06:00 02 February 2018 | UPDATED: 15:11 02 February 2018
Councils in Norfolk have played down fears of disruption to local services following suggestions of financial difficulties at outsourcing giant Capita.
The group announced plans this week to raise up to £700m from investors, as well as cutting costs and selling off unprofitable businesses, but warned these measures would not stop full-year profits for 2018 falling short of expectations at an estimated £270m-£300m.
It comes after the collapse of fellow contracting firm Carillion last month, which issued three profit warnings in the months before it buckled under almost £1.5bn of debt.
Breckland Council, which holds a contract with Capita for planning and building control services, said news of the firm’s problems was “concerning”.
A spokesman said: “As a result we are speaking with Capita’s head of local government to seek assurances that our frontline services will be protected from any changes made by the national company. We are also working with our local leads to support our teams.
“We will be monitoring this situation closely.”
Norfolk County Council said Capita provides it with network services and software, and provided interim staff “from time to time”. It also has some leasing arrangements with the company.
A spokesman said: “We note the government’s view that Capita is not in a comparable position to Carillion’s, but we will continue to monitor the position.”
Broadland District Council said it only had a minor involvement with Capita currently, including licenses for software.
The council is due to be taking up Post Office and Pay Point transaction services from Capita in March due to its current provider ceasing the service.
Capita has seen its shares plunge more than 40% to a 15-year low after warning over profits and announcing an investor cash-call as part of a major overhaul.
Labour and trade unions have called for urgent action to avoid “another Carillion”, but the government has claimed Capita is not in a “comparable position”.
In response to a question in the House of Commons on Thursday from senior Labour MP Rachel Reeves, cabinet office minister Oliver Dowden said Capita’s plans were “primarily a balance sheet strengthening exercise” and that the company had “significant cash reserves”.