Barnet Tories slammed as service provider Capita posts £513.1million annual pre-tax loss.
- Credit: PA
The Conservative-run borough has contracts with Capita worth half a billion pounds to run services such as highways, planning, regeneration, environmental health, trading standards and the Hendon Cemetery and Crematorium.
The announcement comes as deslected Barnet Conservative councillor Sury Khatri urged residents to vote for Labour councillors in the upcoming local elections on May 3 due to his concerns over the Capita contract.
Capita announced that revenue fell 4 per cent to £4.23 billion in the year to December 31.
As part of a new strategy to reduce debt, the outsourcer is targeting annualised cost savings of £175m by the end of 2020 and around £300 million from disposals in 2018.
In a statement today, the group said: “Capita has today announced its new strategy which aims to simplify and strengthen the business in order to deliver future success”
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The group was hammered on the stock market earlier this year after warning over profits.
Capita’s woes comes after construction group and outsourcing rival Carillion collapsed into liquidation in January, leaving the taxpayer on the hook for billions of pounds of projects and pension liabilities.
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Barnet Liberal Democrats said in a statement: “Given that we’ve already seen the collapse of another outsourcing company this year, in January when Carillion collapsed, it is clear that there is a major risk over the operation of Barnet Council. In light of todays profit warning,
“Next week sees elections for Barnet Council. The current Tory administration have put all of their eggs in one basket by handing over control of the running of the borough to Capita. We call for the deputy leader of Barnet Council, Dan Thomas, who has taken responsibility for the administration of the contract with Capita to make a full statement detailing the risks to the borough should Capita collapse.
“People want proper assurance that the council have robust plans in place to continue to operate, that there will be no financial implications for taxpayers and that any money paid in advance to Capita in forward payments is safe in ring fenced accounts.”
Roger Tichborne, candidate for Mill Hill said “Before people go the the polls next Thursday, they deserve to be told the truth about the mess that the Tories have made. When Mike Freer first proposed the One Barnet project in 2009, the council was rated as a three star, well performing council.
“Since then we’ve seen childrens services failing, with OFSTED calling in another council to run the department. We’ve seen our roads become like the surface of the moon through inadequate checking of repairs and now we see the councils main supplier in dire financial trouble and the whole operation of the council is at risk. It is quite clear that if Capita are losing money on their current contracts, there are only two options. These are higher costs for customers such as Barnet or they will go bust. We need to know which of these we will be seeing and how it will affect us”.
A Barnet Council spokesperson said: “The Council regularly reviews the financial status of major suppliers as part of contract management and contingent planning arrangements. Today’s announcement from Capita is in line with the information provided to the market in January, and does not therefore raise any new issues for the Council.”
He referred to a statement from the council in November which said: “A year-four review of Barnet Council’s joint venture with Capita: Regional Enterprise Ltd (Re) has confirmed that the partnership is on course to deliver nearly £40million of financial benefit to the taxpayer over its 10-year term, through savings and income.”