Posts Tagged ‘Fitness to Work Assessments’

Another Crisis in the Outsourcing Industry: Capita Now in Trouble

February 1, 2018

Yesterday, Mike reported on his blog that the outsourcing giant, Capita, was now in trouble. Its share price has apparently halved, knocking £1.1 billion of its stock market value. It has axed its scheme to issue £500 million in dividends to its shareholders. Instead, it intends to raise £700 million, partly by selling off parts of the company, which it needs to balance the books. There are also fears that it will make part of its 67,000 strong workforce redundant as well as concerns for the firm’s pension fund.

Mike in his article notes that the company was responsible for assessing the infamous fitness for work tests, for which the government has imposed hidden targets. One of these is that 80 per cent of reconsidered cases should be turned down. Mike therefore comments that if the crisis means that some of these assessors get a taste of what they inflicted on benefit claimants, this would be a case of poetic justice. He also wonders what the firm was doing when it devised the scheme to issue those massive dividends to its shareholders. Did they believe that the government’s magic money tree would continue to allow them to give heaps of money to their rich shareholders? He also asks other searching questions, such as whether it was deliberately underbidding to get government contracts, and then using the money to help finance those projects it had already won.

Mike concludes

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?

See: https://voxpoliticalonline.com/2018/01/31/in-the-crap-ita-government-contractor-responsible-for-benefit-assessments-is-in-deep-financial-doo-doo/

Capita, or as Private Eye dubbed it, ‘Crapita’, has a long history of incompetence behind it. Way back in the 1990s it seemed that hardly a fortnight went by without Capita turning up in the pages of the satirical magazine. And the story was nearly always the same. The outsourcing company won a government or local authority contract to set up an IT system or run IT services. The project would then go over time and over budget, and would be massively flawed. And then a few weeks or months later, the company would be given a contract somewhere, and do exactly the same thing there.

You’re left wondering how Crapita kept winning those contracts, when it was so manifestly unfit to carry them out. Who did it have on its board? Or was there a deliberate policy by Major’s government to support outsourcing, no matter how inefficient and incompetent they were, because it was private enterprise and so preferred and supported for purely ideological reasons?

In any case, what seems to have placed the company in a very precarious financial situation is the usual tactics of big companies in this stage of capitalism: award massive dividends to the shareholders. This usually goes along with starving the rest of the company of investment, which seems to have been done to. And granting massive, and massively unsustainable pay awards to senior management. There’s no mention of that in Mike’s article, but I don’t doubt that this was done too. I’ve got the impression that it’s just about standard practice across a huge swathe of industry.

This is a financial strategy that has driven far more than one company to the wall. I also wonder if the executives weren’t also trying deliberately to create a debt, so that they could dodge corporation tax for five years. This is one of the tricks Stewart Lansley and Joanna Mack describe in their book on contemporary British poverty, Breadline Britain.

Over the years the outsourcing policy has been in operation, there’s been one crisis after another. The outsourcing companies have repeatedly shown themselves to be incompetent, not just in the case of capita, but also notoriously with G4S and the scandals over the violence and brutality it meted out towards asylum seekers in the detention centres it ran. And, of course, when a whole load of prisoners escaped on their way to court. Or jail.

Private industry has repeatedly shown that it is incompetent to do the work of the state sector. These firms have the disadvantage of having to make a profit for their shareholders, as well as the demands of their management for multi-million pound pay packets. The only way they can afford this is by cutting wages to their workers, and spending as little as possible on the service they are meant to be providing. The result of this has been a series of financial collapses. Carillion was the first. Now Capita and Interserve, another outsourcing company, is in similar trouble.

The only sensible recourse should be to cancel these companies’ contracts, and take everything back in-house. But this won’t be done. I think there’s a problem in that the state sector has been so decimated by the past four decades of Thatcherism, that it no longer has the capacity to run these services itself. There’s also the additional problem that too many politicians and media magnates have connections to these companies, or to firms in a similar position hoping for government contracts. Acknowledging that outsourcing was a failure would damage the interests of these politicos and press barons. There’s also the challenge of actually facing up to the fact that a central plank of Thatcherite dogma – that private enterprise is always more efficient than the state – is absolutely, undeniably wrong. Anybody who makes this point is denounced as a Communist in screaming headlines. You only have to look at the way the Tory press has vilified Jeremy Corbyn for daring to want to renationalise the NHS, the electricity net and the railways. His policies are very far from the total nationalisation demanded by Communists and Trotskyites, but you wouldn’t know it from the frothing abuse hurled in his direction by the Tories and Blairites.

There’s also another problem with calling an end to the outsourcing scam. PFI contracts and outsourcing allow some of the costs to be written off the official government accounts sheet. They’re still there, and we have to keep paying them, but they’re not included in the official figures. It’s why Mussolini used a similar scam when he was Duce of Fascist Italy. Any government that restores these projects to the way they were handled before risks putting millions back the official figures. And if that’s the Labour party, you can imagine the Tories making their usual hackneyed and untrue comments about ‘high-spending Labour’, and then re-iterating the spurious arguments for austerity.

I’ve no doubt that the government will do what it can to shore up the current mess the outsourcing companies are in. But the collapse of Carillion and now the severe financial troubles faced by Capita and Interserve show that outsourcing does not work. And given these companies’ highly checkered history, they should never have been given governments to begin with.

And it bears out exactly the description the author of Zombie Economics used for them in the very title of his book. Outsourcing, and the rest of the Thatcherite economic strategy of privatisation, wage restraint, low taxation and declining welfare are ‘zombie economics’ as they don’t work, but haven’t yet been put it into the grave.

It’s high time they were, and Thatcherite free trade capitalism was abandoned as the failure it so glaringly is.

Advertisements

Vox Political: Report Recommends Commissioner to Protect People with Learning Difficulties

February 23, 2016

This is another fascinating piece from Vox Political. According to the Grauniad, Stephen Bubb, the author of a report on abuse of people with learning difficulties at a care home near Bristol, has recommended that a special commissioner should be appointed to protect them. See: http://voxpoliticalonline.com/2016/02/23/appoint-individual-to-protect-rights-of-the-vulnerable-report-suggests/

It’s an interesting idea. The piece points out that there is already a children’s commissioner, following the horrific maltreatment and death of Victoria Climbie. Continuing the Classical theme from my last post about Boris Johnson, there’s a kind of precedent for all this in Ancient Greece. I can remember reading in one of the books at College that one of the Greek city states – probably Athens – had an ‘archon for women’ – effectively a ‘minister’, to investigate causes of complaint raised by them. This followed a women’s strike or strikes similar to the sex strike portrayed in Sophocles’ Lysistrata. There was, I believe, also radical working class Communist movements, which formed the basis for another ancient Greek play, The Ekkleziae. In the case of women, today that’s resulted in calls for greater representation of women in parliament and politics generally, but that simply wasn’t considered in the very patriarchal political environment of the ancient world.

It’s an interesting idea, but I honestly don’t know how effective such a commissioner would be, even if one could be set up. The Tories don’t like bureaucracy, and especially not when it deals with disadvantaged groups. Mike’s undoubtedly correct when he says that there’s little chance of such a commissioner being appointed under Cameron. I feel that if a commissioner were appointed, it would only be a cosmetic measure. The institutions within the civil service which are supposed to be the government in check seem to be all too willing to bow to their every whim. For example, Mike had to fight long and hard to get the DWP to concede that it had to release the figures of the number of people with disabilities, who had died after being found fit for work. The Department did so only exceedingly grudgingly, and the Information Commissioner at many points seemed very willing to accede to the government’s wishes, rather than get them to release the information. Privacy and civil liberties groups have also expressed alarm at the way the government watchdogs, which are supposed to protect us from the massive expansion of the surveillance state and the intrusive acquisition of personal data by the state, have done no such thing, or have made only the flimsiest of protests.

It’s a good idea, but I’m pessimistic about how it would work out. Even if Cameron appointed one in the first place. And I doubt he would. I think the home at the centre of the abuse scandal is privately run. Cameron definitely does not want anyone to take any action that might impugn the mighty efficacy of private enterprise. It’s why, after all, Nikki Morgan, the education minister, refused to answer Charlie Stayt’s question about how many privately run academies have had to be taken back into state management. The last thing Cameron and his crony capitalists want is another report stating that private enterprise doesn’t necessarily mean quality care, and the expansion of the powers of the state. The Tories are, after all, the party of Thatcher, and that’s what she hated the most. The frontiers of the state have to be rolled back, and who cares if the poor and the disabled are abused and victimised.