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IT company accused of 'excessive' profits

News | Published in TES Newspaper on 3 June, 2011 | By: Richard Vaughan

Capita stings heads with £20k fees to licence vital school management system

Private services company Capita stands to make tens of millions of pounds of taxpayers’ money from the Coalition’s expansion of the academy programme, it has been claimed.

Headteachers overseeing the transfer of their schools to academies are being slapped with bills - often of more than £20,000 - to change the licence on their vital school information management systems (Sims).

Capita’s systems cover all parts of a school’s administration, from registration and dinner money to lesson structures and admissions, and are used by more than 20,000 schools across the country - nearly 80 per cent of the market.

Most of its contracts have previously been with local authorities rather than individual schools, but when a school opts out of local authority control they are forced to pay for an individual licence.

Nearly 400 schools have already taken up the Government’s offer to become an academy and more are expected to follow.

The Department for Education provides £25,000 to a school converting to academy status, but many heads say almost all of the cash is being used up to pay the re-licensing fee for their Sims, before legal costs and other consultants’ fees are taken into account. When still part of a local authority, secondary schools can expect to pay the council about £3,000 to £4,000 for their Sims.

RM, a competitor to Capita, said it does not charge schools that convert to academy status for new licences and has seen more business as a result of Capita’s decision.

Sutton Council is bracing itself for the conversion of all its secondaries to academy status over coming months and described the Capita re-licensing fees as “excessive”.

Councillor Kirsty Jerome, the council’s executive member for education and schools, said: “The charges for an individual licence do seem excessive and unexpected. We asked Capita to change their stance, but they have said they are bound by competition legislation.

“I would urge schools in this position to challenge Capita and the DfE directly.”

William Smith, headteacher of Greenshaw High in Sutton, said: “Capita are seemingly content with taking tens, if not hundreds, of millions out of the education budgets of schools with no change to the service other than a transfer of the licence.”

Mary Bousted, general secretary of education union the ATL, said the fees should act as a warning.

“This is one of the hidden costs of becoming an academy - and it’s just the beginning,” Dr Bousted said. “It just shows that if you want to play with big business you will get burnt.”

Capita Children’s Services, which runs Sims, said that if a school holds its own licence it will only be charged a £200 administration fee when converting to an academy, but if a local authority owned the licence the cost of a new licence must be passed to the academy.

A spokesperson said: “In this case, an academy requires its own licence to use Sims as it is a new legal entity and there is a charge involved.

“Due to Capita Children’s Services’ strong standing in the school marketplace it would be seen as using its position unfairly against its competitors if it did not pass these costs on to its customers.”

A DfE spokesperson said: “The Department is aware of the issue and we are eager to settle the matter as soon as possible to ensure that academies are not financially disadvantaged over maintained schools.”


Original headline: IT company accused of ‘excessive’ profits on new academies

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Comment (6)

  • I doubt that the 'condems' will do anthing about this, after all this is all about the conservative vision of enterpirise and big business getting profit for shareholders.

    Capita are the scourge of education in my opinion - they secure massive govbernment contracts by uindercutting competitors, they in effect have a 'loss leader' approach then once they get the contract and the monopoly BANG up go the charges and the costs and they rake in the profits.

    Pure and simple this is profiteering. After all what is this licenece? No more than a piece of paper (probably not even that) which allows you to use the software - I bet there is no backup or service or upgrade built in, oh no, if you want that, you will also pay through the nose!

    Peroblem now of course is that all those other services that were negotiated through the LA will stick their noses in the academy gravy-train and demand huge payments for just providing the existing service.

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    3 June, 2011


  • The real issue here is that it is practically impossible for most small schools to move away from SIMS. They don't have the level of in-house IT skills to move to a different system and therefore are reliant on Local Authorities to take a decision like that.

    Given that the likes of Capita routinely provide funding to Local Authorities and sometimes even fund the whole Authority IT department, it doesn't take Einstein to work out why Capita have 80% of the market.

    Schools often loathe SIMS but have no practical means of changing their systems and until the Government forces Capita to make the transition out of their system an 'easy' process the situation will not change and Capita will continue to make hundreds of millions out of the tax-payer.

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    Rating: 5 out of 5 stars
    3 June, 2011


  • 'If you want to play with big business you will get burnt' - absolutley true Dr Bousted. Capita will take any and every opportunity to extract money from schools - and provide a shoddy service in return.

    Schools are backed into a corner, they can't easily change MIS supplier so there's little they can do but pay the bill. It's disgusting, pure profiteering and Capita should not be allowed to get away with it.

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    3 June, 2011


  • Its the LAs and the schools responsibility to challenge the monopolistic and exploitative companies. I have worked with a few large providers in various school settings and the story is the same: Inefficient, to big and VERY expensive. Support small businesses. Many small good IT firms know the basic language behind SIMS and how SIMS works, and give these parasites a little competition!

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    7 June, 2011


  • I'd challenge the idea that schools can't easily change their MIS supplier unless the reasons are political. I work for one of Capita’s competitors and we regularly migrate the entire database in under a week, training included. It really isn’t that hard.

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    8 June, 2011


  • Whilst I wholeheartly disagree with the additional license cost for the Academies, I also wholeheartly disagree with many of the comments above. Many schools benefit hugely from the fully integrated MIS system that is provided by Capita, and very few wish to change providers, I have certainly never met a school that "loathes SIMS". Schools can easily change their MIS provider IF they are willing to pay for new licenses and invest heavily in the retraining of staff -they are hardly "backed into a corner".
    Expensive - maybe - but fit for purpose - Absolutely.

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    8 June, 2011


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