IT company accused of 'excessive' profits

3rd June 2011 at 01:00
Capita stings heads with pound;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 pound;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 pound;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 pound;3,000 to pound;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 pound;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

Log-in as an existing print or digital subscriber

Forgotten your subscriber ID?


To access this content and the full TES archive, subscribe now.

View subscriber offers


Get TES online and delivered to your door – for less than the price of a coffee

Save 33% off the cover price with this great subscription offer. Every copy delivered to your door by first-class post, plus full access to TES online and the TES app for just £1.90 per week.
Subscribers also enjoy a range of fantastic offers and benefits worth over £270:

  • Discounts off TES Institute courses
  • Access over 200,000 articles in the TES online archive
  • Free Tastecard membership worth £79.99
  • Discounts with Zipcar,, Virgin Wines and other partners
Order your low-cost subscription today