Takeover firm Capita posts record profits

3rd August 2001 at 01:00
Dismayed unions say shareholders are growing rich at taxpayers' expense. Jon Slater reports.

Capita, the private firm that has taken over education services in Leeds and the London borough of Haringey, this week announced record profits.

Interim results for the company for the six months to June 2001 show an increase in operating profits of 62 per cent to pound;31.3 million.

It is the third company working in state education to reveal a rise in profits in recent weeks. The other two are Tribal group, which acts as consultant to 20 education authorities, and Nord Anglia, which runs education services in Hackney and Waltham Forest, both in London.

Capita's shareholders will see dividends for shareholders increase by 36 per cent, almost 10 times this year's teachers' pay award, after the company secured more new work in the first six months of 2001 than it did in the whole of last year.

In addition to its work with education authorities the company is set to win the pound;110m contract to manage the Government's new Connexions youth services card for 16 to 19-year-olds.

The card is intended to tackle the financial barriers preventing young people continuing in education.

More than half of Capita's income comes from the public sector with education making up a fifth of the group's turnover.

Education is seen as a key growth area for the future. The group is about to launch Capita Education Direct in September which the company says will enable it to "market, sell and deliver the full range of our services directly to schools".

Teacher unions were dismayed by Capita's results. The National Union of Teachers said: "It is distressing to recognise that this amount of money is going out of the public sector into private hands."

The National Association of Schoolmasters Union of Women Teachers has submitted a motion to the Trades Union Congress attacking the expansion of private-sector involvement in education.

Chris Keates, NASUWT deputy general secretary, predicted the time was coming when teachers would be judged on how much they helped companies' profitability rather than children's education.

Capita's results come as a think-tank that has championed business involvement in education criticised the Government's attempts to attract private-sector cash into schools.

Instead of the current "top-down" approach where ministers introduce national funding schemes they should be encouraging schools to build on their existing links with local firms, says a report from the Social Market Foundation.

According to authors Gillian Penlington and George McNamara, education action zones failed to attract the hoped-for business sponsorship because ministers made the mistake of thinking that British businesses were as philanthropic as American.

The report from the foundation - which has been seen as right-wing but which is trying to reposition itself as an independent, centrist organisation - also calls for employees from industry to teach the new vocational GCSE courses.

Employees would teach one module or section of each course under the supervision of a qualified teacher. They would be responsible for their own lesson plans. These volunteers from industry would not be paid by schools, but the report argues that their companies will give them paid time off.

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