Turnaround specialists need to be straight-shooters and Capita boss Jon Lewis is no exception.
Lewis yesterday delivered a refreshingly candid assessment of the company’s current standing and the difficulties it faces. According to Lewis, the firm’s top brass had never looked further than a year ahead. In his own words, they had no strategy. For the first time, someone in this sprawling sector has effectively admitted what many have been reluctant to say: for years firms have been chasing revenue like headless chickens.
It doesn’t employ blue-collar builders; its white-collar office workers deliver slick IT solutions. Such solutions ensure cars are billed correctly for driving in the London congestion charging zone, tax credits are processed and TV Licence fees are collected. Capita has faced criticism for its performance on these and many other contracts.
Some £175m of annual savings are being targeted yet Lewis insists they won’t impinge on the quality of its services. There will be some job cuts but savings will come from head office changes and Capita will “take cost out at the point of procurement” – in other words, it will buy things more cheaply. To be frank, this doesn’t entirely sound like a recipe for Accenture-style delivery. But putting the finer details of Capita’s turnaround to one side, one thing is for sure: better planning should be welcomed.
One has to wonder what on earth was happening beforehand under former boss Andy Parker, though. Lewis’ comments should also serve as a timely wake-up call to the government. When the firms fail, like Carillion, or contracts are handed back (see the East Coast mainline on two separate occasions) it provides fuel for those who mistakenly argue against the provision of public services by the private sector.
A new focus on procurement suggests an end to low-balling by Capita. Lewis is making a bold statement and ministers should take note.
Picking the lowest bidder for critical public services, while easier to justify to the taxpayer, is not always the correct option. The government needs to be similarly bold by picking the right bidder, not just the best price.