Another privatisation domino wobbles …

“Capita has suspended its dividend and put plans in place to raise up to £700 million as it became the latest company in the troubled outsourcing sector to hit investors with a shock profits warning.

The group, whose public sector contracts include working with the emergency services, in healthcare and with the police and justice systems, said that it would auction off non-core assets over the coming two years.

Capita, which also works in the private sector for banks, insurers, retailers and telecoms groups, said that it would press ahead with a cost-cutting drive, including reducing its administrative expenses and centralising its contract procurement processes.

Companies in the outsourcing sector, particularly those with large government contracts, face wafer-thin profit margins and cutbacks in Whitehall spending. Private sector clients are also cutting costs.

Capita’s warning comes weeks after Carillion, whose main customer was the government, collapsed into liquidation, triggering a string of investigations into the circumstances of its demise.

Shares in Capita had fallen by 46 per cent to 188p by late afternoon trading in London today valuing the group at £1.3 billion. They have dropped 30 per cent over the past year during which the company issued several profit warnings.

The outsourcer said it plans for a “multi-year transformation programme” just over two months after Jonathan Lewis was appointed as its new chief executive. Capita said today that under its new boss, it had initiated a process of change that covered “strategy, cost competitiveness, sales IT and our capital structure, to improve the performance of Capita over the medium to long term”.

Mr Lewis said: “Capita has underinvested in the business and there has been too much emphasis on acquisitions to drive growth. As our markets have evolved, the group has not responded. Today, Capita is too complex, it is driven by a short-term focus and lacks operational discipline and financial flexibility.”

Capita’s decision to suspend its dividend payments so promptly stands in contrast to Carillion, however, which has come under fire for continuing to reward shareholders even when it was in financial difficulties.

Capita said today that although trading in its 2017 financial year had been in line with its expectations profits before tax in 2018 were now likely to come in between £270 million and £300 million.

Before today’s warning, analysts had pencilled in profits for 2018 of about £400 million.

The company said that it would be raising cash through a rights issue this year. It said that the precise amount it needed to raise was not yet clear but that it had agreed a standby underwriting facility with banks for up to £700 million. When banks underwrite a capital raising it means they guarantee that the money will come in even if it means they have to buy up unwanted shares.

Mr Lewis said: “An immediate priority is to strengthen the balance sheet through a combination of cost savings, non-core disposals and new equity. My initial review of our cost base highlights that over the next few years there is significant scope for cost efficiencies but also the need to spend more where there has been underinvestment.

“We have identified a small number of quality business that do not fit with our core skills for which there will be better owners and a process to maximise value will commence shortly.”

Among the businesses Capita plans to offload are Parkingeye, a car park management company, and Constructionline, a register for contractors and consultants in the UK.

Capita forecast that its net debt at the end of 2017 would be around £1.15 billion and that it would aim to reduce its gearing.

The company is also in the process of a review of its pension scheme. Capita currently expects that the deficit in the scheme will be below the most recently disclosed figure of £381 million.

Analysts at Jefferies said that their “initial calculations” suggested that consensus forecasts for Capita’s earnings per share this year would probably be cut by about 40 per cent today. “In the medium term, cost savings should help (we think £85 million to £90 million could be achievable) but the revenue environment remains lacklustre,” they added.”

Source: The Times, paywall

TV tonight: “The New Builds Are Coming: Battle in the Countryside”


“Richard Macer explores the controversial decision by the government to free up the green belt to developers. In the tiny charming village of Culham he finds residents furious at plans to supersize their village to three and a half thousand new homes.”

“Javid: Hoarding developers will lose land”

Is Owl the only cynic who thinks developers are, at this moment, working on a new definition of “hoarding”? !!!

“Housing Secretary Sajid Javid says compulsory purchase powers will be used more widely to drive up the supply of new homes, with developers set to lose planning permission on unused land if they fail to hit construction targets. Mr Javid told the Times: “We’ve got a housing crisis. We’ve got no time for anyone who is just antidevelopment for the sake of it.”

He added that the Government will not “be your friend” if you are a nimby as ministers are “on the side of people who want more homes.” With Shelter analysis showing that planning permission was granted on 1,725,382 housing units in England between 2006 and 2014 but only 816,450 had been completed after three years, Mr Javid said there is “definitely some hoarding of land by developers” and insisted the Government must “play a more active, more muscular role.”

Source The Times, Page: 1 The Times, Page: 13 (pay wall)

Fight for your country, pay taxes, marry – but you are too “immature and irresponsible” to vote says Tory Deputy Leader

“Young people aged 16 and 17 lack the “maturity and responsibility” needed to vote, the de facto deputy prime minister has said.

In a move likely to anger young people demanding the right to vote, David Lidington dismissed calls for the voting age to be lowered to 16.

The Cabinet Office minister and unofficial deputy prime minister was stepping in for Theresa May, who is in China, at Prime Minister’s Questions.

He was responding to a question from Emily Thornberry, standing in for Labour leader Jeremy Corbyn, about why the Government refuses to reduce the voting age to 16.

In response to his answer, Ms Thornberry accused the Government of being a “coalition of cavemen”. …”

“Special scrutiny meeting may be held over set up of shady Accountable Care System in Devon”

Again, Martin Shaw (East Devon Alliance Independent)and Claire Wright (Independent)to the rescue! From Claire Wright’s blog:

“A special health scrutiny session may be held in the next few weeks, if it transpires that a controversial Accountable Care System is to be established in Devon in April, it was agreed at last Thursday’s Health and Adult Care Scrutiny Committee meeting.

My Independent colleague, Martin Shaw, put together an excellent and very well researched paper on the subject – found here: and presented it to the committee last week.

He asked for an urgent special meeting of the committee as the pace of change is looking very fast.

The main concerns about ACS’s (Accountable Care Systems) and ACOs (Accountable Care Organisations) are that they are the very opposite that their name implies, that they would not be set up in statute and may not be subject to the usual checks and balances that legally constituted NHS organisations are.

The language is the same as used in the United States healthcare system, which is quite understandably worrying many people.

There is also a great fear that such organisations will source much more work from the private sector over much longer contract periods.

Any such organisation or system may not be able to be held to account by the only legal check on health services – Devon County Council’s Heath and Adult Care Scrutiny Committee.

I formally proposed that the committee holds such a meeting in February preferably. This was agreed subject to the date when the Devon Accountable Care System may be established.

I am delighted to see that nationally, a judge has granted permission for a campaign group to pursue a high profile judicial review against the government on this issue.

So we will see.”

How different the approach to redundant quarries can be – with East Devon the loser

North Devon:

East Devon:

Claire Wright and Martin Shaw fighting heroically for our NHS

Thank heavens we have Claire Wright and Martin Shaw fighting so hard for our NHS on a daily basis and don’t have to leave the fight to Swire, Diviani, Sarah Randall-Johnson and East Devon Tories – or there would be no fight at all!!!

Holding NHS Property Services to account:

Getting those winter performance figures that Randall-Johnson was happy to wait months for:

Social care not working:

Ambulance service under intense pressure due to cost-cutting:

Decisions on community hospitals:
Health Scrutiny hears there will be no precipitate decisions on community hospitals – local conversations with CCG and RD&E offer chance to shape ‘place-based health systems’ around towns

Declining performance:
Devon’s health system’s declining performance over last 12 months – and Health Scrutiny still waiting for winter crisis evidence

“Watchdog launches review of local government ethical standards”

The call for evidence closes at 5 pm on 18 May 2018. Owl is fairly sure that there will be LOTS of evidence in East Devon!

“The Committee on Standards in Public Life has launched a review of local government ethical standards with a call for evidence.

The terms of reference for the review are to:

examine the structures, processes and practices in local government in England for:

– maintaining codes of conduct for local councillors
– investigating alleged breaches fairly and with due process
– enforcing codes and imposing sanctions for misconduct
– declaring interests and managing conflicts of interest
– whistleblowing

assess whether the existing structures, processes and practices are conducive to high standards of conduct in local government

make any recommendations for how they can be improved

note any evidence of intimidation of councillors, and make recommendations for any measures that could be put in place to prevent and address such intimidation

The review will consider all levels of local government in England, including town and parish councils, principal authorities, combined authorities (including Metro Mayors) and the Greater London Authority (including the Mayor of London).

The review will be led by committee member Dr Jane Martin CBE. She said: “Robust arrangements to support ethical standards are needed to safeguard local democracy and facilitate the representative process, but also to ensure high standards of conduct by councillors. The Committee considers it is timely to undertake a health check of local government so the public can have confidence that the standards arrangements supporting local democracy are working effectively.

“The Committee has maintained a longstanding interest in local government ethical standards, and regularly receives correspondence from members of the public expressing their concern about this issue.”

Dr Martin added: “We are keen to hear first-hand how effective councils’ standards arrangements are, in light of the substantial changes in the standards landscape for local government over the last ten years.

“We are interested in how local authorities have designed their complaints handling, scrutiny and sanctions regimes in order to maintain excellent ethical standards and how members, local government officials and the public experience them.

“The Committee would like to hear from councils and individuals who can help us understand how ethical standards issues are dealt with by local authorities.”

The call for evidence closes at 5 pm on 18 May 2018.

The CSPL said that, based on the submissions to the review and meetings with key stakeholders, it intended to publish its findings and recommendations late in 2018.”

“Squalid homes: Corbyn says government ‘in pockets of landlords’ “

“Jeremy Corbyn has accused the government of being “in the pockets of rogue landlords” and unable to fix what he called a “crisis level” of squalor at the bottom of the rented housing market.

More than half a million people aged under 35 are estimated to be living in rented properties so hazardous they are likely to lead to residents needing medical attention, the Guardian reported on Sunday.

Responding to the story, the Labour leader said: “The squalid and unsafe conditions that hundreds of thousands of people face are at crisis level. The broken housing market is in urgent need of a complete overhaul. The Conservatives can’t fix the housing crisis because they’re in the pockets of property speculators and rogue landlords, not on the side of tenants.” …”

30 Devon health visitorsto be sacked in latest round of austerity cuts

From the blog of Claire Wright:


“The latest round of government budget cuts to public health is set to result in a loss of around 30 health visitor posts across Devon, it emerged at last Thursday’s (25 January) Health and Adult Care Scrutiny meeting.

During a presentation by Steve Brown, assistant director of public health for Devon County Council, I asked for clarification on the budget cuts as a result of reduction in funding of over £700,000 from central government ….

The narrative in the agenda papers stated that several of the budget lines are set to save mobey due to contract renegotiation. I asked for assurances that this meant only a renegotiated contract and not a reduction in service. Mr Brown confirmed that there would be no service reductions in those areas.

However, due to budgetary pressures in 0-5 children’s services, the contract currently managed by Virgin Care, it is anticipated that there will be a loss of 30 health visitor staff, due to ‘natural wastage’ (staff leaving and not being replaced), in the next financial year 18/19.

NHS funded mental health support in schools set to be lost

A cut of £223,000 to the public mental health in schools budget could mean that NHS funded emotional health and wellbeing service in schools will be scrapped, it was also revealed at last

Thursday’s meeting.

When I enquired, Mr Brown confirmed that the contract for the service was coming to an end and his department was searching for a new provider. He said it was a really valued service and if further efficiency savings could be made elsewhere, this service would be top of the list for funding.

I was completely dismayed at what I was hearing, given that anxiety and depression among young people is rocketing.

I proposed that the Health and Adult Care Scrutiny Committee relay its grave concerns to Devon County Council’s cabinet about the impact of the cuts on the public health budget.  In particular, the loss of 30 public health visitors and the potential significant impact on young people the cut of £223,000 to public mental health budget, especially at a time when anxiety and depression among young people is rising.

I also proposed that the Health and Adult Care Scrutiny Committee writes to all Devon MPs, asking them to take up the issue with the Secretary of State for Health.

Another proposal from the chair on continuing the push for fairer funding for public health in Devon was also put forward.

All recommendations were supported unanimously.

You can view the speaker-itemised webcast here”:

PFI company? Don’t bother with pensions for workers – put directors first

“Carillion “wriggled out” of payments into its company pension schemes as its troubles grew, while it carried on paying shareholder dividends and bosses’ bonuses, say MPs.

The Work and Pensions Committee is questioning the way pension investments were managed at the collapsed outsourcing giant.

The schemes overall are in deficit.

But last year contributions to the pension funds were deferred until 2019, to help shore up the firm’s finances.

The committee has published a letter from Robin Ellison, chairman of trustees of Carillion’s pension scheme, giving an account of the last few years and suggesting they have been left with a funding shortfall of around £990m.

The letter shows that pension trustees were “kept in the dark” about the state of Carillion’s finances until late last year, the committee argues, and that dividends and bonuses were paid out at the expense of pension fund contributions.

On Monday, the Financial Reporting Council, the UK’s accountancy watchdog, said it would launch an investigation into KPMG’s audit of Carillion’s financial results between 2014 and 2016 as well as the work it carried out during 2017.

The FRC said the probe would “consider whether the auditor has breached any relevant requirements, in particular the ethical and technical standards for auditors”.

It will examine KPMG’s audit work on areas including estimates and recognition of revenue on significant contracts and accounting for pensions.

KPMG said it believed that “we conducted our role as Carillion’s auditor appropriately and responsibly”, adding that it would co-operate fully with the FRC’s investigation.” …

“Business rates hardship fund proves ‘false hope’ after more than £70m delayed”

A relief fund worth £300m set up by Philip Hammond, the Chancellor, to support small firms struggling under the weight of business rates rises has proved a “false hope” after failing to pass on tens of millions of pounds 300 days after its launch.

Research by Gerald Eve, the property consultancy, has found that more than £70m of the £175m allocated to councils for the year to March 2018 has yet to be passed on to local firms.

The Federation of Small Businesses said some of its members were still waiting for the essential funding.

“Our research showed that one in five firms facing business rates hikes were planning to sell, hand-on or close their business,” said Mike Cherry, the chairman. “The Chancellor’s £300m hardship fund offered a small glimmer of hope. For many, it’s proved to be false hope.” …

Greenfield to concrete

England is losing an area the size of Glasgow every year because of a record number of developments on greenfield land.

Forests, fields and parks are disappearing under concrete at the fastest rate for a quarter of a century, an investigation by The Times has found.

“On average, 170 sq km of greenfield land were built on every year from 2013 to 2016 after the government relaxed planning rules to ease the housing shortage.

The rate of development is more than two-and-a-half times the 25-year average and five times higher than the rate between 2006 and 2011.

If the construction of new homes, shops and infrastructure continues at the present pace, an area the size of Greater London will have been built on by 2028.

Greenfield land — not to be confused with green belt — refers to “previously undeveloped land” that includes farmland, gardens, forests and “grassed areas” in towns and cities.

The Campaign to Protect Rural England said that the government figures were “startling”. Graeme Willis, head of rural campaigns, said: “To use land more sustainably, we must start using it more efficiently. This rate of loss cannot be endured without losing huge swathes of our countryside. It is a non-renewable resource. Once built on, [it] is lost forever.”

The government changed the planning laws in 2012 to increase the rate of building with “a presumption in favour of sustainable development”, which required local authorities to allocate land for development.

“What you saw after 2012 was local authorities getting their houses in order in terms of land supply,” Duncan Hartley, director of planning at Rural Solutions, a property consultancy, said. “They have been allocating sites for development and those sites have had to be substantial to meet housing needs.” The single biggest use for greenfield sites once developed was housing at 17 per cent. The other significant uses were for industrial sites, transport infrastructure, offices and shops.

A spokesman for the Ministry of Housing said: “We will be working to put the environment at the heart of planning, making sure any new development improves the environment locally and nationally, while contributing to the wider commitment to build 300,000 homes a year.”

From 1989 to 2011, most developments were on brownfield sites.

From 2013-16, the pendulum swung the other way, with greenfield sites supplying 54 per cent of the land.”

Source The Times, paywall

“Hundreds of thousands living in squalid rented homes in England”

Owl says: the sixth RICHEST country in the world …. where landlord MPs refused to pass a law about habitable housing because … well just because they can.

Rented housing so squalid it is likely to leave tenants requiring medical attention is being endured by hundreds of thousands of young adults in England, an analysis of government figures has revealed.

Rats, mouldy walls, exposed electrical wiring, leaking roofs and broken locks are among problems blighting an estimated 338,000 homes rented by people under 35 that have been deemed so hazardous they are likely to cause harm.

It is likely to mean that over half a million people are starting their adult lives in such conditions amid a worsening housing shortage and rising rents across the UK which are up 15% in the last seven years.

Visits by the Guardian to properties where tenants are paying private landlords up to £1,100 a month have revealed holes in external walls, insect-infested beds, water pouring through ceilings and mould-covered kitchens.

A 30-year-old mother near Bristol said her home is so damp that her child’s cot rotted. A 34-year-old woman in Luton told of living with no heating and infestations of rats and cockroaches, while a 24-year-old mother from Kent said she lived in a damp flat with no heating and defective wiring for a year before it was condemned. …

Government figures suggest as many as 2.4 million people in England live in rented homes – both in the private and social sectors – with category 1 hazards. That includes 756,000 households living in private rented properties – almost one in five of the whole private rented stock – and 244,000 households in social housing.

Sajid Javid, the housing secretary, said he was determined “to do everything possible to protect tenants” and pledged government support for new legislation that requires all landlords to ensure properties are safe and give tenants the right to take legal action if landlords fail in their duties..

“In practice you have fewer rights renting a family home than you do buying a fridge-freezer,” said John Healey MP, Labour’s shadow secretary of state for housing. “Too many people are forced to put up with downright dangerous housing. After the terrible fire at Grenfell Tower, it’s even more important that ministers back Labour’s plan to make all homes fit for human habitation.” …

Tory ex-Ministers hawk their influence for cash

Owl says: Does this disgraceful behaviour go top down, bottom up – or both? Owlis of the opinion it is the latter!

Former cabinet ministers have been exposed attempting to profit from a new cash for Brexit gravy train in Westminster, following an undercover investigation.

Lord Lansley, the former health secretary, was secretly filmed offering to use his knowledge and connections from within West­minster to provide “intelligence” on Brexit to a Chinese company offering him tens of thousands of pounds.

The peer, who has previously been accused of “ripping the heart” out of a bill to regulate lobby­ing, showed he was willing to pick up information from a key Brexit cabinet minister. He advised how the deal could be kept secret from the authorities by employing him through his wife’s company.

Peter Lilley, the former deputy Conservative Party leader, was also willing to approach key ministers on the Chinese company’s behalf. As part of his pitch for the job he described how he attended two advisory groups with influence over the Brexit minis­ters, one of which has never previously been revealed.

A third former minister, Andrew Mitchell MP, also appeared happy to give paid Brexit advice to the Chinese company. He charges £6,000 a day and disclosed that he was looking to work up to 10 weeks a year for private clients despite being paid £74,962 as an MP. “My constituents don’t mind what I’m paid,” he said.

The three men were secretly filmed as part of a joint undercover investigation by The Sunday Times and Channel 4’s Dispatches into politicians improperly making money from Britain’s negotiations to leave the European Union. …”

[there follows several pages of sleazy revelations]

Source: Sunday Times (pay wall)

Who holds academies (and every other privatised service) to account?

” An Observer piece questions the growth of academy schools, warning that: “There is no evidence that, on average, academy chains do any better at managing schools than the local authorities they replaced. Instead, the reforms have created a structural mess, opening up profound gaps in accountability and governance.” The paper also reports that six out of 10 of the biggest academy trusts have raised “warnings over pressures on pay, staffing levels, building maintenance and mounting deficits”, which “raises the spectre of what would happen if a major academy chain were to go bust”.

The Observer, Page: 46


Academy schools – the next privatisation domino to fall?

More than half of the major operators of the government’s flagship academies programme have sounded the alarm over school funding, heaping further pressure on Theresa May to ease the squeeze on public spending.

An Observer investigation into the Conservatives’ treasured education initiative found that six out of the top 10 academy trusts, which operate hundreds of schools across England, have raised warnings over pressures on pay, staffing levels, building maintenance and mounting deficits.

The revelation will worry Tory MPs, many of whom blame pressures on school budgets for the party’s disastrous election result last year. It comes with the prime minister already under intense pressure over NHS funding and facing internal criticism over a lack of focus on domestic issues.

An analysis of the most recent accounts of leading multi-academy trusts reveals that eight of the top 13 largest groups have issued warnings. One said that funding was failing to keep pace with costs and inflation, creating risks of “unsustainable deficits” and staff cuts. …”

PFI – a licence to print money?

“Carillion made £500m in revenue from selling off Private Finance Initiative (PFI) projects between 2003 and 2011, with many deals handing the construction firm returns of more than 15 per cent per year.

The most lucrative sale was of three NHS hospital buildings in Staffordshire, Swindon and Glasgow in 2007 which netted Carillion a 38.7 per cent annual return, according to analysis by the European Services Strategy Unit (ESSU). Around £200m of the sales came after 2010, the figures show.

Several of the purchasers are based offshore meaning they pay no UK corporation tax on the profits they derive from the schemes, which are ultimately paid for by taxpayers, the ESSU research found. …

… There are currently 735 operational PFI and PF2 deals, with a capital value of around £60bn. Annual charges for these deals amounted to £10.3bn in 2016-17, the NAO found. Even if no new deals are entered into, future charges which continue until the 2040s will amount to £199bn.

Earlier research by the ESSU found that nine offshore funds own between 50 per cent and 100 per cent of the equity in 335 PFI projects across the UK. The funds own 45 per cent of all current projects, ESSU said. …”

Claire Wright: “Care at home isn’t working, Sidmouth GP tells Devon County Council’s Health Scrutiny Committee”

From the blog of Claire Wright:

Carers aren’t available to look after people in their homes, a Sidmouth GP told Devon County Council’s Health and Adult Care Scrutiny Committee on Thursday (25 January).

So concerned at the unavailability of care in people’s homes – the service designed to replace community hospital beds, Dr Mike Slot travelled to County Hall to share his concerns with the health scrutiny committee.

After he had finished his submission I tried to ask a question, but was prevented from doing so by the chair and scrutiny clerk, who informed me that it was against the rules for councillors to ask questions of public speakers!  This was the first I knew of it since my proposal to bring in public speaking to scrutiny was agreed two years ago.

The Head of Social Care and the committee chair both intimated that Dr Slot’s view may be an isolated one…. I am less convinced.

At the end of the meeting in the work programme I successfully proposed a spotlight review to investigate Dr Slot’s concerns fully.

Another member of the public was told she was not able to speak to the committee because she missed the deadline, despite there being slots available.

I have since contacted the officer presiding over the Procedures Committee (which I am a member of) to get the rules reviewed. They will now be debated at the the April committee.

I asked Dr Slot for a copy of his speech, which is below.

If community hospital beds was intended to be offset by increasing the capacity of community care so that patients could be cared for in their own homes. This may or may not have been realistic since many of the patients in the hospital system cannot be managed in the community even with excellent community services.

However, with or without community hospital beds it is an excellent idea to expand community services so that all those patients who can be cared for out of hospital can remain at home. Unfortunately there is not sufficient capacity in the home care services to do this job.

When GPs ring the single point of access number asking for rapid response or night sitting, the carers are not available. This is partly due to lack of resources and partly due to difficulty with recruitment. I suspect that part of the difficulty with recruitment may be due to the terms and conditions. If the carers only get paid if they are required then this may not be particularly attractive.

We understand that a hospital only functions well with a maximum of 85% bed occupancy, and similarly with the home care service we need to accept that there will be some unused capacity otherwise the service is never able to accept unexpected cases. Thus we need to allocate enough resource so that we can offer both an attractive rate of pay and attractive terms and conditions.

This is in fact an essential part of the answer to the problem the entire NHS is experiencing. If the level of water in a reservoir is steadily rising and then overflows, you can either try and build the banks higher in which case it will just overflow a bit later, or you can look at the streams going in and going out of it.

Similarly when you see an overflowing A&E or hospital you can buy more A&E or acute beds (very expensive) or you can increase community capacity to prevent people going in and facilitate people coming out (relatively much cheaper but you still have to pay a proper rate for it).”