Cream of the contracts savoured by Capita

Paul Farrelly looks at the fast-growing company that has won the pounds 70m privatisation of the new written driving exam

"A WHILE BACK, it would have been right for people to have a political sensitivity about Capita, but now things have changed. Before, contracting out was purely political, now it's as much about budgets," said Paul Pindar, managing director of the group that will put up to 1.2m learner drivers a year through the written exam mill from July.

"There's no contract for government or Labour councils on which we haven't been able to save at least 10 per cent, cutting backroom costs to plough into frontline services."

Capita Group is now in the running for new government contracts worth pounds 100m plus, and feels it has little to fear from a Labour election victory

In just a decade Capita has grown into a quoted company worth pounds 170m, cashing in on the privatisation gravy train with deals including council tax collection, selling personalised number plates, and running the controversial new nursery vouchers scheme.

Since its pounds 8m flotation in 1989, Capita has cleaned up from Tory cash limits on councils as well as enforced contracting out. "Cleaned up" only metaphorically, though, as it provides strictly white collar services - from computer support to property consultancy - rather than emptying dustbins or sweeping the streets.

It was the first company to help bill people for the poll tax and now chases tardy council tax payers. It provides computer support to more than 50 local education authorities, markets West Midlands bus passes, runs the DVLA's personalised number plate scheme in Swansea, and is moving into NHS trusts.

Last week its shares leapt to a record 297p, against 100p at flotation, leaving chairman Rodney Aldridge a millionaire seven times over.

Mr Aldridge paid the Chartered Institute of Public Finance & Accountancy, the local government professionals body where he worked for 10 years, just pounds 330,000 for Capita in 1987.

The company's profits have grown from pounds 57,000 in 1985 to an expected pounds 12.5m when it announces results next month.

Capita hiccupped last September with revelations that Alan Kemp, an executive for three years, was also a long-time paid adviser to Michael Heseltine - Dr Kemp resigned from the group last July. Surprisingly, that is the only flak the company has ever attracted.

"We're a completely apolitical organisation," Mr Pindar said. He added that the group no longer employed political consultants.

Capita and its partner JHP will make profits of up to pounds 5.5m from the five-year driving exam deal, a net margin of between 7 and 8 per cent. However, it offered the lowest exam cost, of pounds 13 to pounds 15 per driver.

It is currently bidding to run the teachers' pension fund, worth up to pounds 15m a year, and is set to cash in as "outsourcing" gets a final pre-election push.

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