Leading article: When private companies need public scrutiny

Share

The resignation of Rod Aldridge, the millionaire businessman exposed this week as one of the Labour Party's secret benefactors, throws the spotlight on Capita, the company he reluctantly leaves behind. The IT firm has prospered since Labour came to power in 1997, mainly as a result of government contracts worth a total of £2.6bn. Last year, it was named as the preferred bidder for a 10-year IT pensions contract with the Department of Work and Pensions.

Until yesterday, it seemed that things could only get better for the company Mr Aldridge founded back in 1984. Capita's turnover has risen tenfold since 1997. And last year it made a profit of £177m. Even allowing for Capita's shrewd positioning to take advantage of the IT revolution of the late 1990s, this has been an extraordinary success story.

But this is a story of interest to far more people than just Capita's shareholders. This company is now effectively responsible for a huge range of public services, from collecting TV licence fees to administering the Criminal Records Bureau. Capita boasts that it touches the lives of 33 million people in the UK. One obvious question this raises is why the number of civil servants continues to rise when so much that used to be handled by the state is now performed by the private sector. Another pertinent question is whether the taxpayer is getting value for money from Capita.

It is not as if the company has a spotless record. Under its control, the Criminal Records Bureau has been bedevilled with technical problems. Faulty Capita software resulted in chaos in the schools admissions system last year. The firm was criticised by the National Audit Office for its mismanagement of Individual Learning Accounts in 2000, an ill-fated government scheme to encourage more adults into education. Despite all this, the public-sector contracts continue to roll in.

Of course, the central accusation - that Mr Aldridge loaned money to Labour in exchange for government contracts - is almost impossible to prove. It is most unlikely that there was ever any kind of a formal agreement along these lines. And both parties can point out that the awarding of contracts takes place under independent scrutiny. But it is, nevertheless, peculiar that Mr Aldridge should have chosen to resign so soon after his generosity to Labour was revealed.

In the short term, Mr Aldridge's hasty departure is confirmation of the Prime Minister's folly in attempting to keep these loans secret. Even if the award of all these contracts was entirely proper, by keeping the Labour Party's considerable debt to a dozen wealthy businessmen hidden, Mr Blair has created the impression of sleaze at the heart of government.

Mr Aldridge claims he resigned because he does not want to invite unwelcome scrutiny of Capita or undermine its reputation by associating it with a public scandal. But companies that bid for government contracts cannot have it both ways. Firms like Capita cannot charge millions to the Government and yet expect to keep their affairs free from public scrutiny.

Private tendering is set to increase in the future. The likely next Prime Minister, Gordon Brown, has been one of the driving forces behind the expansion of public private partnerships. There will continue to be a huge amount of money to be made by private firms from government contracts for the forseable future.

Just as a light must be shone into the murky waters of party funding, so too must the processes by which lucrative government contracts are distributed be made transparent. And those that prosper through the public purse must expect the same degree of scrutiny as any government department.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Account Executive/Sales Consultant – Permanent – Hertfordshire - £16-£20k

£16500 - £20000 Per Annum: Clearwater People Solutions Ltd: We are currently r...

KS2 PPA Teacher needed (Mat Cover)- Worthing!

£100 - £125 per day: Randstad Education Crawley: KS2 PPA Teacher currently nee...

IT Systems Manager

£40000 - £45000 per annum + pension, healthcare,25 days: Ashdown Group: An est...

IT Application Support Engineer - Immediate Start

£28000 per annum: Ashdown Group: IT Software Application Support Analyst - Imm...

Day In a Page

Read Next
Emma Watson has become the latest target of the 4Chan nude hacking scandal  

What is 4Chan? And why does it threaten women like Emma Watson?

Memphis Barker
Chuka Umunna was elected MP for Streatham in 2010  

Could flirty Chuka Umunna be worth a punt for Labour’s top job?

Matthew Norman
Syria air strikes: ‘Peace President’ Obama had to take stronger action against Isis after beheadings

Robert Fisk on Syria air strikes

‘Peace President’ Obama had to take stronger action against Isis after beheadings
Will Lindsay Lohan's West End debut be a turnaround moment for her career?

Lindsay Lohan's West End debut

Will this be a turnaround moment for her career?
'The Crocodile Under the Bed': Judith Kerr's follow-up to 'The Tiger Who Came to Tea'

The follow-up to 'The Tiger Who Came to Tea'

Judith Kerr on what inspired her latest animal intruder - 'The Crocodile Under the Bed' - which has taken 46 years to get into print
BBC Television Centre: A nostalgic wander through the sets, studios and ghosts of programmes past

BBC Television Centre

A nostalgic wander through the sets, studios and ghosts of programmes past
Lonesome George: Custody battle in Galapagos over tortoise remains

My George!

Custody battle in Galapagos over tortoise remains
10 best rucksacks for backpackers

Pack up your troubles: 10 best rucksacks for backpackers

Off on an intrepid trip? Experts from student trip specialists Real Gap and Quest Overseas recommend luggage for travellers on the move
Secret politics of the weekly shop

The politics of the weekly shop

New app reveals political leanings of food companies
Beam me up, Scottie!

Beam me up, Scottie!

Celebrity Trekkies from Alex Salmond to Barack Obama
Beware Wet Paint: The ICA's latest ambitious exhibition

Beware Wet Paint

The ICA's latest ambitious exhibition
Pink Floyd have produced some of rock's greatest ever album covers

Pink Floyd have produced some of rock's greatest ever album covers

Can 'The Endless River' carry on the tradition?
Sanctuary for the suicidal

Sanctuary for the suicidal

One mother's story of how London charity Maytree helped her son with his depression
A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world