Election special: Capita growth by James Ashton Last update: 01:00 GMT, Jun 05, 2001, Business AM It doesn't really matter who's sitting in No 10: the trend for public-private tie-ups is set to continue. Rod Aldridge is not standing for parliament. Nor is he a member of one of the legions of quangos that successive governments appoint and then pledge to cut back in an attempt to secure re-election. But as executive chairman of Capita, the �3.2bn outsourcing giant, he is set to play an even larger role in Britain's public sector, regardless of who is living in Downing Street on 8 June. Capita, which specialises in white collar back office support services, already deals with 10m taxpayers every year, collecting council tax, managing pay and pensions and handling thousands of job applications on behalf of clients. In particular, Capita has picked up contracts across the public sector by introducing technology to clapped-out, usually paper-based ways of working that invariably strip out costs - music to the ears of both the main political parties. Labour is pledging to give the private sector a larger role in running public services. The Conservatives are vowing to save more than �2bn by trimming the fat from the government's central administration. Both manifesto promises bode well for outsourcing specialists and Capita's phenomenal growth rate - 49% this year according to yesterday's trading update - looks set to continue. Despite being spotted at a �500-a-head Labour fund-raising dinner in March, which he claimed not to have paid to attend, Mr Aldridge plays his own politics close to his chest. But Capita, he says, can benefit whatever the prime minister's political persuasion. "We are trying to save money from the back office that can go on to the front line. Whoever is in power has to find the money to do some of these things and we play a part in freeing up that money," he said. Mr Aldridge would not look out of place on the hustings with his claim that you could fund the recruitment of 23,000 new teachers if all the support services of Britain's local authorities were run through his ten multi-purpose business centres. It becomes even clearer that he has his own manifesto for change when he mentions that more than 400 local authorities send out a council tax bill each year when just one organisation could handle all the administration centrally. Maintaining momentum When pressed, he conceded that a Labour victory later this week would work best for his burgeoning industry. He said: "There is obviously a lot of work that has been put in place over the last four years by the government and I think the pace of change, should they be re-elected, will obviously be fairly considerable. "If you were to get a Conservative government, in a way some of that momentum has got to be created. There has been a lot of thinking about public services ... the building blocks are definitely there." There is no doubt that Capita has prospered under Labour, gaining admission to the FTSE-100 last spring. Capita has strengthened over the past 18 months, picking up some �1.5bn of new contracts, mostly long term. According to Mr Aldridge, the "defining moment" came when Capita won the �400m ten-year contract to run the government's criminal records bureau. Industry estimates suggest that there is another �11bn worth of outsourcing to come from the public sector alone. Capita's turnover this year is forecast to hit �640m. With a 2.9% equity stake, Mr Aldridge has amassed a �90m fortune. Not bad for an accountant who trawled around five banks before finding one that would support his management buyout of the consultancy arm of Cipfa (the Chartered Institute of Public Finance and Accountancy) 14 years ago. The �330,000 3i-backed MBO took place three years after the business was set up when Mr Aldridge, as technical director, developed a joint computer system for 156 local authorities. Local government contracts led into central government, education - Capita provides software services to 23,000 schools and more than 155 local education authorities - and now the private sector. There, its largest business win has been the �320m contract to manage Abbey National's general insurance activities. In Scotland, Capita employs 250 people who operate teacher placements, property management and a customer call centre for the BBC. Mr Aldridge employs 7,500 people, the majority of whom transferred across from the private sector. About 58% of staff are shareholders - a policy aimed at motivating a notoriously demotivated workforce. Capita's success signals that attitudes have changed towards farming out chunks of business previously thought to be at the heart of flabby organisations. Mr Aldridge said: "When we started, there was more hostility around for some of the things that we did. Now there is more an environment of coming together in long-term partnerships rather than contractualisation." Treasury pays out �3bn a year to PFI contractors Private Finance Initiatives (PFI) and Public Private Partnerships (PPP) have mushroomed over the past five years and with them the number of companies who are specialising in facilities management. The treasury will soon be shelling out �3bn a year in annual PFI payments. Serco lost out in its bid to run the National Air Traffic Control Service but has made a success of building and maintaining a number of prison and hospital complexes. Jarvis yesterday announced it had been made the preferred partner to manage student accommodation for Nottingham Trent University. It already looks after student rooms in Plymouth. John Laing, which built the Millennium Dome, is selling its construction arm to concentrate on asset-backed projects. Amey, another construction company changing its focus, is the preferred bidder for the Edinburgh Schools PFI project, and has already won the Scottish highway maintenance contract. CURRICULUM VITAE Rod Aldridge left school at 16 with five O-levels. He is married with four children, three of them grown-up. At 22, he qualified as an accountant, but says now that his greatest regret is not going to study at university. His work with the Prince's Trust has helped it to offer technology training and work experience to schoolchildren. "I am of the opinion that if you get education right then you start to get real social change," he said. Capita derives about 17% of its turnover from education, but Mr Aldridge denies he wants to start running failing schools. The group manages back office administration for local authorities that enable head teachers to spend more time focusing on the classroom. ===== Michael Keaney Mercuria Business School Martinlaaksontie 36 01620 Vantaa Finland [EMAIL PROTECTED]
