Capita will shut up to 100 offices: Devastating blow to PM’s campaign to get Britain back to workplaces as top government contractor with 45,000 staff plans massive shift to permanent home working
- Capita collects the BBC licence fee and runs the London congestion charge
- Closures make Capita first major British firm to pull out of city and town centres
- Increasing number of companies look at a permanent shift to flexible working
One of the UK’s biggest employers is planning to close nearly 100 offices permanently in a crushing blow to the Prime Minister’s campaign to get Britain back to work.
The Mail on Sunday can reveal that Capita – the giant Government contractor that collects the BBC licence fee, runs the London congestion charge and provides other key public services – is preparing to shutter more than a third of its 250 offices across Britain.
The huge raft of closures will make Capita the first major British firm to pull out of city and town centres as an increasing number of companies look at a permanent shift to flexible working arrangements after staff worked successfully from home during lockdown.
Under its plans, many of Capita’s 45,000 UK staff will continue to work from home – as most have done since March – and will only attend a smaller number of regional ‘hub’ offices part time in future.
The news will come as a huge setback to Boris Johnson just days before he launches a campaign to encourage Britons to return to their workplaces. The back-to-work drive will begin this week as schools reopen and business support schemes are wound down.
The Mail on Sunday can reveal that Capita (offices pictured) – the giant Government contractor that collects the BBC licence fee, runs the London congestion charge and provides other key public services – is preparing to shutter more than a third of its 250 offices across Britain
It will be a particularly bitter pill for the Prime Minister to swallow given that Capita is one of the biggest recipients of Government contracts. Last year, it made an estimated £1billion from public-sector work.
It is feared that unless Britain is weaned off working from home the economy will suffer long-term damage. Analysis for The Mail on Sunday today reveals that almost half a trillion pounds could be wiped off the economy over the next four years if workers fail to return to their offices.
Economists warn that swathes of sandwich shops, cafes and other firms that rely on the flow of commuters into town centres face ruin if home working goes on indefinitely.
Dozens of large firms including PwC and Schroders have indicated they are considering letting staff work from home more regularly after the pandemic ends.
Capita’s move – which is not expected to lead to job cuts – is aimed at catering for the increasing demand from its staff for more flexible working, as well as slashing the sprawling company’s costs.
The business has already decided not to renew leases on 25 of its properties, which is expected to save it £20million by 2022.
But its latest plans – dubbed the ‘New Hybrid Norm’ – are expected to increase that number to nearly 100. The locations of the towns where offices will close are not yet known. The company is planning to create regional office ‘hubs’, meaning some staff will have to travel further if and when they are required in the office. Capita is also expected to reduce the amount of its office space in Central London.
As at large corporations, Capita’s chief executive Jon Lewis has already told his staff that they do no need to return to the office until the New Year.
He said this month: ‘Why would you spend up to two hours a day commuting into and from a Central London office five days a week when you can work just as effectively at home?’
Capita is a giant Government contractor that collects the BBC licence fee (file image)
The company has already saved some £4million in costs from shutting around two-thirds of its offices during the pandemic. The savings are likely to be mainly in building services and would be much higher if it closed offices permanently.
It comes as the Government’s focus this week shifts towards getting workers back into the office.
The push coincides with the start of the winding up of the furlough scheme on Tuesday as the taxpayer’s contribution to wages will drop from 80 per cent to 70 per cent before being phased out completely by the end of October.
Chancellor Rishi Sunak’s successful Eat Out to Help Out discount scheme for pubs and restaurants also ends on Monday.
Capita, which counts former Tory Minister Baroness Neville-Rolfe as a director, was founded in the 1980s by Sir Rod Aldridge, who created an IT services company to manage administrative tasks for local authorities when Margaret Thatcher opened up public services to tender. It flourished in the late 1990s as outsourcing boomed under New Labour.
Although the company’s fortunes have dipped in recent years – falling out of the FTSE 100 share index after financial troubles – it still earns half its revenues from public-sector work. Tussell, a data provider on UK Government contracts, estimates that Capita pocketed more than £1billion in revenues from such deals last year – the most of any IT services provider.
As well as collecting the licence fee for the BBC, Capita handles recruitment for the British Army. However, it and other outsourcers such as G4S and Serco have come under fire for failings. The firm was heavily criticised for a delayed Army recruitment project marred by missed targets and IT problems. It was awarded the ten-year £500million contract in 2012.
Earlier this month, the company was awarded a £355million five-year contract extension to manage the London congestion charge zone and low emissions zones (file image)
A report by the National Audit Office in 2018 said there were ‘significant problems’ with the recruitment project after it consistently failed to deliver enough soldiers.
A Commons public accounts committee report last year said Capita took on the job without understanding its complexity.
Earlier this month, the company was awarded a £355million five-year contract extension to manage the London congestion charge zone and low emissions zones.
A Government spokesman said: ‘This is a commercial decision for the company. We are working closely with employers across the country to help them make workplaces Covid-secure and give people confidence to go back to work safely.
‘There are many wider benefits of office working for businesses including employees’ wellbeing, learning and development, and being able to meet face to face with colleagues, as well as the impact on local communities and the small businesses that serve them.’
Capita declined to comment.