UK officials met Capita bosses to discuss its financial problems

Government officials met executives from the outsourcing firm Capita to discuss its financial problems, it has emerged, as Labour accused ministers of being complacent and warned of similarities between the company and its collapsed rival Carillion.

In response to an urgent question from Labour’s business select committee chair, Rachel Reeves, the Cabinet Office minister Oliver Dowden said a crown representative had been appointed to monitor Capita.

The move, which came after Capita halved in value following a shock profit downgrade on Wednesday, is part of a procedure designed to help officials monitor the finances of struggling companies that provide public services.

Dowden said officials had met directors of Capita on Wednesday night to discuss the health of a company whose state contracts range from the electronic tagging of prisoners to collecting the BBC licence fee.

And he insisted Capita was in a stronger financial position than Carillion, whose collapse earlier this month has led to uncertainty over the future of thousands of jobs at the company and its network of suppliers.

“We do not believe that Capita is in any way in a comparable position to Carillion,” said Dowden.

But Labour MPs lined up to accuse the government of failing to take Capita’s problems seriously enough.

Reeves pointed to the company’s large number of public contracts, debt pile of more than £1bn, plunging share price and £381m pension deficit.

“It seems that there are more similarities than differences between these two companies,” she said, accusing the government of being “muddled and complacent”.

And the shadow Cabinet Office minister, Jon Trickett, warned that Capita was in “serious trouble.”

“It’s a familiar tale of woe with strong echoes of Carillion,” he added.

Vince Cable, the Liberal Democrat leader, who served as business minister in the former coalition government, pointed to the admission by the Capita chief executive, Jon Lewis, on Wednesday that Capita was “far too complex”.

He said: “If the CEO finds it hard to know how the firm works, how does the government monitor the performance of these large companies?”

Lewis downgraded Capita’s profit forecasts on Wednesday and announced plans to raise £700m and axe the dividend to shore up its balance sheet, with job losses and asset sales expected to follow.