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UNISON DOCUMENT

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Company Update June 2001

This bulletin provides the latest developments over the month on companies in which UNISON is interested. Comments and information on the companies mentioned should be sent to the Bargaining Support Group.

• The Chairman of Itnet declares a buoyant public sector order book for 2001 with revenues up by 18%. Itnet is the preferred supplier for two new contracts: with the London Borough of Southwark, over 7 years and worth £35m, to deliver Information Communications Technology (ICT) services andwith Cotswold District Council for a £3m ICT services contract over 3 years.



• Dudley MBC's direct labour organisation won more than 30 contracts, worth a total of £1m, in the six months to March 2001. Jobs included building an extension to St Mary's School in Brierly Hill.



• Nord Anglia has been awarded the contract to run Abbeylands secondary school in Surrey. This is the first time a for-profit company has been awarded a contract to run a state school. Although the school is performing increasingly well academically, the governors are experiencing severe difficulty in attracting pupils. The school will be renamed Runnymede Business and Enterprise College. The contract will run for seven years during which time Nord Anglia will be paid a flat fee and extensive bonuses based on fewer exclusions, better academic results, and the number of parents who make the school first preference for their children.
  
  This contract is seen as the model for wider private sector management of school which the Labour Party wants to introduce if they get a second term in government. While the school is performing increasingly well academically, the governors are experiencing severe difficulty in attracting pupils. Labour proposes to change the law to make it easier for private companies to run failing schools for profit for a fixed period of five or seven years. The idea is based on the 'charter' schools in the USA. Contracts would be renewed subject to performance. King's Manor school in Guildford, which was deemed a failing school, is being run by the not-for-profit 3Es Enterprises company. However, under current law, King's Manor had to become a voluntary-aided school before 3Es could take it over. Companies that would benefit from such a change in the law are: The Centre for British Teachers, which runs a private school in Kent charging fees below the level of state funding and Nord Anglia, a plc that runs private schools in the UK and abroad.



• Nord Anglia's shares have increased a further 34p following its award of the Waltham Forest Education contract. Nord Anglia and Amey have formed a joint venture company named EduAction.



• Nord Anglia confirms its intention to expand in children's nurseries. There are now 9 Princess Christian Nurseries with another due to open in Sale Cheshire in June.



• Nord Anglia, has announced it wants to employ teachers directly so that it could pay them bonuses to help achieve performance targets. After the election the company will be lobbying hard to get a change in the law to allow them to directly employ staff.



• An unpublished draft report of the official industry investigation into the Hatfield rail disaster claims that Railtrack knew the track at Hatfield was flawed two years before the derailment. Ultrasonic tests, which should have detected any problems, were carried out by Balfour Beatty but do not appear to have been acted on. Other inspections may not have been adequately carried out. A series of mistakes due to poor communication between Railtrack and Balfour Beatty were highlighted in the report.



• Accenture and Hewlett Packard have formed an alliance in an attempt to challenge IBM in IT outsourcing services. Last year HP failed to take over the technology consulting unit of PwC in pursuing the same strategy.



• BT is considering selling Syntegra, the IT services business, as part of its current restructuring plans. If the sale goes ahead it is expected to attract bids from companies such as Logica and EDS as well as private equity firms.



• East Renfrewshire, in Scotland, has a 25 year schools PFI with Jarvis. The facilities part of the contract is due to start in August. The branch and the council believed the staff would transfer and be employed by Jarvis. However, they were told in April 2001 that facilities services were sub-contracted to Chartwells, a Compass subsidiary. The staff will have their terms and conditions protected for the first five years of the contract only, when the sub-contract will be re-tendered. The UNISON branch has been attempting to discuss the issue of pensions with Jarvis, who keep referring them to Chartwells.



• Carillion and Morgan Sindall PLC have begun proceedings to agree the sale of Carillion Housing to Morgan Sindall's subsidiary, Lovell. This is in line with Carillion's greater focus on its PFI and services-related businesses and a more selective approach to construction. Morgan Sindall has also bought Miller Civil Engineering Services.



• Lambeth Council is expected to terminate its contract with Capita to supply the councils housing benefit system. A report by management consultants Barony Group has recommended that the staff and service be brought back in-house. The Council is also pursuing a legal claim of £18 million because of problems encountered with the service.



• Capita is the preferred bidder in a DfEE £100m project to develop and deliver the Connexions Card to 16-19 year olds in England. The contract runs for 7 years with an option to extend for 3 years, worth over £100m.



• Capita Group is buying McLaren Dick & Company, the UK business of McLarens Toplis, for £33 m. McLaren Dick provides services to insurance companies is is the UK's second largest loss adjuster. Several of the McLarens Toplis board will have a role within the company and the business is to be merged with Capita's existing insurance arm, centred on Capita's insurance outsouring company, Eastgate.



• Interserve, the re-branded Tilbury Douglas, began a 40-year facilities management and refubishment contract at four Dudley hospitals. This is the support services part of the PFI contract to rebuild and refurbish hospitals for the Dudley Group of Hospitals NHS Trust, doubling the number of beds to more than 760. In a deal worth £530m, Interserve will run the hospitals non-clinical support services, such as cleaning, catering and telecoms.



• Southampton City Council has chosen Interserve, formerly Tilbury Douglas, as its preferred bidder for its PFI scheme to build three new schools.



• Amey has been selected as preferred partner in the London Underground PPP. Amey owns a third of the Tubelines Group consortium that is the preferred bidder for the Jubilee, Northern and Piccadilly lines.



• Amey’s Chief Executive, Brian Staples, who received a salary of £494,885 last year also made a profit of £1.5m from selling shares from a share option which was set up for him when he joined the company in 1997.



• Sue Clifton, the director of Medway Secure Training Centre, the first privately run jail for children in Britain, has been suspended pending an internal inquiry. A spokesman for Group 4 said the suspension had no connection with finance or child welfare.



• Sodexho has won a large contract to provide catering, support services, grounds maintenance and cleaning with Wiltshire County Council. The full extent of coverage of the contract will only be known once schools have decided whether to be included in the contract or to make alternative arrangements. It is expected that around 1,000 staff will transfer from Wiltshire direct services to Sodexho.



• Serco QAA has been selected as preferred partner to provide education services for Bradford City Council. The contract is due to be awarded officially by June 15, though it is still subject to approval by the Department for Education and Employment. The contract worth £210m is the biggest education contract to be awarded so far and will last for 7 years.



• United Utilities the parent company of Vertex Business Services will be floating Vertex on the stock exchange in 2003. Originally, United Utilities had planned the flotation in four years time but this has been brought forward because of the company’s recent success. Vertex has increased its work to the tune of £1.5bn compared with £85m in 2000.
  
  United Utilities attributes much of the company's success to Vertex's alliance with Cap Gemini Ernst & Young (CGE&Y) earlier this year. This five-year partnership means Vertex takes on CGE&Y's call centre business in the UK while CGE&Y provides information technology consulting services for Vertex customers.



• An estimated 234 staff in Birmingham's privatised housing repairs organisation are taking early retirement at a loss to Birmingham City Council's pension fund of £4.5m. The loss-making organisation was privatised to Serviceteam and Accord in April. Under the terms of the pension scheme, anyone made redundant qualifies for a special bonus.



• Care UK is confident that its business of supplying home care for the elderly and people with learning difficulties would prosper no matter which party wins the election. Central government will continue to "rationalise expenditure". Care UK says it can supply certain services at a third of the cost of NHS services. In the six months to 31 March 2001, the company's pre-tax profit rose by 10% to £3.2m.



• RM is the largest supplier of education IT services to the 28,000 primary and secondary schools in the UK. This gives it a clear lead in a rapidly expanding sector where government spending on IT is expected to double over the next 5 years. RM failed to agree terms on the PFI project jointly with ICL to supply all the schools in Northern Ireland with managed computer services. The reason given is thought to be the low price offered by the Government. ICL now has the contract.



• Mouchel has recruited Bob Hogg, former executive director for lifelong learning and leisure at Southampton City Council and John Turner, senior education adviser at the DfEE. Mouchel is a consultancy company which hopes to win contracts in the increasingly outsourced education, housing and corporate support services market.



• Balfour Beatty avoided having to adopt guidelines on its involvement in dam-building projects at a shareholders' meeting. Friends of the Earth tabled the resolution, which was supported by 1m shareholders. Although about 100m voted against, about 75m abstained from the vote. Considered abstention is increasingly being adopted as a voting policy by institutional shareholders, some of whom have also adopted environmental and ethical shareholding policies.



• NewSchools, the company 65% owned by WS Atkins, has been awarded the schools PFI contract with Kent County Council. The 25 year contract comprises the design and construction, finance and operation of services at the existing Swan Valley Community School and a new Primary School at Craylands Lane.



• Connexions West of England has been given £7m by central government to provide careers advice, mentoring, a range of informal learning opportunities and services for young people who are homeless, addicted to drugs, or in care. This is double what the company was allocated for running a careers service alone.



• The Hyder Business Services (HBS) 10 year contract to run housing benefits, council tax, reception areas and telephone contact with Middlesbrough Council, has been publicly launched. The contract, which also includes the development of a one-stop customer service centre in Middlesbrough House, and a regional business centre in nearby Rede House, with a £25m investment in technology, training and developing services, will cause the transfer of 1,000 Middlesbrough employees to HBS.



• Kunick wants to win a large proportion of the 300 local authority contracts to run leisure facilities that are due for renewal next year, with its subsidiary Leisure Connection to be in the bidding. Last year Kunick sold its French nursing homes to concentrate on the two UK businesses, leisure facilities management and amusement machines. Profits from the amusement machines business has been flat, thereby putting additional pressure on the leisure business.



• Glas Cymru, the newly formed mutual company, has completed a £2bn bond issue that will allow it to buy Dwr Cymru (Welsh Water). This makes it the first fully debt-financed water utility in the UK.

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