Sir Rod Aldridge - Archives of IT

Sir Rod Aldridge OBE is a leading social and business entrepreneur who worked in local government on the south coast of England before studying in the evenings to earn his professional qualification as an accountant.

He then joined the professional body of accountants in the public sector and worked on developing guidelines for the implementation of IT systems in local authorities.

From this sprang the idea of offering IT outsourcing services to the public sector. Aldridge spun the operation out of the professional body and led the development of what became Capita from one employee to 74,000.

1963 – leaves school and works as post boy in the treasurer’s office at East Sussex Council
1974 – joins the Chartered Institute of Public Finance and Accountancy
1987 – founded the Capita Group, a business process outsourcing and professional services
2006 – establishes the Aldridge Foundation, an educational charity helping young people reach their potential
2012 – receives a knighthood for his services to young people

Interviewed by Richard Sharpe on 9 January 2019 at the Worshipful Company of Information Technologists’ Hall.

Early Life

Education

Rod failed his eleven plus and as a result attended his local secondary school. He says: “School, in my terms now, was a serious disaster. I don’t think it got the best out of me. Failing my eleven plus was a defining moment and an upsetting experience to go through. But actually, it was probably one of the things that really motivated me most to prove to myself and to others that I had more to offer than how I was then categorised.” He left school at the age of 16 with four GCEs. He adds: “I didn’t have an easy start in life, and the work I do now in education through my Foundation drives me to want to change this for young people, because remarkably it’s still the same today. I use the mantra that it is not where you come from that matters but where you want to get to that counts.”

Early Career

Rod left school with little careers advice but a keen interest in mathematics and it was suggested he should train to be an accountant or work in a bank. However, his first role was in local government with with East Sussex County Council as a post boy in the treasurer’s department. He says: “So I was the man who knew a lot about people, but people didn’t know a lot about me, and they would, in many cases, ignore me … This is quite fascinating, because I used it to learn about people and how to work with them. I also learnt a lot about the organisation, because it enabled me to go anywhere within it because I was only the post boy! Local government turned out to be an amazing experience, it was my university of life, frankly.”

In taking on the job, Rod continued his education, passing a fifth GCE and then sat a specialist local government exam to enable him to be eligible to study to qualify as an accountant. He studied for this via a correspondence course working at home in the evenings and weekends for a qualification as a public sector accountant with the Chartered Institute of Public Finance and Accountancy (CIPFA, previously, IMTA the public sector examination body). At the age of twenty-two, he completed his studies and gained a qualification considered to be the equivalent to a university degree.

Over the next nine years, Rod progressed through the ranks within East Sussex County Council, then moved on to Brighton Borough Council where he completed his accountancy qualification and then on to Crawley Borough Council where as a principal accountant he set up the Authority’s new statutory responsibility for the education service.

CIPFA and CIPFA Computer Services

In 1974, Rod joined the Chartered Institute of Public Finance and Accountancy, (CIPFA) where he progressed to become its Technical Director. It was at CIPFA that Rod became involved with the computer industry working with Bernard Harty and others as the Institute formed a consortium of 147 local authorities to design a functional specification offering local government the solution to the Government’s efforts to drive greater efficiency through compulsory competitive tendering. The project meant that Rod was introduced to all of the main computer suppliers, who were interested in being involved with the designing of a system that complied with the functional specification, including ICL, IBM and Honeywell, he explains: “I had to work with them on the design of the systems which proved to be an interesting experience giving me an entrée to a new world. CIPFA offered “a seal of approval” to the system, so not only did we design the function specification, we went on to work with consortia of users formed by ICL and McDonnell Douglas to actually design and implement the system in local authorities.”

Rod says that through the work McDonnell Douglas became a prominent operator in local government, he continues: “What we (CIPFA) were doing is develop relationships with these local authorities in a way which as a professional institute we never had before this initiative. Equally, we had a commercial relationship with the ICL and McDonnell Douglas based around licences sold for systems implemented and I then went on to sell the rights to use the specification to fifteen other IT companies. All of a sudden CIPFA was generating money and profits, which, when you’re a professional institute with a charitable status, creates a problem. You are actually in danger of affecting your charitable status. So to avoid this happening, they had to set up a company to run these operations; it became CIPFA Computer Services.”

At the age of around 37, Rod became the Chief Executive of CIPFA Computer Services effectively moving from the public sector to the private sector for the first time in his career. The company expanded rapidly being asked by local authorities and other public sector bodies to undertake IT Strategy studies, implement computer systems that had been selected to deal with compulsory competitive tendering, provide training and development of staff and so on. Rod says: “All of a sudden we had a large number of clients from the consortium members including working directly with Honeywell and McDonnell Douglas advising both of them on the suite of packages they offered to local government. We were moving to becoming a consultant, which is not a world I had ever worked in. We started to grow the number of people working for the company; when I first started in CIPFA Computer Services it was just me; all of a sudden there was four of us, then twelve, sixteen, twenty of us. We began to think about what was going on in the market which was driven by Thatcher’s determination to radically change how local government operated. It became clear to us that this was a massive opportunity and we are sitting in the middle of it with a prime position. However, whilst when owned by CIPFA we received a good salary along with bonuses for meeting targets, we don’t actually have any equity in the business”

Capita

Worried about what would happen if CIPFA decided to sell the computer services business, Rod and his team opened discussion with the Institute to force a management buyout with financial support from 3i, the venture capital company. Rod mortgaged his house to finance his stake in the company, he says: “When I signed the deal with the bank manager for the funding, I’ll never forget his face. I knew in my own mind that he would never have the opportunity to take my house away from me because failure of the company was not an option. There were four of us as directors in the management buy team which led to the creation of the Capita Group Ltd and all of the staff we employed came with us. The energy that came from that time, it was probably one of the greatest periods I’ve ever worked in in an organisation. We just went for it and we became successful, because, we couldn’t afford to fail not only because of our houses being on the line, but equally, pride. Pride is a great motivator.”

After the buyout, Rod persuaded Paul Pindar who he had met through the transaction and led the deal from 3i’s perspective to join Capita and to become the company’s finance director, and Derek Fowler, the Deputy Chairman of British Rail, to became a non-executive director.

The company continued to grow, offering consultancy services in IT strategy and implementation and also venturing into outsourcing of technology; the first two clients were Berkshire and Oxfordshire County Councils. The company also formed a spin-off company, Telecom Capita, with BT which wanted to get into the public sector with their technology services.

Having started with IT outsourcing, Rod and his team realised that they could expand into other areas, he explains: “We began saying if it is not core to you why not outsource it to us for us to run and in doing so why don’t you transfer all the people that are employed on that process? Gradually, we expanded out our service offering moving into the collection of Council Tax. The contracts we developed set targets for collection improving the present performance, delivered at a reduced cost and penalties if Capita did not meet these. Effectively we were moving towards becoming a specialist provider of white collar back office services”

He continues: “The sector became braver and there was a momentum of activity. Before we knew where we were, we were running contracts for 20 to 30 local authorities, and we were winning consistently. The competition was really the computer suppliers, but they had an inability to move away from selling boxes. Delivering services under a need to transform performance was not really their forte. So, the competition had a real problem and from no where we became a market leader in a new market of outsourcing non -core services. This proved to me that if you can shape a market and become a market leader, the momentum you can achieve is colossal.”

The company continued to grow and began winning central government contracts; the first being with the Department of Education to manage teachers’ pensions. Rod adds: “All of a sudden we had gone from local government to central government; we’ve gone from IT into delivering whole back office services. Every time we won a contract, there were group of people transferring to us none of whom had ever chosen to work for Capita, but were part of the contract we had won”

With interest from unions, Rod took an open approach to negotiating with them; he says: “Joining Capita was a better way for their members than staying where they were where frankly they could have lost their jobs as local government was forced to cut costs. We were growing, and therefore we needed the people and their expertise.”

After two years of successful growth post the MBO in which the business was purchased from CIPFA for £600k the company floated on the stock market using AIM with a valuation of £8 million. Over the next period of 14 years with continued and substantial growth Capita went on to become a member of the FTSE 100 reaching a market capitalisation of £8 billion. Today the company has over 74,000 employees and its services impact on the lives of 33 million people in the UK.

Rod says that he liked the accountability of the public company, explaining: “Every six months we had to report. I’m very proud of the fact that as the Chairman of a public company I had 32 consecutive reporting periods of six-monthly reporting where we met or exceeded targets on every occasion. The business was run in a very results-orientated way but with a focus on service delivery which meant that Board of directors and the company as a whole had a team culture with a shared vision to build a successful company.”

As the outsourcing industry grew so too did negative attitudes towards it. Rod explains the steps he took to help counter these: “I went to the CBI to meet Digby Jones, who was then the head of it and suggested that we needed to have an organisation like the CBI to represent the industry. As Capita it was difficult to defend the actions of outsourcers against the views expressed by the national press or to encourage government to be bolder it what it outsourced. Whereas under the banner of the CBI, we could.”

As a result, the CBI set up the Public Services Strategy Board made up of all the CEOs of all the major outsourcing organisations in the industry and this was chaired by Rod. The Board allowed government ministers and unions to have a dialogue about some of the issues.

Capita, which remained UK focused, outstripped much of its competition including some of the largest IT suppliers, Rod says: “Through several acquisitions, Capita also became the largest supplier of software to local government, outside of ICL. So, not only did we have the systems, but we also had the technology along with the transformation skills, enabling us to provide an integrated offer to clients in our contracts with targets set for improving performance.”

Speaking about the Company’s responsibility for the delivery of the congestion charge system introduced in London by Ken Livingstone, the then Mayor of London, Rod said that it was the highest profile contract the company had won under his leadership. The policy was controversial and was the largest traffic management scheme ever to be attempted before in the world. He was proud that Capita delivered it on time and to budget, Rod acknowledges that Capita were subsequently given a further £31 million of funding to extend the zone and to reflect changes needed to the IT system. “One of the reasons why the technology was successful was that the specification was frozen and agreed allowing time for it to be written and tested. The consultants that were around it, PwC, were also incentivised to meet the deadline of the implementation of the system and therefore their interests were aligned to those of Capita. The Mayor said, ‘It is going to be implemented on this date, and we’re not going to vary the date.’. We had a three to five-month trial of it. … It meant therefore that on the day of operation it wasn’t the first day, we had been trailed for some time. I was asked by No 10 to write a paper to the Prime Minister about why the technology-driven system for congestion charging worked, whereas many other government projects involving IT had failed.”

Capita and Rod continued to be a source of media interest especially when the company was listed on the FTSE. Having taken the decision to retire, in 2006, Rod loaned £1million to the Labour Party, a move for which he was heavily criticised. He explains: “I had drafted a statement which I was going to put to the Board and to use as an announcement to the City, about standing down as I planned to retire but for various reasons I decided to delay it. Around this time, I had known a lot of people in Labour circles, and, they always wanted me to donate, and I always refused. I made that very clear every time that they ever asked. At some stage in that period they asked me if I would loan them money on commercial terms. It was an emotional time for me in my decision to retire from Capita after 22 years at the helm and so I decided I’m leaving, so I agreed to the loan. I freely say now, it was wrong. I don’t say it’s wrong for the reason that somebody shouldn’t do it, because you have a right to be able to do that, as it’s my money and it was a loan. I think I was wrong because of the position I held, and wrong about the timing of my decision.to do so.”

He continues: “I refer in my autobiography recently published of the five days that changed my life, because, all of a sudden this, I use the word tsunami, came at me, there was publicity around others that have loaned money to the Labour Party. I didn’t know there were others. When it was announced, I decided that it was wrong for me to put the company in that position. So, I decided to stand down as Executive Chairman, becoming non-executive Chairman until I retired from the business following the announcement of our company results in the July of 2006. My plan was to have retired in a far more enjoyable way leaving the company that I had started and had achieved so much with, on a high, but instead I left with a very heavy heart”

The Aldridge Foundation

In August 2006, Rod formed the Aldridge Foundation and became one of the first sponsors of the government’s academy programme. Choosing to work in challenging communities where the provision of education had been historically poor. The Foundation has majored on encouraging students to have an enterprising outlook on life and their studies. The belief is that in many cases this will led to many starting business as entrepreneurs and as Rod did with the start up of Capita.

In 2016, the Foundation established the Aldridge Education Multi-Academy Trust to manage the 14 academies and colleges that have been established through the work of the Foundation over a 10-year period in the north west, in London and in the south east including the very school that Rod went to as a boy as a 12 year old. Rod’s philanthropic actions have enabled the Foundation to unlock over £300m of government funding to build new academies and to provide world class learning and sporting facilities for students from these communities.

The National College for Digital Skills; Ada

In 2014, Mark Smith and Tom Fogden, successful teachers under the “Teach First” initiative wanted to develop a “code college” to address the skill shortage for jobs in this industry. After working together with the team at the Foundation for a short time they asked Rod and the Aldridge Foundation to join with them in sponsoring the project.

Rod says: “There was an opportunity to bid for 5 national colleges that the Government was planning to establish, one of which was going to involve digital education. Mark and Tom were an incredible team and came from no where to win the bid beating off other more established colleges to be selected by the Government as the preferred supplier of this new national college for digital skills. I was the chair of the small group established to run the bid and became the inaugural chair of the Board charged with the responsibility to set up the college. As part of this role I co- hosted a breakfast at No 10 to encourage the CEO’s of the major IT and consultancy companies in the UK to support the venture through offering apprenticeships. Ultimately it also involved sitting down in front of the then Mayor of London, Boris Johnson to secure the capital funding from the GLA along with the funding from BIS needed to build the new college.”

The National College of Digital Skills, is based in Haringey and designed to be the home for those interested in developing their digital skills with a view to having a career in that industry. Rod adds: “Significantly they have set in their vision statement the wish to encourage more women to see this a career route since this is not the case at present in the industry. Ada, also wishes to use the college as a way of addressing social mobility which plays into the backgrounds of many of the young people who attend our academies with many having a high level of digital skills. So, I think it’s going to be quite an exciting period for both the college and the Foundation.”