Theresa May last night denied another major government contractor was in meltdown after a shares crash wiped £1bn off the value of Capita.
A profits warning from the giant firm sparked fears it could become the next Carillion, the construction firm that dramatically collapsed just weeks ago.
But the Prime Minister rejected comparisons between them and insisted ministers were not concerned.
The Prime Minister has rejected comparisons with Carillion and said ministers are not concerned
Mrs May’s spokesman said: ‘The British government monitors the financial health of all its strategic suppliers and does not believe any, including Capita, are in a comparable position to Carillion.
‘We monitor the financial health of all our strategic suppliers and we are in regular discussions with them regarding their financial position.’
Shares in Capita, which collects the BBC licence fee and provides computer services to UK air traffic control, yesterday plummeted by nearly 50pc to lows not seen since 1998.
The fall came after bosses revealed weak sales and said the company had spread itself too thinly.
Jonathan Lewis, its chief executive, launched a turnaround plan that included raising £700m from shareholders, cutting costs and selling parts of the business. He also scrapped the company dividend and pledged to pump funds in to its pension scheme, which has a £381m black hole.
Shares in Capita plummeted by nearly 50pc to lows not seen since 1998. The company collects the BBC licence fee and provides computer services to air traffic control
Capita is the latest big outsourcer to show signs of stress, amid concerns some are taking on too much work for wafer-thin profits.
The turmoil also reignited the row about the government’s use of private companies to run public services.
Labour’s Jon Trickett, the Shadow Minister for the Cabinet Office, urged ministers to watch Capita closely.
The MP added: ‘We cannot afford another Carillion. The Tories’ privatisation dogma risks lurching our public services from crisis to crisis, threatening jobs, taxpayers’ money and leaving people without the services they need.
‘The Government must end its ideological attachment to private profit in public services and instead start putting the public interest first.’
Frances O’Grady, general secretary of the TUC workers union, called for an urgent review of all public sector contracts.
She added: ‘It’s essential the government completes this quickly and is prepared to bring services and contracts in-house if they are at risk.’
Capita chief executive Jonathan Lewis launched a turnaround plan that included raising £700m from shareholders, cutting costs and selling parts of the business
Frank Field, who chairs the Work and Pensions Committee, also said Capita would join a growing list of firms being investigated by MPs.
They are already probing the collapse of Carillion, which went into liquidation with debts of up to £5bn and a pension scheme deficit of £990m.
The outsourcing giant was responsible for a range of public sector services, including school meals, maintenance of Armed Forces homes and building part of the HS2 railway.
However Helal Miah, an analyst at The Share Centre, said Capita boss Jonathan Lewis was trying to prevent his firm from repeating Carillion’s mistakes.
She said: ‘Another government contractor appears in trouble, but at least Capita are making drastic changes before it’s too late.
‘It should be no surprise the troubled group has today announced a deep restructuring programme.’
But she added the company could find itself at the centre of a political storm, adding: ‘The government have already placed other companies on watch after the Carillion fiasco.
‘No doubt some will say that Capita should be on that list too.’