Sopra Steria pays £82m to buy Cabinet Office out of shared-services joint venture

Department will reinvest £57m into government productivity and streamlining programmes – as well as returning £25m to HM Treasury – as IT firm acquires minority stake after 10 years of joint ownership

The Cabinet Office has agreed to sell its 25% stake in Shared Services Connected Limited, a joint venture the department founded with IT company Sopra Steria.

Sopra Steria has announced it will fully acquire SSCL – which provides payroll and other shared services to multiple government departments and other public sector organisations – after 10 years of joint ownership with the Cabinet Office.

The firm has paid £82.3m in cash for the department’s minority share. SSCL will become a wholly owned subsidiary of Sopra Steria, as planned in the original contract when the joint venture was set up.

Cabinet Office minister Jeremy Quin said: “The SSCL joint venture was set up to drive greater efficiency. The government is now realising its successful investment, securing additional value for the taxpayer and using it to make the long-term decisions to deliver the best public services and boost productivity across the civil service”

The Cabinet Office said SSCL has “generated significant government savings”, providing more funds for frontline public services, and encouraged collaboration with the private sector, with the establishment of the joint venture involving the transfer of around 1,100 civil servants to the private sector.

It said the firm has also met the government’s goal to consolidate shared services, such as HR and payroll, across numerous departments, including the Department for Work and Pensions, the Home Office and the Ministry of Justice, “ensuring services operate at the highest efficiency”.

The departments are among the array of public-sector customers to which SSCL provides services including finance and accounting, procurement, and HR and payroll. It was founded in 2013 to manage the government’s shared-services strategy ISSC2, which aimed to make back-office services more efficient through reduced duplication, shared expertise and larger economies of scale.

The Cabinet Office said it will retain £57m of the sale proceedings, £45m of which it will reinvest into “accelerating” programmes that increase cross-government productivity.

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“This will help to set the country on the right path to strengthen public services by increasing efficiency across government,” the department said.

It will use the rest of the cash injection to continue work to streamline services and processes across government. This will include a particular emphasis on digital capability, it added.

The remaining balance of around £25m will be returned to the Treasury.

Progress with shared services in government has accelerated in recent years, with a 2021 strategy refresh creating five multi-department clusters for shared services.

As of this summer, three clusters were already operating a shared-service system and two were in the process of procuring such a system. There is also commitment to further transformation once the clusters of shared-service centres go live in 2028 – with an estimated overall saving of around £1.8bn over the next 15 years.

John Neilson, chief executive of Sopra Steria Ltd, said: “With the shared-service model now successfully embedded and proven, the Cabinet Office can realise its plan to sell its stake in the joint venture, making a significant contribution to the public purse and allowing Sopra Steria to continue our investment in the SSCL business. This is recognition of the success of Sopra Steria and SSCL, our people and our plans to further enhance, innovate and grow our services on behalf of civil service users.”

SSCL has trebled its revenues from 2014 to 2023, according to Sopra Steria. The firm’s most recent annual accounts, covering the 2022 calendar year, show a 2.3% yearly increase in revenue to £291.6m. The generated net profit of £31.9m – an increase of more than £4m compared with the prior year.

Tevye Markson

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