Business

NHS cuts spark Mitie misery as chief Ruby McGregor-Smith signs off

All change: Ruby McGregor-Smith is stepping down as chief executive of Mitie
Lucy Tobin
21 November 2016

The departing boss of Mitie on Monday hit out at the Government, warning “the cuts have gone too deep” as the FTSE 250 outsourcer withdrew from the domestic healthcare market, fell to a £100 million half-year loss and slashed its dividend.

Presiding over her last results after almost a decade as chief executive, Ruby McGregor-Smith saw Mitie’s shares plunge 20% on opening, as last year’s £45 million interim profit swung to a loss and one City analyst’s verdict was: “the outsourcer is in a mess.”

Mitie, whose work stretches from dealing with Great Ormond Street Hospital’s clinical waste to running immigration detention centres, struck a second profit warning in three months after being squeezed hard by rising staff wages and the uncertain economy.

But most of the loss was from writedowns at its loss-making homecare business MiHomecare, which provides meals on wheels and other services to the elderly and vulnerable.

Its ward-cleaning-to-waste management healthcare arm will continue.

McGregor-Smith, who is handing over Mitie’s reins to ex-British Gas boss Phil Bentley, said local authority cuts had forced it out of the sector.

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“We’re hugely disappointed about leaving the social care market,” she said. “But it’s driven by a funding crisis in adult social care. Even if more money is put in the Autumn Statement, it won’t be enough to save the sector, which will be a total tragedy for the UK. Between the NHS and local authorities, the cuts have gone too deep. There’s no understanding of what that’s going to do to the elderly in the UK.”

McGregor-Smith said finding care workers was a problem too: “It’s so badly paid that it’s not easy to attract staff to that market. Pay needs to be much higher than the living wage.” That’s despite MiHomecare, which Mitie bought for £112 million in 2012, facing an investigation last year amid claims that, when taking into account travelling time, it wasn’t paying carers the NMW.

Mitie admitted MiHomecare will still cost it money, on top of today’s £107 million charge, until the business is either sold, likely to another large UK outsourcer, or shut down.

McGregor-Smith, who had presided over a doubling of Mitie’s revenue and profits in her tenure, admitted: “This wasn’t quite the [final] announcement I’d been expecting to deliver. Brexit turned a fragile economy into a tougher one, and caused more uncertainty and investment delays.”

But the Conservative peer hit out at critics: “I’m not handing over a poisoned chalice; Phil will say the same. I’ve just made the right decisions for the business in the long term.”

Shares settled down 10% at 188.3p.

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