Wednesday, 9 September 2020

Inspection of the accounts - What we pay to Capita.

I don't know about you but I was keen to see the details of the £83.2 million Barnet Council have paid to Capita in the last year, especially as the contract value for 2019/20 was just £39.7 million.  


I have found issues in the past and feel it is my civic duty to at least provide a modicum of scrutiny to the huge amount we pay Capita.  I used to be able to attend committee meetings and ask detailed questions about the contract, but Barnet hated that, so  they introduced the gagging rules stopping that level of public scrutiny. Luckily, every Barnet resident has the right in law to inspect the accounts and that is what I have just completed, checking 421 Capita invoices. It presents some interesting data.

Contract Fee:

We paid £24.2 million on the Capita CSG contract and £20.3 million on the Capita Re contract for the basic fee.  What isn't made clear, when some councillors talk about savings with the Capita  contract, is that this figure excludes an inflation element which is billed separately under the heading of indexation. Last year this amounted to an additional £3.44 million. I would love to have a contract that gave me an automatic uplift for inflation each year and I can't think of a single council department where that inflation proof guarantee since 2013 is in place.

Gainshare:

We are still paying out on the gainshare clause whereby Capita get a share of any savings. They don't get gainshare on any procurement now, thanks to my persistent campaign showing that we were being ripped off by a poorly worded contract. However, last year Capita received £109,198 on printing gainshare and just over £100,000 gainshare on property income where Capita  keep 30% of the additional income from rent reviews, lease renewals and letting on the property portfolio above an agreed baseline. They received £180,421.92 gainshare for exceeding the council tax collection target on the basis that if they collect more than 98.5% of council tax  revenues Capita receive 50% in gainshare.  They also received £125,057.81 for gainshare on recovered housing benefit over-payments and £230,702.89 for reducing the number of people claiming single person discounts.  

In total, gainshare amounted to £837,218.66 last year, which I would suggest is money that Barnet desperately needs and should have been retained by the council. Capita supporters say it is essential to incentivise a company to gather this extra revenue, but I doubt the front line staff who do the actual chasing get a share of that gainshare. Barnet used to publish a schedule of how much gainshare had been paid to Capita (Benefits Realisation Schedule) but as with so much else in Barnet, they no longer publish it, possibly because it paints a very different picture of the contract performance.

Out of Hours Service:

Last year we paid Capita  £86,031 to answer the phone out of hours. We pay £1,200 per month as a fixed fee,  which guarantees 80% of call will be answered within 40 seconds, and then between £5.86 and £7.58 per call answered. We also pay and additonal charge if they have to escalate matters with an outbound call. According to Capita's website "'Response out of hours’ is a nationally shared out of hours customer service partnership, delivered by Ealing Borough Council and Capita. Public sector bodies such as local authorities, housing associations and health service providers can join the partnership, wherever they are in the UK, to access a large pool of highly skilled and experienced customer service agents, to deliver their out of hours customer service requirements". It does make me wonder if it might be a bit cheaper if we got together with some of our neighbouring London Boroughs and did this ourselves.

DBS Checks:

Last year we paid Capita £152,972.60 for DBS checks. Nobody is doubting the need for DBS checks, but this seems like a large number of checks and makes me wonder if this is driven by the large number  and churn of agency staff.

Other Items:

The are lots of other costs such as the £1 million paid to Capita for Office 365 licences, £463,628 for mailroom & photocopying, £1.96 million for pension deficit payments and £683,500  for TUPE payments. This again highlights that the savings talked about in headlines are quickly eroded by so many top up charges that are never discussed. We also had to pay back to Capita £801,775 which was money recovered through the proceeds of crime act. When the massive fraud happened within Capita Re with one member of staff stealing over £2 million, Capita had to refund all the money stolen. As money has been recovered and returned to Barnet, we have to refund it to Capita, so in this case not an actual cost to Barnet.  However, the other big cost area is Special Projects which I have detailed below:

Special Projects:

Capita have carried out a variety of special projects with a value of around £8.39 million including:

  • £503,441 for the Corporate Transformation Programme (yes I wondered what that was as well);
  • £286,458 for Customer Transformation Programme to deliver "improved and additional digital online transaction function to deliver a better service"
  • £256,985 to "provide an impact assessment of all relevant and appropriate IT infrastructure for the introduction of the new office and subsequent closing of NLBP B4"
  • £270,457 to provide support to the LBB;
  • £357,787 to prepare a business case for development opportunities under the One Public Estate  (OPE) programme.

The Capita Re contract it is structured differently so they simply bill for work requested.  So in addition to the £8.39 million they have  also billed £659,523 on the new Council Offices in Colindale, £1.065 million on the Local Implementation Plan (LIP), £132,000 for Enhanced Advice and Adaption Services £436,930 for work on the Upper & Lower Fosters regeneration project, to name but a few. 

However, the biggest source of billing for Capita is for work on the different elements of Brent Cross project including the new waste transfer station, the new Thameslink station and the Brent Cross South regeneration. In total these Brent Cross projects clocked up £14.1 million of charges from Capita.

Brent Cross is a massive regeneration project and it has become a major source of income for Capita. I will be writing a follow up blog on Brent Cross in the next few days which I would urge you to read as the consequences of this project could be exceptionally serious.

In summary, when councillors tell you about all the money that the Capita contract is saving ask them about all the extra charges, and whether they have factored these into their claims. It is a bit like the £350 million pounds a week sign on the big red bus. It makes great headlines but dig a bit deeper and you know it simply isn't true.




Thursday, 30 July 2020

It's been a while - but I'm still here

I have been continuing to keep an eye on Barnet's finances during this very difficult time but as lockdown eases I thought to was a good time to start digging a bit deeper into Barnet's finances again, especially as the annual inspection of the accounts is coming up in August.

In terms of the monthly supplier payments it looks like Capita continue to benefit from their contract with Barnet. In June they were paid £12.5 million and this brings the total paid to Capita on the Barnet contract to a whisker under £500 million. When I mention this figure to some people they laugh as they simply don't believe that one council could pay so much money to one company but that is the reality of Capita in Barnet. The table below gives you the detail.
















The long overdue review of the two Capita contracts has been postponed because of the Covid crisis but from my perspective it now looks inevitable that the contracts will be extended for a further 5 years taking us up to 2028. Capita may lose certain components of the contracts along the way but that may well suit Capita especially those elements which make them little or no money for them.

Interim and agency staff are still in great demand with another £1.26m spent in June. In some ways there is a plausible reason for having so many agency staff when many staff may have been absent due to Covid but it still seems like a lot of people employed on a temporary basis.


A couple of other things have jumped out of the latest supplier payments. The first is a payment of £375,823 to PA Consulting. Now I may be wrong but I believe they have been commissioned to sort out the mess of the Mosaic casework IT system which Capita tried and failed to implement. Barnet did receive a settlement from Capita on this project but increasingly this looks like is was way too small.

The other payment is to a company called Wirecard. Since the start of the financial year in April, Barnet have paid £239,340 onto these cards which is used for pre-payments. The problem is that Wirecard ran into financial difficulties in June with a €1.9 billion blackhole in their accounts. The background can be read in the Financial Times here and then in the Barnet Times here where Barnet Council played down the seriousness of the matter. However, a number of people had their payment cards suspended until the insolvency administrators took over. It demonstrates quite well why we have to be vigilant at all times and that just because a company is large and well known it does not mean it cannot go bust.

I will keep watching Barnet's spending.

Thursday, 14 May 2020

I'm Still Keeping an Eye on Barnet's Finances

Hello to readers out there at this difficult time. I know that some people have been very badly affected by the Covid-19 pandemic and to you I extend my deepest sympathy. Two members of my extended family have been affected one of whom died and one who is still in hospital. Others have been financially affected by lockdown and again that is something with which I can empathise having had first hand experience. I have chosen not to blog about Barnet for the last couple of months as people have had more important priorities, but as the situation seems to be changing I thought it would be appropriate to start up my scrutiny again.

Barnet's supplier payments for the year end came through so it is good to take stock of where we are.

The money paid to Capita this year seems almost beyond belief especially at a time when they have performed so poorly to the point that the pensions administration has been taken away from them. This financial year they were paid more than double the contracted sum, £83.2 million versus the contracted sum of £39.7 million and in total for the duration of the contract we have paid them £189.5 million more than the contracted value.


In terms of payments for agency staff, that has finished the year at £15.11 million, down on last year but a much smaller reduction than was originally anticipated at the start of the financial year.


This is a brief analysis but I will be doing further articles in the next few days.

Thursday, 27 February 2020

Capita wins yet again - Barnet Supplier Payments for January

Barnet's supplier payments for January have just been published and yet again Capita have done well receiving a total of £6.6 million in spite of having to pay credits of £1.44 million. It brings the running total paid to Capita for this financial year to £65 million and £178 million more than the contracted value since the contract started.


The other big payment this month was £2.25 million to Matrix SCM who are responsible for the interim and agency staff payments for Barnet. This is a big jumps from previous months and is a worrying trend with the year end figure looking like it will hit £15 million.


A few other payments which caught my attention include: £27,580 paid to Baltimore Consulting who help recruit senior public sector staff; £62,954.18 paid to PA Consulting; £10,976.48 paid to Saracens; and £151,997.11 paid to Blue 9 Security who also provide security at our "unstaffed" libraries.

Barnet are facing a massive financial black hole over the next five years with a £92.7 budget shortfall looming.  This year Barnet have to make £17.3 million of savings this year, a target which Barnet have failed to meet year on year.  Until they can get the Capita contract under control it will be exceptionally difficult to reduce this financial black hole.

As always, and even though gagged, I will keep a watching eye on Barnet's spending.


Wednesday, 29 January 2020

A Capita Stitch Up - Expect Capita to be in place till 2028

The latest supplier payments are out for December, a month when the council paid out a very substantial £86.67 million in just one month. There were some unusual large payments including £6.46 million to the GLA identified as "Levies", £8 million to Network Rail Infrastructure towards the Brent Cross Thameslink station and £5.83 million to John Graham Construction who are the Council's construction partner building the two new leisure centres.

However, there were two other payment which stood out, both of which were to Capita.  £7.75 million was paid on the CSG contract and Capita employee benefits and £3.97 million to Capita Re. This brings the running total paid to Capita since the start of the contract to £457 million, £175 million more than the contracted value.

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The reason why this is particularly significant today is that tonight, Barnet councillors will be discussing the basis of the review process for both of these contracts. The CSG contract was supposed to have a review in Year 6, something which has been delayed to merge it with the Year 7 review of the Re Contract. However, the two contracts are quite different, and the contract review processes, as set out in both contracts (see at the bottom of the page), are quite different.

In the CSG contract, Barnet are supposed to identify improvements or savings they want Capita to make and then there is a defined process for Capita to come back with their proposals and once agreed and implemented a mechanism for measuring how well those changes have been delivered.

For the Re contract, the basis of the Year 7 review is focused entirely on whether or not Barnet wish to extend the contract for a further five years. If both parties agree to extend the contract till 2028, Barnet can then instigate a review which will form the basis of the partnership going forward.

Now as is often the way, Barnet don't follow the contract and the review being discussed tonight appears to have gone straight to the discussion about the contract extension and which services will continue to be provided by Barnet. The report says that: "In conducting the Review, the council will work collaboratively with Capita, with a view to presenting jointly agreed recommendations to this Committee, insofar as that is possible". The problem is that Barnet have shown over the last six and a half years that when they say 'collaboratively' it means they end up doing exactly what Capita want them to do. Capita has a catalogue of performance failures as detailed by Barnet's own internal audit team (Capita delivered services marked in RED) yet Capita still continue to provide most of these services.


Barnet are planning to spend the next 12 months jointly reviewing the services provided by Capita,  with Capita. Officers were supposed to carried out a review of the service when instructed to do so 18 months ago in July 2018. However, after 5 months of silence they came back saying that the review had been cancelled and that a secret deal had been struck with Capita following the visit of Capita's Chief Executive to Barnet. Barnet got a cheque for £4.12 million which included compensation for the colossal cock up on the implementation of the Mosaic casework system, the settlement of disputed gainshare claims and KPI failures on the Re contract and in return the whole issue of contract realignment disappeared.

My key worry about this 'collaborative' approach is that Barnet will be showing all their cards to Capita as part of this new review and that will give a massive advantage to Capita in negotiating the five year contract extension. Indeed, I wrote to every Financial Performance and Contract Committee member last week setting out my concerns, the only way a resident can raise such complex matters now that residents have been gagged. I sent the email last Thursday 23rd January and as at 3pm today 29th January not a single councillor had replied or even had the courtesy to acknowledge my email.
This is what I wrote to them:

I write to you as members of the Financial Performance and Contracts Committee as I am not allowed to address the committee in person and a single question of no more than 100 words cannot address the issues which cause me concern. You have published the proposed terms of reference for the year 6 CSG and year 7 Re contracts reviews. This differs significantly from the original definition of the Year 6 CSG review, and seems more in line with the contract definition of the Re Year 7 Contract review which is to “meet to discuss whether each party may wish to proceed with a 5 year extension to the service period”. I have attached copies of both the contract clauses. The clauses are quite different for a good reason. The CSG contract is exactly that, a contract between the two parties. As such both parties, Barnet and Capita, will be seeking to ensure that their best interests are secured in any negotiation. By contrast the Re contract is a Joint Venture and is already by its very nature, collaborative where both parties share the benefits of any financial outcome.

I am pleased that at last the service is being reviewed although this should have happened last year. The extended nature of this process means that any final decision on the CSG contract will not be completed until the contract is well into year 7, a year later than required with the consequent risk that a year’s worth of potential savings will have been lost. It also risks missing the interdependencies between service lines and the synergies that could be achieved if some were considered together.

More fundamentally this process exposes the Council’s negotiating strategy and will make it exceptionally difficult if the council wishes to retender the contract in 2023 by placing Capita at a major advantage to any other potential bidders.

This review process appears to ‘bake in’ Capita’s on-going relationship with Barnet and will automatically prejudice any other bidders or an in-house team from providing a comparator to Capita. As such I would ask you to think again and create a clear separation between the service review and the negotiation of the contract extension to protect Barnet’s negotiating position going forward and to look at consolidating the review into a more compact timeframe.

In addition, unlike previous contract reviews at year 3 on the CSG contract and year 4 on the Re contract, the general public appear to have been excluded from the process even though there was a great deal of participation in previous reviews, especially the Re contract review when many people expressed their dissatisfaction with Capita's performance.

When the two Capita contracts were let in 2013  we were promised better services for less money. All the evidence so far suggests we haven't made any savings and the service is significantly worse.

I have reached the point where I have no confidence whatsoever in Barnet Council to deliver a satisfactory service for residents and with no suitable scrutiny process to hold senior councillors to account, the ruling conservative group can do whatever they want with impunity. Today it was announce that "dissatisfaction with democracy is at an all time high" having risen from 33% in 2005 to 61% in 2019 something I suspect is closely reflected in Barnet. Barnet used to be a borough where people loved to live. Increasingly, that opinion is changing.



For your reference the contract review clauses

By contrast the Re contract review is somewhat different:

Sunday, 12 January 2020

Barnet - a High Rise Hell

If you live in Totteridge or Hampstead Garden Suburb don't bother reading any further. Your homes and environment are secure. For everyone else be afraid, very afraid. Next Tuesday (14th January) a planning application will be heard for a monstrous development at the Hyde on the A5.  You can read the 122 page officer's report here but for those that don't have the time it can be summarised as  follows:
A replacement Sainsburys store of 8,998 sqm Gross Internal Area (GIA), 1,309 residential units  and 951 sqm GIA flexible commercial space in buildings ranging from 4 to 28 storeys. The numbers on the image below indicate the number of storey in each block and how it towers over the surrounding properties.




With 1,309 units that means there will be at as many as 3,848 residents (they are building 2,278 residential cycle spaces) right on the A5 and a good 20 minutes walk to  the nearest Underground Station at Hendon. There are buses that run along the A5 are already busy and with all the other developments being built near by mean that it will be difficult to get on the buses at peak times. They have only included one car parking space for every three flats (0.33 spaces per flat) but the risk is that instead of deterring people from driving it will just mean they park on surrounding streets. If it was right on top of a tube station or in a town centre there might be a supporting case for fewer but this scheme meets neither of those requirements.

 The poor people who live in 11-13 Gadsbury Close will be dramatically overshadowed with only 3 out of their 8 windows meeting the target known as Vertical Sky Component (VSC) but that is dismissed in the report as "relatively minor".

What really worries me is that this development seems to have ignored key elements of the council's own planning rules. The site is not in an Opportunity Area and it is not in an area designated for tall buildings but because they are building huge blocks nearby that seems to set a precedent which can allow other schemes to break the rules.

Interestingly the Council's own Environmental Health assessment says:
"I disagree with results of the air quality modelling that claim that the Air Quality (AQ) will be okay when the development is operational. The A5 is currently very congested at times, add to this the cumulative impacts of other developments there will undoubtedly be extra traffic on the roads, resulting in AQ objectives being exceeded. At some receptors there will be 6-12% more traffic due to the development."
Don't worry we can put in some mitigation. Well actually I do worry. To the north of this site are two other developments, the Colindale Telephone Exchange Building which has planning for 505 flats and the former Homebase site which has planning for 386 flats. The Council recognises that 78% of all roads in Barnet are above the European legal limit for air pollution. In addition, all those people will need to use the buses, need doctors and dentists, school places for their children yet there is no condition that these facilities have to be in place.

All over Barnet new developments are being proposed that seem to be developer driven rather than community driven. We have massive developments proposed at Finchley Central and High Barnet Tube station car parks with many more schemes in the pipeline.  On this scheme the number of flats means that the total scheme cost will be in the region of £500-600 million pounds. Due to what they call the "viability test" it builds in a developers return (profit) of 20%+ so on this scheme the developer stands to make between £100 and £120 million. As such you can see why they are so keen to push through these huge developments.

No areas in Barnet are safe other than those designated as conservation areas. The Council's Growth Strategy identifies a lovely regional park in the centre of the borough but everywhere else is up for grabs. Even worse, the London Plan Panel report recommended 35,460 new homes over the next 15 years, yet in the latest draft of the Local Plan, Barnet's planners are recommending Barnet set a much higher target of 46,000 new homes. This is all about generating more council tax revenue. This number of new dwellings would generate at least £50 million a year in council tax, helping to meet the forecast budget shortfall but it fails to recognise that 46,000 new homes means a massive increase in population all requiring services such as doctors, dentists, schools, libraries, hospitals, bin collections, social workers, care workers - which always seems to get ignored.

It is reaching the point where people have to decide if they want to live in a borough of high rise blocks of high density housing with poor facilities and heavily polluted streets or abandon Barnet for a better quality of life. I know it is something I am considering very seriously at the moment.

If you can, please do try and get to the planning meeting at Hendon Town Hall 7pm on Tuesday and show your concern about Barnet's planning policy.

Saturday, 11 January 2020

My responses to the Barnet Budget Consultation

Barnet Council are currently consulting on the budget for next year which you can find here. It is both complex and time consuming but it really matters as, based on this budget proposal, Barnet are facing a massive budget shortfall over the next five years.

Originally Barnet had planned a 2.99% council tax increase plus a 2% social care precept to get closer to closing the gap but the government reduce the threshold at which point a council has to hold a referendum from 2.99% to 1.99% so Barnet have opted for the lower figure. They are proposing many cuts but the issue is whether they are achievable or acceptable and even with these cuts, we will still have a massive on-going shortfall.  I would urge everyone to at least speak with their local councillor about the budget proposals even if they don't have the time to go through the consultation.

For what it's worth I have set out below my comments that I submitted as part of the consultation. Commenting on each budget cuts in each area:

Adults - you are using capital budget for community equipment which will not have an asset value, which cannot be transferred and which is a one off purchase. As such you will be constantly drawing from the capital budget which is not what the capital budget is for. Has this change been approved by the external auditor and if not is there a risk it will have to be reallocated to the revenue budget? The review of care packages to step down the accommodation setting to a less intensive option sometimes goes against the wishes of families and the individual which is unacceptable. The same issue is true for mental health packages. Purchasing nursing care packages from other boroughs means that friends and relatives will have to travel further to see their friends and loved ones and may mean they become isolated. Does the over-delivery against projected income from the GLL leisure services contract take into account the £700k of lost revenue to date caused by the closure of Finchley Lido?
Childrens: How can you be confident of delivering the savings of remodelled placements while at the same time delivering the same or better care. This seems a very large saving which, if it could have been made, would have happened before now. The service is demand led and due to the on-going austerity means that demand may continue to increase. The 4 day week for back office staff appears entirely implausible. If staff are not needed, then make the post redundant. The risk is that staff will end up doing 5 days work in 4 days, either causing burn out of staff, staff turnover to rise, or work not being done properly which could place children or staff at risk.
Environment: There is no supporting evidence to justify the £5 million of savings for "Smart Cities" whatever that means or for parking charges. The other issue for parking charges is that there are restricted services on which the special parking account funds can be spent so how confident are you that even if the money can be generated (for which there is no evidence) that it can be spent on services that are under cost pressure. Does the £700k of savings/increased revenue from advertising mean that the borough will become plastered in ugly advertising signage and with the continue shift of advertising revenues to online/social media what confidence is there that this is a robust and continuing revenue stream.
Housing: While all the new accommodation will generate more council tax there seems to be no recognition that more people means more demand for services. So with one hand you are making cuts to services yet with the other you are actively creating more demand by encouraging more development. It seems ludicrous to say you will generate £203k a year from subletting Barnet House when it is costing £65k a month for the next 12 years because the council moved offices to Colindale without exiting the lease at Barnet House. Exiting the lease at NLBP was always planned and part of the business case for moving to Colindale. This entry in effect shows the saving twice.
P&R: You are planning to reconfigure commercial, performance and executive support at a time when more rigorous control and enforcement of contracts is vital and when contractual failings have been repeatedly identified. This seems like a massive false economy. Are the cuts to the CSG contract real or on paper only?
On the proposed Council Tax Increase:
Barnet itself identified that you needed to increase council tax by at least 2.99% and that this has only been reduced because the government limit for a referendum has been reduced to 1.99%. To accept this cut in your planned budget is financially irresponsible. It is clear you need to increase council tax by more than 1.99% and if you refuse to make further increases it simply makes the problem worse as every year goes by. You have to act responsibly and if that means people have to pay more then so be it - you engineered this problem by 7 years of council tax freezes. To get to a balanced budget you need to take an 8% increase in CT in year 1 (+social care precept of 2%) and then 2.99% CT + 2% social care precept thereafter to get even close to a balanced budget by year 5. If you fail to act now you risk bankrupting the council in the next 3-5 years as your reserves chart clearly shows.

The problem is the public haven't been able to comment on any of these savings at committee stage because so many meetings were cancelled in the election purdah period and the public are now gagged from making comments or asking more than one question at committees. Consultation only has value if it is meaningful. Even opposition Councillors at the Policy & Resources Committee on Monday made the point that the details are so sketchy and that if a Councillor doesn't understand the detail, how can the general public be expected to understand them.