Thursday, 22 February 2018

Is Barnet Capable of Managing its Outsourced Contracts?

Next Tuesday is the Performance and Contract Management Committee meeting. Reading the 119 page Performance Monitoring Report it makes my heart sink at how poorly some of the contracts are being monitored and managed and how performance management seems to be a box ticking exercise. You can read the report here at agenda item 7.

I have submitted a series of questions on a number of agenda items set out below. It will be interesting to see the responses.

  1. Can you explain why the Commissioning Group budget has risen from £20.2 m in 2016/17 to £35 million in 2017/18?
  2. On page 42 risk AC028 identifies the lack of a fully functioning case management system. Who is responsible for managing and maintaining this system and how confident are you that the draft plan to implement remedial works is actually working?
  3. On page 44 reference is made to Barnet’s Children’s Commissioner and her report of January 2018. At 4.23.3 of her report she made specific reference to the role of the PCM Committee, raising a question over whether that Committee has the capacity or capability to scrutinise and monitor complex children’s services effectively. Why was this not highlighted in the papers for this meeting and how are you going to actually address this serious concern?
  4. The Children’s Commissioner also noted that there is a culture in Barnet of over optimistic and over reassuring reporting to members. How confident are you that the reports you are receiving in these papers are not over optimistic and over reassuring and what steps are you taking to ensure that culture is changed?
  5. At page 94 there is a report regarding the performance of Cambridge Education. As part of this contract, school meals were subcontracted to ISS. School meals was a profit centre generating £240,000 of profit before it was outsourced and the business case identified it as a major source of additional income generated outside the borough to support the business case. Why is there no information on the financial performance of the ISS subcontract and will you provide an update of ISS’s current financial and operational performance?
  6. At page 97 it notes that there will be an additional charge for Revs & Bens work from DWP. In 2016/17 Capita charged £330,000 for additional Revs & Bens work plus £98,000 for face to face support. How much is Capita likely to charge in 2017/18?
  7. At page 99 the reports states that there is a rebate from Comensura and administration charges to other services, totalling £1.986m. Please can you clarify how this rebate from Comensura is calculated, and what proportion of the £1.986m it represents?
  8. One of the CSG contract variations identified in Table 12 is for £1,004,038 for dilapidations to NLBP Building 4 “to increase the funds to cover cost until October 2018”. Given that Barnet should have existed NLBP 4 in October 2015 why are we still paying into a dilapidations fund and why are we paying it to Capita, not the building freeholder?
  9. At Page 103 the report states we are paying £78,908.65 to Capita to assist with Family Services recruitment. Given that we paid Capita £248,000 for the same task last financial year are you sure this further payment represents value for money?
  10. At page 106 the report provides details on Re’s financial performance yet there is no mention of how much additional revenue they generated, a key component of the overall financial performance. Please can you tell me how Re are performing against revenue generation targets?
  11. To what extent has the contingency plan recognised that Capita provide services through a range of different service companies (for example pensions administration is operated through Capita Employee Benefits Limited) and that with such a complex operating structure some companies  might continue to trade while others are placed into some form of insolvency measure?
  12. To what extent has the contingency plan recognised issues such as retention of title, where for example if a Barnet contractor has purchased but not fully paid for essential equipment (such as IT hardware) the original supplier may uplift that equipment?
  13. To what extent has the contingency plan recognised that before a  company goes into some form of insolvency measure, it may experience a prolonged period where cashflow is highly restricted, preventing investment in key equipment and failing to replace staff that leave which would have a highly detrimental impact on service standards?
  14. Have you taken specific professional advice from an insolvency practitioner, for example from the external auditor BDO, to ensure the contingency plans are robust?
  15. At the Audit Committee of 31st January 2018 the Chair, Cllr Rayner, said that he was referring the issue of gainshare on the CSG contract back to this committee for a review. There is no mention of this in the forward work programme. When is it scheduled to take place?


Friday, 9 February 2018

You get what you pay for - should Barnet residents pay more?

Next Tuesday the all powerful Policy & Resources Committee will assess whether to increase Council Tax or not. There is a recommendation that they should add a 3% social care precept. Social care is in crisis, not just in Barnet, but throughout the UK so this makes sense. However, this money is ring fenced and the council are obliged to prove it has not been used for other purposes.

The Council are also allowed to increase Council tax by a further 2.99% without having to hold a local referendum but the recommendation is that this should be frozen. This follows a pattern with Barnet having frozen or cut Council tax every year since 2010. In 2016/17 they did include a 1.7% social care precept but this mirrored a 1.7% reduction due to the Olympic levy coming to an end - so no overall net increase.

The problem we have is that Barnet have been using reserves to make up some of the shortfall and they are getting to a point where they will reach the minimum threshold a local authority is required to hold. Barnet are proud that they have made real term cuts to council tax of 20% but that has a very significant cost in terms of the reduction of services. Most departments are being required to cut their budgets, including services like Children's and Adults. For details of all of the budget cuts you can read them here with a summary below.

Currently Barnet is being propped up by a central government grant called New Homes Bonus which is linked to the number of new homes are built. This year it is roughly £10 million so you can see why Barnet is so keen to push through every new housing development. However, this grant is being cut and there is no certainty as to how much longer it will continue.

So now we come to the tough bit; should residents be prepared to pay a little bit more? From my perspective the answer is, unfortunately, yes. Failure to do so is just building problems for the future. I was talking to someone about this the other day and it is a bit like only paying off the minimum balance on your credit card each month  - you know it's not enough but you don't have to worry about it this month.

Even if Barnet had taken a very modest 1% increase in council tax each year, it would mean we would have around £14 million more to spend this year, negating the need for this year's cuts and borrowing from the reserves. The argument for not taking a council tax rise is that many families are hard pressed financially. That is also true but this whole problem has been brought about by central government cuts to local authority financing and all three constituencies returned Conservative MP's who have voted through these cuts.

I would also say that there are some savings still to be made at Barnet Council. We know about the very expensive PR & Communications team which you can read about here and the huge salary rises for some of the most senior staff but ultimately people have to be realistic and pay for key services like Children's and Adult Social Care.

I have raised a number of questions regarding the budget which I have set out below and I will update you when I get some answers.

  1. At the Policy & Resources Committee last year the detailed revenue budget showed an “original estimate” for 2017/18 of £270,333,880. This included £ 6,863,000 for Additional Income from Council Tax. In this year’s detailed revenue budget it states the “original estimate” for 2017/18 was £277,196,880 with the Additional Income from Council Tax left blank. How can the “original estimate” have changed and what has happened to the missing £6.8 million?
  2. Given that the external auditor said in the audit completion report “there is little margin available in reserves and balances to support any further revenue budget overspends or slippage on savings plans and management will need to revisit how these reserves are being utilised in the event of continued pressures on budgets”, do you think it is wise to recommend a budget that recognises pressures yet freezes Council tax and depends on reserves to make up some of the deficit?
  3. Given that the Council will be unable to levy a social care precept in 2019/20, and that you are forecasting a budget gap after savings and reserves of £5.965 million, even with a 2.99% council tax increase, do you think it is fiscally responsible to freeze council tax yet again this year?
  4. The report states that “it may become necessary to go to alternate weekly collection if recycling rates continue to plateau and/or the savings identified are not realised” does this two weekly collection refer just to residual waste or would it include two weekly collection of recycling and food waste as well?
  5. How confident are you that the savings forecast on the Your Choice Barnet contract aren’t simply adding to the deficit in The Barnet Group and what safeguards are in place to stop that happening?
  6. Can you clarify how the £300,000 decrease in concessionary fares will be achieved?
  7. Under Central Expenses can you clarify why, in the expenditure breakdown, the current estimate of capital financing for 2017/18 is approximately £11 million less than the original estimate for 2017/18 but that the original estimate for 2018/19 increases by £12.6 million over this year’s current estimate?
  8. Are the efficiency savings on third party contracts identified in the Children’s & Family services budget net or gross of any gainshare payments to Capita?
  9. Given the inadequate OFSTED report rating of Children’s Services and the fact that the original budget was overspent by £6 million to try and help resolve some of the issues identified, is it wise to forecast savings for 2018/19 of £2.1 million on Children’s Family Services for 2018/19?
  10. Why are no financial savings shown against the HB Law service – have they achieved the pinnacle of efficiency?



Friday, 2 February 2018

Barnet Supplier Payments - yet another reason why we need to start planning for change

This has been an eventful week in Barnet. Capita's share price has crashed, with Barnet having to draw up contingency plans in the event of its failure. The same day as the crash, the Audit Committee heard a catalogue of Capita failures.

Today I have published the supplier payments for December 2017. As you can see from the chart below, we are still paying Capita/Re a fortune even though we have made huge advance payments to them on both contracts.


The monthly bill for agency and interim staff is declining slightly but it is still forecast to hit £17.2 million by the year end. With a commissioning council and so many services outsourced it is beyond belief that we are spending more on agency staff now than we were when no services were outsourced. Below are the charts showing the payments to Capita and Re as well as for Interim and Agency staff.



I have had a number of discussions today with people asking whether the contract with Capita can be terminated. I have referred them to the contract (page 167) on the Barnet Council website which seemingly makes it clear that, yes, we can terminate the contract. We would have to pay a fee (which Capita do not want me to see as explained in an earlier blog) but given the massive cost of the current contract that may well be a price worth paying.

What is important now is to start discussing what a redesigned Council could look like and how it could be structured. I had a great discussion with someone who has great experience of the council. They identified what services should be working much more closely together to make them more effective at delivering services (and which would save a significant number of managers). That made me even more convinced than we need to start the process of creating a masterplan for the council and then start bringing service back in house to fit within the new structure.

The message to Barnet residents should be one of hope and the genuine belief that without Capita we can have a better, more efficient council that can deliver the best possible services, cost effectively.

Thursday, 1 February 2018

Capita's problems or a one off opportunity for Barnet

Last night I attended Barnet's Audit committee. It was a catalogue of  Capita failures. Failures to meet the promises made 5 years ago when Barnet decided to appoint this company who promised to deliver services better and cheaper. Last night I said that the council needed to do something now and that doing nothing was not an option. I mused on this further and chatted with people who understand Barnet Council and why the Capita contract has delivered so poorly. The more I talked with them the more I saw Capita's failures in Barnet and their disastrous performance on the stock market as representing a one off window of opportunity for Barnet.

Yesterday I asked for Barnet councillors to start bringing key services such as finance and pensions back in house. Today I am asking for something more radical. We have a window of opportunity to think about how we design a local authority from scratch, a blank sheet of paper. Yes, the council clearly has to deliver a range of specific services but how they are delivered is up for grabs and what other services they provide is up for debate.

Prior to Capita taking over Barnet, there were established customs and practices, physical and organisational structures that restricted how change was implemented. Some aspects of the service were great; remember Barnet was rated a four star council. Other aspects were poor, often restricted by a lack of investment in good technology. We were told that Barnet could not afford to invest in technology and that is what Capita would deliver. Ironically, as soon as Capita were appointed Barnet found the money for investment and gave it to Capita. The services were outsourced but instead of coming up with a radical and bespoke organisational solution we simply transitioned to Capita's established customs and practices, Capita's physical and organisational structures. Is it any better? Well the evidence suggest it is no better at all and in many ways it is much worse. The recent Children's Commissioner's report criticised Barnet for its "Silo Structures" made worse by outsourcing. The report also said that Barnet was process heavy which slowed down decision making. In the review of the Capita joint venture, Re, the report noted, "Capita’s internal organisational structure (known as “the towers”) has been identified as a layer of complexity that potentially impacts on day to day service delivery".

My attention was drawn recently to how the cost of the commissioning function in the council has grown since the contracts with Capita were signed. Barnet are having to throw more and more resources in to managing the contract with highly paid "strategy staff". The commissioning budget has risen from £8 million to over £20 million in three years yet we still don't seem to have enough staff monitoring the contracts.

So can we start again from scratch; design an organisational structure that reflects Barnet's needs now but with the flexibility to adapt as the role of local authorities change and develop? We can develop a efficient structure that gives councillors and the public a clear joined up view of the council and how it is performing. That might mean some services are outsourced, typically those that are highly specialised and non-core to the running of the council. But they would be outsourced to market leading specialists rather than "we can do it all" suppliers like Capita.

I know some people will say we can't afford it but it is important to distinguish between capital and revenue. Borrowing to invest in services that will save money makes plenty of sense. Indeed Barnet are making many capital investments to save or generate revenue such as the new leisure centres.

It is clear to me that the Capita contract is not performing anyway near to the level we were promised. There are lots of extras we are being charged for. But most importantly Capita and the council do not share common goals. With the problems Capita are experiencing now, that goal divergence is likely to get worse, not better, as pressure increases to improve profitability of its remaining contracts.

The die hard defenders of outsourcing will trot out all the old phrases but my view is they are living with an outdated and broken model. We need fresh thinking and innovative ideas.

If I was leading a party into the forthcoming local elections I would be selling the opportunity to change the way the council is run, to get the best advice for a new and efficient model. A model that suits us, not a remote, corporate organisation going through its own massive restructuring exercise.

That means preparing a masterplan for the council with a phased withdrawal from the Capita contract. Indeed, as one of my fellow bloggers mentioned, Capita might be pleased to seek an exit from the JV contract, especially as it is struggling to deliver the promised returns. Bringing finance back as quickly as possible is essential because without control of finance any other plan will struggle. There will be lots of specific questions like, do we need to bring a call centre back to Barnet? There are plenty of organisations that could help set up a call centre quickly in Barnet staffed by people who are connected with the area, who know what services Barnet provide and have a connection with the area. There are lots of specific questions, but what is essential is to have a vision of what a great council looks like.

We have a window of opportunity. I just hope we have some councillors who have the courage to innovate and deliver something new, efficient, a new council that meets our needs not those of the suppliers.

Monday, 29 January 2018

Six Blogs and a Damning Report - Why we need a change at Barnet Council

Over the last week I have published a series of blogs about the costs of Barnet's contract with Capita.  I am a regular attendee at the Performance & Contract Management Committee meetings where I have consistently raised concerns about the performance of Capita and the costs we are paying. There is an equally consistent approach by Conservative Councillors who always say everything is fine and dandy, which I find both frustrating and worrying given that there is no rigorous challenge.

On Friday we saw the publication of a damning report by the Children's Commissioner for Barnet which you can read here. The background is as follows:

Barnet’s services for children were inspected by Ofsted in April and May 2017. They were found to be inadequate across all reported categories. The inspection raised serious questions surrounding the quality of practice and leadership, including the Borough’s focus on children, its quality assurance systems and the quality of management oversight. The Barnet Safeguarding Children Board (BSCB) was also found to be inadequate. As a result, an independent Children's Commissioner was appointed by the Secretary of State and is required to report to the Minister of State for Children & Families - so pretty serious stuff.

The report looks into the underlying problems that brought about the failure and what barriers are preventing the service from improving quickly. Problems had been identified in 2016 and experts from Essex County Council brought in to advise Barnet but a year later when OFSTED inspected many of the problems still existed.


Identifying why change hadn't been implemented, even though the problems were known, is a key element of this report. It is pretty damning with some of the key headlines as follows:

  • The lack of ‘turn-around’ leadership experience and expertise presents the clearest barrier to improvement in Barnet. It has led to a lack of clarity, inconsistency and poor engagement in terms of setting expectations around practice standards and protocols across children's social care services.
  • A robust, inclusive Improvement Board was needed, supported by a structure which ensures actions are taken and monitored. The Improvement Board in operation was an internal Board, chaired by the Chief Executive which met too infrequently to impact on practice and received over-optimistic and unspecific reports on progress.
  • Silo working was pervasive throughout the Council. While lack of ‘join up’ is often seen in large organisations, the silos found in Barnet at the corporate level mitigated against the potential of SCB to make a strong contribution to support the improvement for children. Equally, silos across children’s services and partners more generally, including between safeguarding and education services, did not maximise improvement capacity.
  • There are some cultural issues to be addressed at the corporate level which may relate to the legacy of the commissioning/delivery split. Because the focus of SCB had become higher level transformational and strategic change issues, day to day ‘business as usual’ matters began to be seen as less important and were not normally discussed at top level.
  • The Council is a process-heavy organisation with multiple approval requirements for even fairly straightforward matters. This leads to frustrations and delays which mitigate against establishing a nimble and creative improvement culture.
  • While many within the service were acutely aware of the failings described by Ofsted, both before and after the inspection, there was a general lack of in-depth understanding elsewhere. Prior to the inspection, this was exacerbated by over-optimistic reporting of progress, including to the Improvement Board, and by inaccurate information arising from audits and quality assurance processes.
  • While there is a clear understanding about the importance of using performance and management information to drive improvement and monitor impact for children, systems and approaches are poor. This represents a distinct barrier to further improvement and is also a contributory factor as to why the impact of improvement activity since 2016 has not been sufficient.
  • There are significant amounts of data and information about performance within the borough but analysis and use of that data and information are under-developed.
  • Monitoring has tended to focus on quantitative indicators without significant reference to the quality of practice and the impact on children.
  • There is a serious disconnect between senior managers in children's social care and the front line. This is a significant barrier to improvement and also a core reason for the lack of impact of improvement efforts so far.
  • The lack of purposeful and systematic engagement with staff in Barnet leads to a lack of clarity and understanding about what is required of them. Equally, staff do not feel that they have the opportunity to contribute their expertise to developments – they are ‘receivers’ of change rather than agents of change. Many staff report frustration about the lack of follow-up when suggestions or requests are made.
  • It became clear that governance in Barnet has not been sufficiently focused on safeguarding children. Most members did not have a good understanding of safeguarding issues; of safeguarding work in the borough; of the needs of vulnerable children in the borough; and, significantly, of the problems growing in the service and the implications for children of the findings highlighted in the recent Ofsted inspection.
  • Following the serious issues raised in the Essex report in March 2016, bilateral discussions were had between the DCS and individual members. The Leader and Lead member (Chair of CELS) were well briefed by the DCS on concerns raised, and the restructuring took place to give the DCS full responsibility and accountability for the service, as outlined in paragraph 2.6. However, the CELS Committee did not receive any reports relating to concerns highlighted in the Essex work.
  • There are a variety of issues and questions arising from this unsatisfactory history. They include:
  1. whether the remit of the CELS Committee is too broad. There is no doubt that the Committee had full agendas during the period concerned, taking controversial items including on libraries, school funding and school places;
  2. whether the split is appropriate between CELS as a ‘theme’ Committee tasked with looking at strategy, ‘transformation’ and policy but not performance, and PCM as the Committee that looks at performance across the Council. Given that PCM’s prime focus has generally been Barnet’s large outsourced contracts, there is a question over whether that Committee has the capacity or capability to scrutinise and monitor complex children’s services effectively;
  3. why the culture in Barnet leads to over-optimistic and over-reassuring reporting to members. This may be due to factors such as the marginal nature of the borough’s politics; the concern to maintain Barnet’s reputation; custom and practice; and/or a misplaced concern to make serious safeguarding issues public prior to an Ofsted inspection.

The Director for Social Care and Education at Essex County Council, will remain the Chair of the London Borough of Barnet’s Improvement Board, and report progress on a regular basis to the DfE. Barnet cannot be trusted to fulfil this key role.

The last three points are indicative of wider problems at Barnet; is the committee structure appropriate to adequately scrutinise the performance of the Council? The split between the theme committees and the performance committee is an issue I have highlighted repeatedly. It is akin to two people driving a car, one holding the steering wheel and someone else operating the accelerator and brakes. Critically, the issue of over optimistic reporting to save face is something I experience regularly in Barnet. This all has to end if we are not to see similar problems arising in other parts of the council.

We need a change of administration and a complete rethink on the way the council is run.

Thursday, 25 January 2018

Is Gainshare Costing Barnet a Fortune - Part Four The Comensura Contract

Agency and interim staff cost Barnet Council a great deal of money. By my calculation it amounted to just under £20 million in 2016/17. Traditionally a council's relationship with an agency staff member would be as follows:

This would involve Barnet dealing with lots of staffing agencies separately and paying bills from each agency. Barnet would also need to negotiate commission rates with each agency separately, which is a time consuming and complex task. To overcome this problem many public sector organisations use what is called a neutral vendor. In Barnet that neutral vendor is a company called Comensura. They do not supply any agency or interim staff themselves, they simply act as a consolidator, collating and managing the relationship between staff agencies and the Council. Comensura negotiate rates and charges with agencies. 



The original contract with Comensura was agreed at Cabinet Resources Committee on 20 June 2012 and started on 1 October 2012 for a period of three years with the option to extend for a further year. It was sourced through the Eastern Shires Purchasing Organisation on a framework contract (one that has already been agreed) and ESPO take a small commission on every hour of agency staff used.

In September 2015 approval was given to extend the contract for one year to enable preparation for, and procurement of, new contract arrangements for temporary workforce provision. A year later, in September 2016, approval was given for a further two year extension due to the failure to secure a new contract in collaboration with a number of London Councils. 

Gainshare Savings Real or Illusory:
In the original tender process, a tender price was submitted by Comensura but the following statement was made at point 9.10 in the tender evaluation report.

“Each of the bidders has identified but is not able to quantify additional cash savings that could be achieved during the implementation phase of the contract when further pay rate benchmarking will be carried out and the baseline value of the contract has been set by Comensura.

In 2015 in the contract extension report it noted:
Comensura and the procurement team have identified short term additional savings benefits in year by reviewing long tenure agency employees; those engaged for longer than 3 months a year on short term contracts and are working towards a reduction of these”. This was also driven by a change in HMRC rules to stop agency staff avoiding tax and national insurance.

Hopefully all is clear up to now. Now we get to the main issue. As soon as Capita took over the CSG contract they claimed a gainshare on this Comensura contract. Since 2013 Capita have claimed several millions (I estimate c.£3 million) in gainshare payments on this contract.

Fundamental to Capita’s gainshare claim that they “negotiated” further savings is whether these were in addition to the savings identified but not quantified or  simply a quantification of the savings that Comensura had already identified or that Comensura subsequently generated. This is a critical point as the majority of gainshare payments made to Capita relate to this one contract. 


I have asked for the evidence that Capita did generate these savings but this has not been provided. I have received a redacted copy of the original LBB Procurement Board Project Submission (attached below) but this merely serves to question whether the savings have been realised given that the cost of contract has risen from £12.53 million in 2012/13 to £19.88 million in 2016/17.




Latest Contract Extension:
Under the terms of the original Comensura contract it was let for a three year term with the option to extend for one year only.  As I see it, the latest contract extension in September 2016 cannot be an extension, it must be a new contract. As such, even if the gainshare payments on the original contract were valid, which I do not believe they were, I do not see how they can be extended to the new contract commencing in September 2016. However, Capita are claiming gainshare for the entire financial year to March 2017.

Overall, we are paying commission to four different organisations between the wages and on costs of the staff member and what Barnet Council finally pays.

Now I don't know how much negotiation took place, whether the savings are real or not but this gainshare has been a massive money spinner for Capita. The gainshare they have claimed could, for example, have been enough to offset all of the library cuts. As with the other contract gainshare examples I have raised in the last three days, by claiming large savings, it triggers the ability for Capita to claim the Agreed Procurement Price Recovery Payment (APPR) which this year was £970,000. I have been prevented from seeing what the APPR was in the three previous years of the contract but is likely to be as much or more than this year's payment.

Again, I raised this with the external auditor back in July last year but six months later have still not received a response. 

I raise this because, at a time when the council are consulting on further budget cuts, Barnet are writing out very large cheques to Capita under this catch-all gainshare clause. It shocks me that the council are happy to cut vital services but aren't prepared to challenge Capita on this matter, but that is the Barnet way. 

Wednesday, 24 January 2018

Is Gainshare Costing Barnet a Fortune - Part Three The Energy Rip Off

Back in 2015 a report was presented to the Policy & Resources Committee regarding potential savings on energy costs. The report was authored by the Council's Commercial and Customer Services Director, a Council employee (not Capita) and who has subsequently left the Council.

The report highlighted an energy review which had been undertaken to inform options for procuring energy for the Council. The energy review was undertaken following receipt of London Energy Project’s (LEP) benchmarking update on energy provision which compared energy arrangements delivery by LASER and Crown Commercial Services. Just to be clear LEP is a  London Councils initiative of which Barnet is a member.


The review informed the options for procuring energy going forward and these are presented both within this report and in the supporting Energy Review Business Case. The report was considered some way in advance of the new contract commencing, as advance commitment had to be given to "enable the opportunity of forward purchase of energy during optimal market conditions."

So just to be clear, this was a report presented by a Council employee, based on a benchmarking update from the London Energy Project for energy delivered by LASER Energy which is a wholly owned subsidiary of Kent County Council and an organisation from which Barnet has been buying energy since 1993.

The report also notes that alternative options were considered but were not recommended as "these would represent an approach which does not conform to the Pan Government Energy Project recommendation that all Public Sector organisations adopt aggregated, flexible and risk managed energy procurement." So this was pretty much the only option.

The report identified that the new contract would save around £110,000 a year on energy costs. In addition, by opting for a fully managed contract,  the report said that the service would avoid certain costs, the largest of which is correcting overcharges. Personally, I find this implausible because if the procurement department were doing their job there should not be £202,000 of overcharges and ultimately they get corrected. I also do not believe that you can forecast those cost avoidances going forward as surely mistakes would not continue to be repeated year in year out? Nevertheless it can be an indicator a fully managed service might be a better option. I have subsequently identified that this fully managed service comes at a cost and is reflected in the price LASER charge for energy, typically 1.5% of energy usage.
The report was signed off and the new contract commenced in October 2016. So far so good.

As part of my review of all Capita invoices, I was therefore surprised to come across this invoice claiming a gainshare of  £357,701.51 of which £313,215 is for making savings on the energy contract of £942,000.

So what Capita are claiming under gainshare is not only the energy saving for three years but also costs avoided for three years, a service provided by LASER and for which Barnet pay LASER a fee of approximately 1.5%.  In total they are claiming a saving of £942,000, yet from what I can see Capita had no input to the generation of this saving and have used theoretical potential cost avoidance, which we pay another provider for, to arrive at an inflated figure of which they want 33.25%. That is, to my mind, is not acceptable, does not represent a fair and reasonable interpretation of the gainshare clause and should not have been signed off by the person who authorised this payment.

What I also find interesting is that Harrow Council, who provide legal services for Barnet, also went through a similar process in 2015. They came to a similar conclusion (with a couple of variations for renewal energy and low energy use sites). You can read their report here. Could we have had a chat with Harrow and made the same savings without any charge from Capita?

What I also want to know is whether any of the councillors who attended that meeting were made aware that by signing off this procurement they were creating a financial liability to the council of  £313,215.  For reference sake, these are committee members:


Be aware that by claiming an overall saving of £942,000, it means that Capita can claim to have met their guaranteed procurement saving and  bill Barnet the £970,000 Agree Procurement Price Recovery. Yet again this has a very bad odour about it and makes me question the whole gainshare arrangement.

I raised this matter with the external auditor, BDO, as an objection to the accounts back in July 2017 but six months on BDO have still to provide a response. I remain concerned that no one has a grip on what we are paying Capita through this money spinner gainshare clause, that Barnet are being right royally ripped off, and that councillors are blissfully unaware.