Monday, 3 August 2015

Barnet June supplier payments - £11.5 million to Capita and £1.8 million to Comensura

In June Capita were paid in total £11,520,890.74; £7.66 million on the CSG contract and £3.86 million on the Re contract. I wonder how this will pan out over the rest of the financial year.

Comensura were paid an astonishing £1.8 million in just one month for interim and agency staff. This is a contract managed by Capita who are receiving massive rewards for apparently saving us money on this contract. It is completely beyond me that a contract that continues to grow so hugely should attract reward payments to Capita of hundreds of thousands of pounds in gainshare payments for two years running.

Conway Aecom have been busily repairing road and billed £938,951.93 in June and our friends from Impower consulting pick up a shade under £47,000.While on the subject of consultants,PA Consulting were paid £40,600 in June  - I wonder what that was for?  The council also spent £36,271.82 with a company called Wider Plan who specialise in employee benefits; their website is here.

I wonder what was so important that Barnet had to spend £16,765 hiring the Ariana Banqueting Suite at North London Business Park. I know from previous invoices that this must have included two quite substantial events.

As always I will continue to monitor Barnet's spending

Tuesday, 28 July 2015

Barnet - a step too far in preserving their majority

IMPORTANT UPDATE BELOW IN RED
Tonight there is an important vote at the Council on the Abbotts Depot. In the papers there is a Monitoring Officers report which covers the subject of Disclosable Pecuniary Interests (DPI) and whether or not a councillor can seek dispensation to speak and vote on an item when they have made a disclosure.

Below is the text from the Monitoring Officer's report which you can read here What it seems to be saying is that even though Cllr Dean Cohen has made a DPI for the Abbotts Depot because he acts for a client who occupies part of the site, he should still be allowed to speak and vote because without his one vote the matter would be tied.

Now when there was a dispensation granted for councillors who owned rented properties voting on housing matters that argument had some traction as there were so many conservative councillors who owned rental properties and there was not a direct link between their individual properties and the policy matter under discussion.

This matter is quite different. In this matter it is just one councillor and he has a direct financial link to the matter because he is paid by a client who occupies part of the site. It also set a precedent as in future; with a majority of just one vote surely the same rule will apply whenever there is a risk that majority will be lost. I think the Monitoring Officer has made a fundamental error here and if this is allowed to stand may leave the council wide open to further legal challenge.

Dean Cohen needs to make a choice who he takes his money from; the Council or his client, but not both. This is also a serious reputation matter and if this is allowed to stand do not be in the least bit surprised to see it feature in Private Eye's Rotten Boroughs page next week.

Richard Cornelius needs to do the honourable thing here and overrule Dean. As for the Monitoring Officer their judgement seems seriously and irrevocably flawed.


1.3 An application to stay, speak and vote has been made by Councillor Dean Cohen in respect of agenda item 14, Motion in the name of Cllr Kathy Levine, on Abbotts Depot.

1.4 Councillor Dean Cohen is declaring a disclosable pecuniary interest in that in a business capacity, he acts for a client who occupies part of the Oakleigh Road South site.

1.5 The Monitoring Officer has confirmed that, under her delegated authority as Monitoring Officer, she has considered the application against the tests set out in the Localism Act and Members’ Code of Conduct and concluded that, given the political balance of the Council, the representation of different political groups on the body transacting the business would be so upset as to alter the outcome of any vote on the matter, and has therefore granted a dispensation for this item.

2. REASONS FOR RECOMMENDATIONS
The Monitoring Officer has considered the application against the tests set out in the Localism Act and Members’ Code of Conduct and concluded that, given the political balance of the Council, the representation of different political groups on the body transacting the business would be so upset as to alter the outcome of any vote on the matter.

It has been brought to my attention that at item 12.1 of tonight's council agenda Appendix F there is a request for the Council to "Note the designation of Davina Fiore as the Monitoring Officer". It also mentions that she was appointed as the Director of Assurance and Monitoring officer at the Council meeting in April. In fact the minutes say something different in that she was appointed merely as the Director of Assurance as you can see here.

As such this looks awfully like the monitoring officer isn't the monitoring officer at all in which case her decision to grant a dispensation to Dean Cohen is void until she has been duly appointed. This a matter of grave importance especially given the debacle the council suffered under the previous but one Monitoring Officer.

Saturday, 27 June 2015

Barnet Council - Commissioning Council At Any Price

Barnet Council have made it clear that they wish to become a Commissioning Council whereby we have a few senior officers who let contracts and a swath of subcontractors who deliver all of the services. Most recently the Council has commenced the outsourcing process of education services
which includes:
  • Strategic and financial management of the service
  • School improvement
  • Special educational needs
  • Educational psychology team (part traded)
  • Admissions and sufficiency of school places
  • Vulnerable pupils
  • Post 16 learning
  • Traded services including:
  • Catering service
  • Governor clerking service
  • Barnet Partnership for School Improvement (BPSI)
  • Newly Qualified Teachers support
  • Educational psychology (part)
  • Education Welfare Service (part)
  • North London Schools International Network (NLSIN)

Much of the justification for pursuing an outsourced joint venture is predicated on generating a large amount of new income from traded services with other local authorities. In total 71% of the financial improvement is from income growth rather than efficiency savings and of that 60% comes from school meals. Given that school meals is such an important component of the outsourcing package you need to be really sure that the company delivering the service is suitably qualified. 

I have questioned the business case because they have used completely unsupported assumptions that show both a commercial ineptitude and and lack of understanding of the way school meals operates. Previously I challenged these margins and received this reply from Barnet Council:

"As stated at the Committee meeting in January, the document presented to Committee was an outline business case, which was based on our assessment of the various options for the future delivery of these services and which of those options was most likely to meet the project’s overall objectives.  The report made it clear that a full business case, based on the outcome of a procurement exercise, would be brought back to Committee for final approval.  It was also made clear to Members that the only true test of the market would come by carrying out this procurement exercise and that proceeding to procurement was the only means of providing certainty over the delivery of the required savings".

When we had three bidders for this contract there was an argument that a dialogue might reveal that the business case was completely wrong. That very rapidly became two bidders, Capita and Mott MacDonald. Capita made it clear that they would subcontract out school meals to Compass so at least everyone knew what they were dealing with. 

This week we found out that this tender competition has become a one horse race with Capita folding, leaving a clear run for Mott MacDonald who trade under the name Cambridge Education. They don't provide school meals services so for the first time this week we found that they would subcontract that element of the business to ISS Catering.

So to summarise the situation:
  • Barnet have tendered a contract for which there is only one bidder;
  • Barnet don't know what margin they will achieve on the largest component of the business and will depend on the sole bidder telling them;
  • The company Barnet are in dialogue with don't actually provide the largest component of the service being tendered;
  • Until this week no one was aware  (other than  a few senior officers) that the now sole bidder would subcontract the largest component;
  • Capita who run the two large outsourcing contracts and have the best opportunity for economies of scale have walked away which may indicate that the contract isn't viable.
If an in house team had been allowed to bid we would have had a very clear benchmark  against which any other bidders could be measured but in Barnet, in-house teams have been refused permission to bid.

We are faced with a situation now which is entirely unsatisfactory, exposes the council to significant financial risk and from a governance and scrutiny perspective is inadequate.

I also believe that there is a glaring flaw in the entire process. The Barnet business case is for a Joint Venture with Cambridge Education. The largest part of this contract is the school meals service and without that hitting very aggressive growth targets they will fail to deliver the forecast savings.  ISS, the school meals sub contractor, is a major player. They will not be part of the JV, merely a subcontractor to it. When opportunities to bid for more school meals contracts arise, say, in Harrow, Brent or Enfield, will ISS forgo a share of their profit to bid for these contracts as part of the Barnet JV or will they bid for them on their own  - given they are specialist school meals caterers - and keep all of the profit to themselves. The JV model can only work where the partners are the major service suppliers and that is not the case with Cambridge Education. I forecast therefore that if Barnet enters a JV with Cambridge Education they will never hit the massive revenue growth targets which are predominantly school meals driven and as such they will fail to meet the budget savings required. Consequence - disaster.

I call on all councillors to suspend the dialogue process immediately and seek an in house comparator bid to at least provide some form of competition/comparison.I also ask them to reconsider the right to subcontract such a large component of the contract to a third party. If the council continue to push this through with a single bidder with a subcontracted school meals service, then they will have failed in their responsibility to demonstrate best value and in the future that decision will come back to haunt them.

Tuesday, 9 June 2015

Royal Brunswick Park - 1600 homes on North London Business Park

Barnet are terribly keen to vacate North London Business Park (NLBP) and Barnet House and relocate to a sparking new office at Colindale. You can read the report here.
 This will cost £36.3 million to build with interest at 3.34% over 30 years. The report says that in the long run it will save money and we won't have to keep paying rent although my reading of the business case is less clear.  I kept scratching my head to understand why they wouldn't remain in Building 2 at NLBP and Barnet House until the full impact of outsourcing all of the council services is clear at which point we might not need the 90,000 sq ft of space in these new offices.

Today I happened to be looking through council decisions which are taken by officers and came across this and pennies began to drop.
You can read it here.
What this tells us is that Barnet have entered into an agreement with Hindale Limited (two directors Brian and Luke Comer) whereby Hindale will pay Barnet £105,364 for officers time to prepare a site development brief and to provide pre application advice to inform the preparation of the planning application for the site.

So what you may say - the site is designated as a Strategic Employment Location in the Mayor's London Plan  March 2015 so what's the problem. Well the problem is that the proposal is to develop 1600+ homes on the site along with the re-provision of the St Andrew the Apostle Greek Orthodox school.

I know new homes are important but so are jobs and the correct balance needs to be struck here.

With such a massive potential development why has this decision been buried away on the website. Surely the community should be alerted to what is being proposed and Barnet's apparent desire to assist Hindale/ Comer in this development.

I hope for her sake that Cllr Lisa Rutter is fully aware of these proposals coming on top of the complete dogs dinner that is the Abbotts Depot on Oakleigh Road South and the apparent involvement of the Comer brothers in that site. (see the latest statement from barnet labour group on the matter here)

There is something very seriously wrong in Barnet.

Monday, 8 June 2015

Barnet's Supplier payments in April

April's supplier payments over £250 saw large lumps sums paid out to the usual suspects.
Capita received £6,173,867.16 for both the CSG and Re contracts and Comensura received  £1,268,593.60 in just one month. Last year Comensura billed over £15 million for interim and agency staff and based on this invoice it looks like they will hit a similar target this financial year.

In addition there were a few of the usual suspect who seem to have been paid rather a lot in April. City Suburban Tree Surgeons were paid £303,266.17 which in one month represents 30% of what they were paid in the whole of 2014/15 (£1,003,311.80). Perhaps this is an area where officers should be looking to make savings.

NSL the Council's parking contractor was paid £292,000.51 in April. I am sure Mr Mustard will be scrutinising their payments in some detail. Again the overriding question is, have they really saved money?

We seem to have paid out £32,527.96 to Gatenby Sanderson, an executive recruitment agency, for employee expenses. I don't know if this is payments for interims or simply their recruitment fees, but did we really need to spend it?

Old 'friends' Impower who along with Agilisys were paid over £8 million to implement One Barnet are back advising the council and in April were paid £32,743, a modest sum based on past experience but are they really needed?


I am still waiting for Barnet to take up the challenge of showing where the savings are buried because to date I haven't found them.



Tuesday, 2 June 2015

Barnet and the Dodgy Business Case

Today some Barnet Council staff are on strike about the continued outsourcing of services in Barnet. Already we are starting to see the wheels are starting to come off existing outsourced contracts with over grown cemeteries and the "Inadequate" rating given to an outsourced care home (read the damning Care Quality Commission report here).

What makes this situation much worse are the entirely dodgy business case reports that have promoted outsourcing as the answer to all our woes. In the original CSG business case it was based on Capita making a major investment in IT because Barnet didn't have the money. Yet once the  contract is signed we find the Council advanced a massive capital sum of £16 million to invest in the IT. For the Your Choice Barnet contract, which involved outsourcing adult social care to Barnet Homes, the business case was predicated on generating income from other local authorities which, surprise surprise, failed to materialise.

In the latest outsourcing scheme, which focuses on educational services we have another dodgy business case which uses assumptions which are entirely unsupported and without any benchmarks to justify a joint venture. The business case is here

The services being outsourced include:
  • Strategic and financial management of the service
  • School improvement
  • Special educational needs
  • Educational psychology team (part traded)
  • Admissions and sufficiency of school places
  • Vulnerable pupils
  • Post 16 learning
  • Traded services including:
  • Catering service
  • Governor clerking service
  • Barnet Partnership for School Improvement (BPSI)
  • Newly Qualified Teachers support
  • Educational psychology (part)
  • Education Welfare Service (part)
  • North London Schools International Network (NLSIN)
The problem is that much of the justification for pursuing an outsourced joint venture is predicated on generating a large amount of new income from traded services with other local authorities. In total 71% of the financial improvement is from income growth rather than efficiency savings and of that 60% comes from school meals. Given that school meals is such an important component of the outsourcing package you would have thought that whoever put the business case together would have made sure their assumptions were accurate or at least supported by benchmarks. 

The problem is they have used very generic assumptions, specifically around the profit margin that school meals generate. In the business case they have assumed that school meals generate a 20% margin and the Council's justification for this is that the current service will pick up most of the fixed overheads. However, speak to anyone in school meals and they will tell you that a 20% margin is a complete fantasy and many school meal services just about break even. Indeed Barnet's in house school meals service is well regarded and generates an operating profit of £190,470 on a turnover of  £7.1 million or a margin of approximately 2.7%.

Having asked the council to tell me what school meal service in the UK operates at a margin of 20% the answer came back none, or rather we don't know. By using a profit margin of 20% that generates a forecast profit of £963,000 it suggests a turnover target of £4.8 million. However, if they have got the margin wrong and it is 5% then to generate the same level of profit they will need to generate £19.26 million of additional school meal sales or approximately 9 million school meals, a huge increase which seems entirely unrealistic. I have brought this to the attention of the council including Richard Cornelius but no one seems particularly concerned.

We are being pushed down an outsourcing path, not because it makes financial sense but because of political dogma and anyone who challenges the financial logic is branded a troublemaker. If the outsourcing follows what happened with Your Choice Barnet, where all the promised revenue growth failed entirely to materialise, then the risk is that staff will be forced to take pay cuts and services will be reduced in the same manner as YCB and that is unforgivable.

Monday, 25 May 2015

Barnet Council where are the savings - Who pays for the interim staff?

As I blogged about yesterday, I am challenging Richard Cornelius, Andrew Travers and Capita to show me where are the promised massive savings.

One area where it is difficult to pin down savings is the whole subject of interim staff. Comensura supply interim and agency staff to the Council and in March  billed the council a whopping £1.9 million bringing their grand total for the year to £15,538,090.25.

In 2012/13 Comensura billed £12.5 million, In 2013/14 it rose to £13.8 million and this year, 2014/15 it has jumped again to £15.5 million. One major area of concern I have is that former council staff who used to work for a salary have been made redundant or left the council payroll cutting costs for Capita and then coming back as consultants on much higher rates, paid for out of the Comensura contract.

Perhaps part of the £3 million per annum increase in the Comensura costs is a switch between contracts and if that is the case are we, the Barnet residents seeing the benefits?