Tuesday, 15 September 2015

Capita's Money Making Machine - It's Called Barnet Council

Over the next few weeks I will be publishing a series of blogs which relate to the two massive contracts which Capita have with Barnet Council, the CSG and Re contracts. It has taken some time to compile the data and is taken from many Capita invoices that I requested as part of the inspection of the accounts in June. The reason for inspecting all of Capita's invoices is because I remain unconvinced that the appointment of Capita is actually saving any money overall. They may be making savings on the core contracts but they charge for everything extra with dozens of special project which all attract additional payments. Overall in 2014/15 we paid Capita £51 million and £126 million since the contract started so I believe this deserves much greater scrutiny.

I preface my comments by noting that I was warned not once but twice, in writing, by Barnet Council that I risked committing a criminal offence for passing on, blogging or communicating in any form any of the information I discovered other than to the auditor, Grant Thornton, or the Police.  Surely in a 21st century open democracy this type of information should be available to everyone without any threats of prosecution. I read the legislation and in the absence of any clear evidence to support these assertions I asked where such offences existed in the legislation. Surprise, surprise Barnet said they had made a mistake! Time will tell on that front.

Today I will start with the Comensura contract. Comensura were appointed back in 2012 to act as a broker who coordinates the supply of agency and interim staff. They don't directly supply any staff themselves but provide one point of contact for Barnet with a range of staff agencies. In theory they are supposed to save the council money but over the last three years the cost of the Comensura contract has risen inexorably. In 2012 the average monthly cost of the contract was just over £1 million a month. In the first three months of 2015/16 it has hit £1.6 million a month and in July alone it was £2.3 million.  Now there may be very good reasons why we are having to use so many interim and agency staff, two thirds of which are in the Adults and Children's department but Barnet have been talking about reducing this cost for the last two years and have so far failed miserably. Based on my calculations and the current run rate, Barnet will pay Comensura around £20 million this year.

So, you may ask, what has this got to do with Capita. When Capita negotiated the CSG contract they included a Gainshare clause which means they get a share of any savings they make on contract negotiations. Although the percentage they receive is confidential by my reckoning it is 40% and so far I estimate they have been paid around £750,000 on this single contract. This contract was due to expire in October but because the procurement function ( run by Capita) have not started the tendering process and they don't want to be rushed,  the contract will be extended for another 12 months. If Capita continue to receive gainshare at the same level I estimate they will receive another £750,000 in gainshare payments over the next 12 months.

I would also point out that there are a number of people taking their cut on the agency staff contract in between what the staff get paid and what Barnet Council pays. The contract was originally let through a framework agreement from the Eastern Shires Purchasing Organisation (ESPO). They charge a small levy on every contracted hour purchased to cover their costs. The staff agency takes their cut on the staff supplied, Comensura take their cut of all the staff supplied and finally Capita get their gainshare payment. So four different organisations are taking their cut on this contract.

Some people may say that if Capita are getting 40% we are saving 60%. I would suggest that any contract that is so generous for one contract discussion should itself be renegotiated. It also make me wonder what on earth the Barnet commercial team were up to before Capita were appointed that allowed such poor contracts to be agreed - oh yes they were all too busy working on the Capita contract. I raised all my concerns  on the Comensura  contract at the recent Policy & Resources committee and although treated politely and courteously by Richard Cornelius the committee still voted to extend the Comensura contract for another year. Looks like another good year for Capita - unless they tell me otherwise?

Monday, 31 August 2015

URGENT: Act to save Cricklewood's last green open space from Barnet Council's land grab

Guest Post From the Coalition for a Sustainable Brent Cross Development

Act to save Cricklewood's last green open space from Barnet Council's land grab

Cricklewood Open Space (Thomas Bell Photographs)

This is what Barnet Council says to justify the selling off of Cricklewood's last green space:

The subject plot fronting B&Q, on Cricklewood Lane is currently an open space primarily used as a disabled access ramp to the B&Q store. It is regularly fly-tipped and attracts rough sleepers among other social issues such as alcohol and substance misuse. The proximity to local businesses means on-going disturbance to businesses, environmental degradation, and Health & Safety concerns resulting from substance/alcohol misuse and excessive littering. Retention of the site in its existing condition would not only allow these problems to continue, but also drain the Council’s resources in terms of on-going management costs. 

Campaigners and residents from Barnet and Council came together in November 2013  to protest at the possible disposal of the green space outside B&Q in Cricklewood and are organising again as a planning application to build on it goes before Barnet Council on September 7th.

November 2013
The Coalition for a Sustainable Brent Cross Development sent this message over the weekend:

Barnet  Councilare meeting on September 7th to discuss the sale of Cricklewood’s only green space, outside B&Q. It was given as public open space in 1987 when the retail park was built. Crown Estates sold it to Barnet in 2004 with a stipulation it would not be built on.  Barnet have managed to remove this requirement, and are selling public land with no public consultation.

All the known Cricklewood Green Space material is now on the BX Coalition website  LINK - scroll down for the last few postings there:

Actions you can take
-          Tweet @Barnetcouncil using #CricklewoodGreen
-          Sign the petition if you haven’t before and ask your neighbours to sign LINK
-          Write to the papers
-          Write to the committee about the sale of public land without consultation,
-          Join us in a protest outside the meeting on September 7th (check blog)
-          Keep checking the blog and Twitter @BXcoalition

From the Coalition for a Sustainable Brent Cross Development
Our co-ordinator  Alison is on holiday, please contact fiona.colgan@yahoo.co.uk

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

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.

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.