Monday, 28 March 2011

Five minutes, four men and a £270 million gamble

I have just come back from the Cabinet Resources Committee where they were dealing with, amongst other things, the outsourcing of the Development and Regulated Services functions. It covers services from Planning and Highways to Environmental Health. It didn't start well. "Written responses have been provided ask your supplementary questions". Yes well they forgot to supply the answers to me. I asked for a couple of minutes to read the replies and to his credit Cllr Thomas offered to adjourn public questions for a few minutes while I read the answers. "No" said Cllr Coleman "Read out the answers and then he has to ask his supplementary questions". Cllr Thomas did say that reading out the answers was rather tedious so I dived in. But no point really. What is clear is that the four councillors present simply aren't interested in any comment or debate. What I find most shocking is that they didn't

1. What assumptions are councillors using for the anticipated level of investment that the private sector will make in the proposed outsources services and why are these assumptions not detailed in the business case report?

Reply by the Chairman of the Cabinet Resources Committee
Councillors are not making any assumptions about the anticipated level of investment by a partner. We do expect that in order to make the cost savings investment will be made by any future partner, for example in technology and equipment. The exception to this is the cremators where significant investment will be required; the delivery of this investment will be considered separately.
During the competitive dialogue process, the council will be specifying the outcomes it wishes to achieve. It will choose its partner based upon the most efficient and effective solutions put forward to meet those outcomes

How can you prepare a business case and ignore investment. What will be the cost of that investment and how is it likely to affect the price charged by the outsourcing company?

2. Are councillors concerned at the lack of benchmark data and evidence from other outsourced councils to support the assumptions set out on pages 41-43 of the report.

Reply by the Chairman of the Cabinet Resources Committee
Benchmarking data for the services in scope is limited, and in many cases the services themselves believe it to be unreliable. Where possible, CIPFA data and national indicators were used to give an indication of potential cost reduction and income increases. Where it was not possible to use benchmarking data, these assumptions were based upon what the services believed was possible, and market research.

So no evidence then!

3. Do councillors believe that the rather simplistic +or-10% for the sensitivity analysis is adequate for such a complex project?

Reply by the Chairman of the Cabinet Resources Committee
The +/- 10% confidence range is an indicator to demonstrate a logical range within which we would expect the new expenditure to operate. This range helps to determine whether a new provider could provide the same level of service for less cost, and specifically considers:

- The cumulative annual improvement to reach specified benchmarks, and;
- The effect on revised gross expenditure.

This is part of the financial model which underpins the Business Case, which at this stage is a description of the reasons for the project and the justification for undertaking it (based on the estimated costs of the project, the risks and the expected business benefits and savings). For DRS in particular, it provides the indicative evidence on which to progress the project to the next phase of activity, and further detailed modelling will occur one (sic) competitive dialogue is underway and we are clearer about what solutions the market has to offer. As a dynamic document, the Business Case will then be updated on the back of this data.

From my perspective simply tweaking the answers by +/- 10% is not a credible sensitivity when the assumptions are not supported by any evidence.

4. Do councillors believe that 4 key risks as set out on pages 52-53 of the report are an adequate assessment of the risk this project is likely to experience?

Reply by the Chairman of the Cabinet Resources Committee
The risks set out within the business case are the key risks only and not a full risk assessment of the project. A full risk register will be maintained by the One Barnet Programme Office and managed according to the London Borough of Barnet corporate risk management strategy.

No operational risks in the business case doesn't give me any confidence. Given Grant Thornton's previous comments back in December I think we have every right to be worried.

With questions out of the way the actual agenda item was dealt with in less than five minutes. Outsourcing approved.

So what is the answer. Well fellow residents of Barnet we all need to keep our fingers crossed and hope that this outsourcing project goes well because if it doesn't (and currently there is no evidence to suggest it will) we will all be paying for this mistake for years to come.


  1. Mr R: as always, your questions, and observations on their responses throws a spotlight on the pitiful lack of preparation for the whole sorry business - sorry,an inappropriate use of the word. I don't see any progress from the level marked in the Grant Thornton report, and as you say, we the residents will be paying for this nonsense long after these nincompoops have left the scene.

  2. Ooh surcharging, I remember that from long ago but seem to think that it has sadly been abolished. Can we just bring back the stocks ?