Sunday, 20 March 2011

It's All a Question of Trust

Next Monday, the members of the Cabinet Resources Committee are going to rubber stamp yet another scheme to outsource services at Barnet Council. I have read the Business Case and basically it all boils down to a question of trust.

Do I trust a set of assumptions about the level of cost reductions and income increases which have absolutely not a single piece of supporting evidence other than trusting the people who are putting forward this scheme?

Do I trust the assumption they have made about the on costs that will be saved – that includes all that expensive IT investment that the council have been spending money on for the last 6 years.

Do I trust the assumption that they will have to retain 7.5% of the workforce to deal with all the elements that legally the council are not allowed to outsource – even though nobody seems to know?

Do I trust the assumptions on the sensitivity analysis that the best and worst case is only 10% away from the other assumptions – so for Planning that means that at worst they will save 18% and at best 22% or maybe even more?

Do I trust the assumption that there are only 4 key risks and that the mitigation steps will adequately address them?

Do I trust the private sector to deliver savings of as much as 20% whilst at the same time making investment in the services and leaving enough for a profit to satisfy their shareholders?

Do I trust the private sector to provide the level of transparency and governance standards that we currently expect (although don’t always receive) from a public sector?

Do I trust a process where the council enter an 18 month negotiating process without knowing what they are going to end up with at the end?

Well, for me the level of trust required here looks more like blind faith and I’m not that gullible. Frankly, it amazes me that any councillor can vote for something that requires this level of trust. It also amazes me that the ratepayers of Barnet trust councillors to make these decisions.

I implore every single ratepayer in Barnet to ask their councillor how they can take such a risky decision based almost exclusively on trust.


  1. Do I trust the council to agree contracts which contain minimum performance guarantees from the private contractors?

    Do I trust the council to build in the necessary safeguards into all the outsourcing contracts, so that if the private contractors fail to deliver a service at least as good as the council currently provides, then the contracts can be cancelled without penalty to the taxpayer?

  2. DCMD, strangely yes, actually I do - because that is about writing it into a contract. But do I trust that they will monitor the contract to ensure those minimum guarantees are achieved and that the contractor actually delivers a service as good as the council currently provides, and that we can actually exist a contract without penalty. Well that is another matter.

  3. Mr R: Safeguards in a contract surely mean failure to "deliver a service significantly better than the council currently provides", given all the extra costs the council will have met, in order to get the whole thing into place, and face costs over retendering and/or going back in-house.

    Do you trust the council to do that?

  4. The Council don't appear to monitor a simple service like the recycling, otherwise there wouldn't be so many complaints about the road looking such a mess after the weekly visit. Therefore I don't think they will have the will to thoroughly monitor a complex contract, or even to negotiate it correctly in the first place. They just want the guestimated savings ( pie-in-the-sky and all multiples of 5% so definitely not accurate ) and they will have lost control. No Contractor does work which isn't in the Contract so that leads to extra charges. Look at the Chancellor's Xmas tree fiasco.

  5. Baarnett,you are absolutely right to mention the costs.However, they seem to have overlooked all of the costs of putting this process in place within the business case - yet another reason why it isn't credible. Unfortunately the report doesn't aim for services which are "significantly better" than the current service. One of the overarching aim of the One Barnet Programme is "Citizens get the services they need for successful lives". That could mean lower quality not better just so long as it saves money.

  6. Mr Mustard, sadly I think you are right about contract monitoring and the issue about service flexibility is one of the biggest issues in outsourcing. If you have something like refuse collection you know how many houses there are and that they have a collection every week. New houses can be added at a predefined cost. That is a service that is relatively straightforward to outsource - its then all about monitoring that they do it properly but with every houiseholder as an unofficial monitor you soon find out if bins aren't being collected. When you start looking at services like environmental health and trading standards they are much more complicated. Legislation changes which can impact on the services they are required to peform. Building in the necessary flexibility is incredibly difficult without paying through the nose and sadly that is what I suspect will happen.

  7. Mr Reasonable

    I think you are being a little naiive to trust the council to draw up proper contracts. The Underhill sale contract was riddled with basic errors (which a first year law student could have spotted), and the people responsible for its drafting are still in situ.

    David Hencke reports the demise of Metpro on his blog:

    Apparently, Metpro’s liquidator has put the Barnet contract up for sale. Any organisation that knows what it is doing, would build a clause into a contract of this nature that would immediately terminate the agreement upon the supplier going into administration / receivership / liquidation. Barnet could now find itself using the services of a security company which it has not vetted (not that we know whether Metpro were ever vetted).

    On the evidence before us, I wouldn’t trust Barnet Council to run a bath.

  8. DCMD perhaps I was having a funny five minutes when I wrote that! I must have been feeling overly charitable to the commercial directorate which costs us £900k a year. As for Metpro you are absolutely right. In 25 years of reviewing service contracts and I have yet to find one that doesn't have an insolvency clause. As you say the real issue here is how on earth Metpro were ever awarded this contract in the first place. By the way, Metpro Emergency Response were registered as a new company on 13 January 2011 and their website is almost identical to Metpro Rapid Response with only a subtle change to the logo. I wonder who the council's contract is with?