Friday, 24 August 2012

One Barnet - Credibility Exhausted

This afternoon Barnet Council’s Interim Director, Pam Wharf, issued a statement which highlights the fact that councillors have absolutely no control over what happens at the Council. Ms Wharfe neatly states that the officers have made a decision to proceed with a Joint Venture and that at the end of the process they will present the Cabinet with a fait accompli. Accept the bidder and a joint venture or reject the lot. This means that councillors will have no option but accept the JV as it is inextricably linked to the final bid.

Ms Wharfe says that the option of a joint venture has been considered for the last two years. That is true but in every report for the last two year it has been ruled out as not the best option. 

 I wonder if the sustained pressure from One Barnet opponents has made them realise that they will lose control when they enter into a contract with the chosen bidder. Well this is not the solution.

As I have said repeatedly, whilst a JV will give Barnet a degree of control, if also shifts decision making back onto Barnet. So say for example, that the JV is underperforming, the bidder may say to Barnet, “Look we can’t deliver what you wanted, it’s unrealistic. We either need to cut the spec or put up charges to the public”. What do Barnet do? If it was a straight contract/client relationship Barnet could say, “Tough shit it’s in the contract just do it and any loss is down to you”. However, in a JV the relationship changes totally. Any loss incurred by the JV will be shared by Barnet in whatever proportion has been previously agreed. It will demand a much higher degree of management input than under a straight contract and that will inevitably lead to higher costs for Barnet.

Ms Wharfe talks about the possibility of the JV becoming insolvent and the back up of a parent company guarantee. My experience of parent company guarantees is that firms are reluctant to give them without very carefully written caveats and exclusions. All I can say is that if it ever reaches a situation where Barnet try to enforce a parent company guarantee, the lawyers will earn a fortune. In reality it is highly unlikely that the situation will arise because the partner will put immense pressure on the Council to change the basis of the contract so that it stays solvent, as insolvency would result in the cessation of services which are critical to residents.

What I want to know is what has the council’s implementation partner been doing for the last two years and why wasn’t this flagged much earlier. Nothing has changed over the last two years. It has always been known that a straight contract would reduce control but that a JV would increase risk.  

This whole process has cock-up written all over it. It lacks credibility and it smacks of desperation. Just pull the plug in this frightful mess and get the senior management refocused on running the day to day workings of the council properly.


  1. Mr R: if only the Tory leadership would listen to what you are saying, we might just manage to escape this nightmare future they are committing us to. Sadly I suspect they simply do not understand or want to understand the consequences of what they are doing.

  2. So if Barnet Council only put in £1 they aren't going to have much say in anything are they? What they forget to mention is working capital. I don't suppose that if, say, £25m of working capital is required to get the DRS projects off the ground that the winning bidder is going to provide it all. There are no free lunches. Everything that the bidder does has to be paid for by the council in the end and maybe at the beginning so that the JV company can buy something.

    I don't like the lack of morals that Ms Wharfe is espousing on behalf of the council; I very much doubt that the major in whose name contracts are usually made will be pleased to be associated with such improper conduct.

    If companies supply goods and services to the JV and it turns into a cock-up the council can just dump it and walk away. Had those same services been provided directly to the council they would have to be, and should be, paid for in full. I can just see the JV phoenix arising from the ashes "Barnet Council (2013) Ltd". Does the council tax payer expect the council to act in an honourable fashion and pay for everything it has ordered; most people would say yes?

    Or is one of the Agilisys consultants called Arthur Daley?