Friday, 17 August 2012

One Barnet - Is it deliverable. Perhaps the bidders are starting to have doubts?

Today was a very significant milestone in the One Barnet programme  and one that may spell the end of the entire project. In an email to council staff, Pam Wharfe slipped into the note that Barnet now intend to enter into Joint Venture with the successful bidder of the massive outsourcing tender exercise.

You may say so what? Well, when the business case for outsourcing was made, the Council's consultants actually identified that "the costs and risks associated with a JV model are judged at this stage to be higher than for a Strategic Partnership". Yet today the council have committed us to higher risks and greater costs.

Experience suggests that one of the key reasons why the bidders are keen to enter into a Joint Venture is to shed risk they would experience in a standard  contractual relationship. In Ms Wharfe's email she suggests that the bidders are entering into a JV so they can share all the new commercial opportunities. Ha Ha Ha. who are you kidding! Further savings sufficient to justify their massive management fee looks increasingly difficult to achieve.

So what are the risks of the Council entering into a Joint Venture?

Barnet will have to pick up their share of losses should the outsourcing project be a disaster - and please don't say it can't go wrong. Just talk to the former Conservative leader of Somerset County Council and their problems with SouthWest One. At no stage anywhere during the outsourcing process has there been any indication that Barnet will pick up financial liabilities but suddenly that has been agreed. My question is by whom and with whose authority? I asked specific questions about financial liability to Councillor Thomas at Cabinet and I was told "all the risk is with the contractor". Well not anymore.

It is also much more complex, time consuming and expensive to set up a JV and also a lot more difficult to dissolve because the relationship is different to a straightforward contractor/client relationship. 

Suddenly Barnet Council are drawn into potential conflicts of interest for example on issues of health and  safety where traditionally the responsibility would have rested entirely with the contractor. Council directors/ Councillors who sit on the JV board may become personally liable for any financial shortcomings.

A JV will inevitably lead to compromises being made by Barnet because it is now their money at stake as well as the contractor’s.   I have seen it time and time again where the contractor says, fine if you insist on pursuing this policy you will have to fund half the losses. It changes the whole management relationship and will draw Barnet into day to day management decisions that they will no longer be able to resource. 

There may be tax or VAT issues and it will lead to concerns around the valuation of assets in the JV at the points of establishment and dissolution.

What really worries me is the glib way in which a massive financial risk has suddenly be increased for the council and with it the risk to every single council tax payer without any public debate, without any transparent financial advice and apparently in contradiction to the recommendations of the business case 18 months ago. 

Based on Pam Wharfe's statement today I think the credibility of Barnet is in tatters. Councillor Cornelius, I am not sure if you are clear what this has committed the council to but it is exceptionally risky. I cannot believe that you have made such a massive shift in position without taking independent professional advice but at the minute that's the way it looks. 

Is this the beginning of the end for One Barnet. I sincerely hope so!


1 comment:

  1. "Is this the beginning of the end for One Barnet. I sincerely hope so!"

    Please remind me: how many millions have been wasted up till now?