Over the last two years Barnet residents have received many promises and reassurances on the One Barnet outsourcing programme. Now the Capita contract is in place some of these myths are starting to unravel. Here are just a few that have come out in the last week:
Myth 1 "We need to invest but we have no money. That is why an in-house bid is not an option".Barnet have handed over £16 million of cash (£10.5 million was paid in August) and will either come from reserves or from borrowing because it is cheaper for Barnet to borrow money that a private company. So it is okay to borrow money and give it to a FTSE 100 company but not to invest in your own in house team. This act will save Capita's shareholders around £1.1 million in interest annually.
Myth 2 "Capita will be subject to the same contract procedure rules as the Council"Mr Travers, Barnet CEO has told me, "Capita will only be subject to the procurement regulations governing public sector bodies when it runs procurement for Council services that are outside the scope of the existing CSG contract". So any purchase that is part of what Capita are contracted to do is not covered and they can appoint whoever they want without being subject to tenders or disclosure.To set this in context, Capita are responsible for collecting council tax and as part of that activity they need to appoint bailiffs, so that is why Capita can appoint whoever they want including a wholly owned subsidiary company. This exemption will cover hundreds of contracts ranging from the supply of paper and office supplies through agency staff to IT spending so long as it is in connection with any of the service provided by Capita.
Myth 3 "There will be full transparency on purchases made or activity undertaken by Capita"Part of the £15.2 million payment made to Capita in August included £4.7 million of "Service Charge" paid quarterly in advance. So we will pay just under £20 million a year to Capita in "Service Charges" but we have absolutely no transparency as to why that has been paid.
Myth 4 "There is a procedure in the contract to manage conflicts of interest"Reading the 2,000+ pages of the Capita contract at Schedule 21, Conflicts of Interest Protocol, it states that "within three month of the Agreement Date the Service Provider (capita) shall provide.. a draft protocol".So we have signed a contract that does not contain a procedure for managing conflicts of interest, merely an agreement that Capita will write one within three months so any conflicts that take place now are simply not covered and can go through unchallenged.
Myth 5 "At the heart of the One Barnet programme is a relentless drive for efficiency"On 24th June the Cabinet Resources Committee agreed to the "Council entering into an interim contract with Capita up to a value of £14.7m to secure the business critical activities detailed in Section 9 of the report in order that the Council can continue to provide effective services. The arrangement will be in place until 31st January 2014 or until the outcome of the appeal is known." On the 1st July Barnet signed a cheque for £14.7 million up front. Subsequently the court date was brought forward, the appeal rejected and Barnet signed a 10 year contract with Capita. I have been told that, of the £14.7 million paid upfront, £0.7 million was actually spent so Capita are sitting on an advance payment f £14 million. At the minute the council are discussing with Capita if this will be refunded or offset against future charges (but not the £4.7m for the first quarter because that has already been paid). The benefit for Capita is that this overpayment will fund their company's cashflow and save them around £80,000 a month. handing over so much money unnecessarily does not strike me as efficient, or effective, or even very sensible.