Wednesday, 29 November 2017

Supplier Payments October

Barnet's supplier payments are out for October and as ever they make interesting reading. Yet again Capita are receiving significant payments even though they have had massive advance payments. In the audit report published in September the External Auditor noted that Barnet had made £44 million of prepayments on the CSG contract. On the Re contract Barnet agreed in June to make a pre payment of £16 million in return for a discount. With such a large pre payment balance it then comes as a surprise that in October Barnet paid £1.71 million on the CSG contract and £1.24 million on the Re contract. Set out below is the latest tally on the two Capita contracts.

We have also been told that Barnet is working hard at bringing down agency costs. Unfortunately that isn't work as well as planned and after an initial drop in payments to Comensura they have started climbing again. In October Barnet paid Comensura £1.853 million bringing the running total for the year to £10.88 million with a year end forecast of £17.3 million.


There are a few other payments which caught my eye, although given that this month's expenditure spreadsheet ran to over 12,400 separate payments I have probably missed something more interesting.

  • Blue 9 Security are doing nicely out of the library work billing Barnet £78,599.69. This brings the running total for the seven months of this financial year to £625,647.68. To set that in context in 2015-16, before the unstaffed library process began, they billed £662,949 for the entire year.
  • The council spent £9,600 for events at the Ariana Banqueting suite conveniently located on the North London Business Park - I wonder where they will use when the council offices move to Colindale.
  • There are also over £1.1 million of redacted payments classified as "various" from "various" departments. Not helpful or transparent.

I will keep watching.


Monday, 27 November 2017

So are we getting value for money from the outsourced Re Contract?

On Tuesday 28 November we have a  meeting which will discuss the review of  the Development and Regulatory Services contract with the Capita Joint Venture, Re.

I have read the report and the numerous appendices and it makes uncomfortable reading. Some services such as Trading Standards and Environmental Health are okay, others such as Highways and Planning are problematic.

Some of the statements which I find most worrying are as follows:

"The RE contract is a wide-ranging and complex commercial structure, which has created challenges regarding interpretation and understanding. The review has been particularly beneficial in terms of securing better awareness of this structure and thereby resolving a number of matters relating to interpretation and understanding of various elements of the contract."  What this says to me is that they didn't understand the contract when it was signed and even after 4 years of this contract being in operation they are only now coming to terms with interpretation of the contract which to my mind is unforgivable.

"There have been significant issues on highways service delivery, which is in part due to the complexity of the arrangements between RE, Conways and the Highways DLO." I have said repeatedly that the complex contractual relationship means that certain tasks fall between the gaps at the contractual boundaries and that is bad for residents.

"The Working Group concluded that:

  • Planning enforcement needs to be more responsive; 
  • Accessibility to planning applications needs to be improved, particularly on larger applications with high volumes of associated documents; 
  • Communication between planning and the public needs to be improved; 
  • There is a need to ensure that the consultation system is operating effectively (i.e. residents receive consultation letters in accordance with the policy); and 
  • The Planning Committee may wish to consider the policy in terms of the extent of consultation". 

Good recommendations but the fact that we are 4 years into this contract shows that the monitoring system has been inadequate to date. I blame all those professional consultants and lawyers who were paid millions to set up this contract but have so clearly failed to consider how it would be implemented.

"Capita’s internal organisational structure (known as “the towers”) has been identified as a layer of complexity that potentially impacts on day to day service delivery and a further exploration of this is recommended (report will include specific examples)"

Talk about "silo mentality" to anyone in business and they will tell you how destructive it can be for an organisation yet Capita seem to foster and promote this through their "Towers". Again this is something that should have been identified and addressed much earlier. The key risk now is that while it has been identified Barnet have no ability to influence how the much larger Capita organisation operate and as such they are likely to remain in place.

The Grant Thornton benchmarking report makes a telling comment when it says:
"Our benchmarking identified that a clearer understanding would be achieved if margins and costs were considered in relation to prices charged for service delivery".  In other words we don't know if we are being ripped off!

The killer for me is the statement below:

"In addition to the core contract, there is substantial expenditure on projects and the Review brief anticipated that the Review would pay some attention to this aspect. However, timelines have not permitted detailed reviews of individual projects, so the focus has been on value for money. Despite the use of external support, it has proved difficult to obtain sufficient information to conclude whether or not overall project costs represent good value for money and it is proposed that officers should explore this further".

Again, the issue of the cost of special projects is something I have been challenging for the last four years. I challenged on the CSG contract and it was brushed aside. Now they are saying they can't tell whether projects are value for money. In any other organisation any senior manager making such a statement would either be demoted or sacked. In Barnet they just accept it and say officers ought to  explore it further - pathetic!

There is no mention of a number of issues which I raised as part of my submission and which I know other people have concerns about such as the transparency of the contract and who in Re is responsible for each service. The Council has a large chart with names, emails and phone numbers for key senior council staff but not a single person within the Re or CSG contracts is included. That makes them faceless and it frustrates residents when they seem unable to get through to the people who can resolve problems and get things done. There is no mention of the financial performance of this contract. Given that it is overly dependent on raising money rather than making savings ,understanding how well it is performing is critical. The big risk is that in the absence of revenue generated from new business, Re simply put up prices to Barnet residents. The report notes that  Barnet had one of the highest set of  charges for pre planning advice of any of the comparator boroughs. We also have the highest charges for pest control and second highest for vehicle crossovers. So when Barnet say this contract is saving money remember we are generating those "savings" through the higher prices we are paying.

I have submitted a series of questions to the meeting which I have set out below. It will be interesting to see how they respond.
  1.       Appendix A says “The contract is on track to deliver significant savings to the council, in the order of £39m over the 10-year term”. However the external auditor stated in the audit completion report that there was an under performance of contracted income for the past two years totalling £4.599 million and that this was unbilled by Barnet. In addition, the Partnership Director from Capita said  that he "acknowledged the disputed £4.6 million" but that would be subject to debate. Are you sure this report is an accurate reflection of the true financial performance of this contract and why did this shortfall only come to light in the audit report.
  2. When the report says “in the order of £39 million” why is it so ambiguous. Is it more or less than £39 million and if less, by how much?
  3. What is “reasonable quality” and is reasonable good enough?
  4. A prepayment  of £16 million generating a discount is not a service improvement. Why has it been categorised as such?
  5. The report states that “the review has been particularly beneficial in terms of securing better awareness of this structure and thereby resolving a number of matters relating to interpretation and understanding of various elements of the contract”. If it has taken you 4 years to interpret and understand this contract is that a success or an admission of failure?
  6. Under regeneration, please can you clarify what are the “ongoing disagreements about what services are covered by the management fee”?
  7. In Appendix A the report states “it has proved difficult to obtain sufficient information to conclude whether or not overall project costs represent good value for money”. In particular the Impower report notes that there may be a benefit in looking at alternative suppliers of project resources especially firms like supplier D. Why has it taken 4 years to discover this.
  8. The reports states that “contractual commitments have been reviewed and the majority have been delivered” In my submission I identified 132 contractual commitment s and have not seen evidence that they have been delivered. Has this committee been provided with evidence that they have been delivered?
  9. In Appendix C the number of customer satisfaction responses in 2014/15 was 1101 but in 2016/17 was only 162. How confident are you that the data is representative given such a small sample size and why was a larger sample not sought?
  10. In Appendix D the levels of customer satisfaction  in 2015/16 fell by 10 percentage points compared to the previous year. The explanation of the 2016 figure implies people are unhappy because applications have been refused. Does this mean that the level of refusals is up on the previous year or is it simply an excuse for falling performance.
  11. In Appendix E the report notes that contractual commitment T3-100 has only been partially completed even though the commitment should have been completed by December 2013. Do you think a commitment that is 4 years overdue is acceptable?
  12.  In Appendix E the report notes that contractual commitment T3-110 has still not been completed even though the commitment should have been completed by September 2014. What service credit has been levied for this non compliance?
  13.  In Appendix E the report notes that contractual commitment T3-112 is not due. However the contract says this commitment was due 12 months after the contract was signed. Please can you clarify why this commitment has been incorrectly labelled as not due?
  14. In Appendix F the report notes that three contractual commitments T3-091, 097 & 098 are still not complete even though they should have been completed within 1 year of signing the contract. Why?
  15. Given that there is a clear disconnect between the service that was defined by the output specification and KPIs at the time and the council’s current requirements, does this mean that the service specification will be changed, will there be additional costs and does this exemplify the problems of trying to specify such a complex service over such a long contract period.






Thursday, 5 October 2017

Barnet Council - Massive Pay Rises for Senior Staff

In times of austerity everyone has to tighten their belt, so we are told. Cuts are being made at Barnet Council and lots of staff, including many in the libraries, have been made redundant. Every month Barnet publish the salaries of senior staff. Checking the October figures I noticed a few that seemed different and at first I thought it was a mistake so I looked back through the figures for each month. In August 2017 a number of staff appear to have received a very nice pay rise maybe sneaking it in while councillors were on holiday. The Government has been holding public sector pay rises down to 1% so imagine my surprise when I saw some of the huge rises which have been introduced. The comparison is based on the same staff between July 2017 (before the pay rise) and October 2017. Some staff have left or joined the council in the intervening period so I have excluded them from this analysis to ensure it is a straight, like for like, comparison. The analysis is below:


 Now a couple of staff seem to have had a change to their job title. The biggest pay rise, 45% has gone to the former Strategic Lead Clean & Green who is now Street Scene Director. Same person different title. The Chief Operating Officer has now become the Assistant CEO although their pay rise is a much more modest 2%. There are a few senior officers who have had no change of title but substantial pay rises. The Strategic Director of Commissioning has had a 10% or £13,594 pay rise. The Head of Hospitals and Health has had a rather attractive 19% pay rise while the Director of resources has had a whopping £23,154 pay rise or 22%.

In the interests of balance I would also note that there are a number of staff who have had no pay rise at all including the Chief Executive. I have also used job titles only to save staff some embarrassment although all of the staff above are named in the data published here.

I hear all the time how front line staff are struggling to manage following so many years of below inflation increases, pay freezes or, in the case of Your Choice Barnet staff, a pay cut, yet when I see pay rises of this magnitude I can see that the people at the top are certainly very comfortable. When Richard Cornelius attends the Question Time with the Leader event next week I for one will be asking how he can justify these massive increases. I hope lots of other people ask him similarly probing questions about how the council is being run - make sure you book your tickets here.

Tuesday, 26 September 2017

Gainshare, the contract clause that keeps on giving for Capita

Every three months the Council publishes the payments made to Capita.  I thought it might be useful to shine a bit more light on one of those payments, gainshare, the £8.3 million bonus that has been paid to Capita so far.


When Barnet Council agreed the massive Customer and Support Group (CSG) contract in December 2012, many people expressed concern at the lack of transparency in the process and what had actually been agreed. Once the contract was signed in August 2013 and after much badgering we eventually got to see chunks of the contract. Buried away in the thousands of pages was something called Gainshare. In the contract this is defined as follows:

"Gainshare means a distribution of benefits between the Authority and Service Provider in
relation to a benefit calculated by reference to the relevant provision within Schedule 4
(Payment and Performance Mechanism), or business case developed under the
provisions of Schedule 15 (Special Projects Approval Procedure)"

In plain English what it means is that if Capita make a savings on a project, exceed an agreed target or negotiate a better purchasing deal they get a share of those savings. On the face of it that seems reasonable but as always the devil is in the detail. The contract included specific guarantees of savings and my original thought was that gainshare would only be payable on the savings over and above those guarantees but that is not the case. This means, for example, that Capita were able to claim £5.9 million of gainshare payments on procurement savings while Barnet received just £1.36 million above the guarantee. That doesn't look like a fair share to me.

I have always had concerns about this clause as it seems to offer some very open ended incentives. As I feel it is important to hold Capita to account given how much we are paying them, I inspected the accounts this summer to understand if these are valid payments. It was quite revealing. In addition to savings on reduction in the numbers claiming single persons discount on council tax,  Capita have claimed gainshare payments on savings made on a range of other services including:
  • Domestic Violence Services;
  • Children and Adolescent Mental Health Services;
  • Mental Health Assessors;
  • Return Home Interviews;
  • Independent Social Workers;
  • Stroke Services;
  • Independent Advice and Advocacy Services.
Now to be fair, council staff disputed the savings made on Domestic Violence Services and Return Home Interviews and subsequently Capita had to issue credit notes for those payments but the fact that they were paid in the first place is very worrying. 

If you can save some money by buying a standard commodity product, like a laptop computer, somewhere cheaper then I am sure most people wouldn't argue with that so long as it is the same computer. When you start looking at services for the vulnerable there is a real risk that the savings have a direct impact on the service offered. The problem is the contract is heavily incentivised to make these savings and that may prompt actions which are undesirable and risk reducing the quality of service.

The lion's share of the gainshare payments have been paid on the Comensura contract who supply all the council's agency and interim staff.(£1.26 million), London Highways Alliance Contract which provides road repairs (£500k) and saving on gas and electricity (£313k). To be clear, this is not the total saving but merely what is paid to Capita. It is also important to note that the payment is not made against savings actually achieved. It is invoiced up front on forecast savings and at the end of the period they have a "true up" which compares the savings claimed up front against the actual and either further payment is made or a credit issued by Capita.

Looking at the example of the Gas and Electricity savings you can read the basis for Capita's claim here. Capita have claimed a saving of £942,000 made up of  actual annual energy savings of £111,071 plus £202,420 of "corrected overcharges". They then gross up the three years of potential savings and send Barnet a bill for £313,000 as their share of the savings. To my mind this is a serious manipulation of the actual savings that could be justified given that if a procurement department was doing their job properly overcharges would get picked up in the normal day to day review of invoices. I am so concerned about this claim that I have raised it with the external auditor and I await his response.

Normally this whole gainshare process is entirely opaque but as I remain concerned about how much is being paid on this clause I make sure I examine the details. Some people will say that it shouldn't matter as it is better to get 66% of something than 100% of nothing but if we had a well resourced council run procurement department then all that saving would be retained. Just think what the £8.3 million could mean if that was coming back to Barnet instead of supporting Capita shareholders.

Perhaps Richard Cornelius will be able to explain this to me at one of his "Question Time With The Leader" meetings coming up in the next few weeks. You can book your place here



Wednesday, 20 September 2017

Barnet Audit Fiasco Part 2 - Capita penalised £55,000 but disaster looms after 2020

Last night we had the re-run of the Barnet Audit Committee, this time with a largely complete audit report. I blogged about the previous meeting here.

Most of the issues identified at the previous meeting still exist but we now had a largely complete report with just a few odds and ends in need of completion. Before the meeting got under way the Chair of the committee Cllr Hugh Rayner made a statement, one which was critical of Capita's performance and one which sought to build bridges with the external auditor after the unjustified pummelling they received from certain Conservative members at the previous meeting. He said that the reason for the late production of the audit report was not just the external auditor's (BDO) fault but the format in which Capita had provided the information to BDO "almost as if Capita were talking to BDO in a foreign language". He noted  that there would be a service credit (a penalty) to be paid by Capita of £55,000, some or all of which may have to be paid to BDO for all the extra and unbudgeted time they expended to get the accounts into a usable format. He praised BDO "for doing a magnificent job in difficult circumstances". Cllr Rayner went on to say that he was satisfied by the financial state of Barnet but not about the process of collecting financial data and that he was commissioning a review to be carried out by the Section 151 Officer to understand what happened and to bring that review to the November audit meeting.

I mention all of this as it seems unprecedented in Barnet's history and suggests some very serious problems have been encountered. Normally this would not have been so openly addressed so it is refreshing to see Cllr Rayner be so open and transparent about this.

Next up were three of the Barnet Bloggers, Barnet Eye and myself who addressed the committee, and then Mrs Angry as well for the questioning. As is so often the way, comments are received in silence and questions dealt with in a perfunctory manner. Often answers are supplied but not necessarily to the question asked. A copy of the questions and the answers provided can be read here.

After the questions, the Partner from BDO went through their report page by page. The key issue that became apparent is that the auditor can still provide a true and fair judgement on the report if the variation is less than 1.5% of the total council budget which the auditor said was in the region of £13 million pounds. That may seem a small amount in audit terms but that is a massive amount in terms of the amount raised through Council Tax (9%) and to set it in context the cuts to the library service were aimed at saving £2.3 million.

This becomes more important when the issue of bad debts were discussed. This included a debt of £4.6 million from Re, the Capita joint venture. It appears that this is a shortfall against guaranteed income targets. The auditor said that he was satisfied with the management representation that the debt is recoverable even though nothing has been billed and no confirmation of liability has been received from Re. At this point the Partnership Director from Capita spoke to say that he "acknowledged the disputed £4.6 million" but that would be subject to debate. My interpretation is clear, that the chances of recovering all £4.6 million are slim to nil. When the auditor was questioned he made the point that all of it or none of it might be recovered but because it was below the 1.5% threshold it didn't matter from an audit perspective. The auditor has covered his backside and preserved the auditors professional indemnity cover by getting management to make a signed representation that it is recoverable but the sum is still at risk. Interestingly Cllr Finn made the point that Capita compiled the accounts which recognised the debt and Capita owed the money therefore they must recognise the debt. Unfortunately, it doesn't work that way although it highlights the massive conflict of interest of having a contractor that owes money who also prepares the accounts.

There were many disturbing comments raised during the meeting but perhaps two of the most shocking were both on the same subject, one made by the auditor and one made by an independent member of the audit committee.  First of all the external auditor said when discussing the use of reserves that in the medium term till 2020 the council could manage its budget drawing off reserves but after 2020 the council "will need a complete re-write of what you do" if there is any hope of balancing the budget. This was then reinforced by the independent member Richard Harbord. Now Mr Harbord rarely speaks up and some may wonder why he is on the committee but he is a local government finance expert having previously been a local authority CEO and is a regular contributor to a local authority finance website Room 151. He confirmed that indeed after 2020 local authorities "haven't got the faintest idea how they will be financed in any way shape or form". He made the point that so many changes to local authority finance need primary legislation but the legislative timetable was full because of Brexit. The Director of Resources also made the point that they don't have enough funding to meet next years requirements and that is why further cuts are on the way. It looks like we are in a complete mess and based on both Mr Harbord's and the external auditors comments this must be the biggest single risk to the future of the council.

Towards the end the external auditor was asked how Barnet rated compared to other local authorities in the preparation of their accounts. I suspect some councillors were expecting a positive answer but no. Some clients could be worse than this "but taken in the round I would put you on the not so good step of the range I am dealing with".

To be clear, the audit process has been a mess, there are "loads of issues" as noted by one committee member, which need to be addressed. There will be a review document in November but it will be essential to see how any action plan addresses these problems. My concern has always been that having such a key function as finance run by an external contractor, Capita, creates divisions, barriers and risks that key financial actions will not be undertaken properly. The fact that Capita are in effect being fined £55,000 for their miserable performance at this audit must raise doubts about their ability to continue to provide the financial function for the council. At some point in the very near future I believe that councillors will need to consider taking the finance team back in house where there can be proper control and insight into this vital function. The interchangeability of Capita and LBB staff makes for confusion and a real chance that matters get missed or fall down the cracks between the two organisations.

I will report back after the November meeting but watch out for a series of blogs coming up in the next week or so.

Friday, 15 September 2017

Barnet's Payments to Capita - the external auditor challenges £44 million pre-payment

Barnet's external auditor has produced their final (almost) audit completion report. One thing they make reference to on page 32 is the amount Barnet have paid in advance to Capita where it says;

"As at 31 March 2017, the Council has a prepayment balance of £44.7 million in respect of its Customer and Support Group (CSG) contract. This contract covers a number of front line and back office services including finance, ICT, HR, customer services, revenues and benefits, procurement,
estates, and corporate programmes. As this is a significant prepayment, we challenged management with regard to its basis".

I have been raising this issue every since the contract was signed so it is good to see that the Auditor has now questioned it. The first prepayment made but the council's continuing desire to throw money at Capita was compounded in November 2016 when councillors agree a further advance payment of £26.9 million. In July Barnet paid Capita  £4,026,345.08 (which included Capita employee benefits of £2.68 million) and paid Re £1,760,758.67.

Set out below is the running total paid to capita through the CSG and Re contracts from the start and you will realise how much extra Capita are being paid add-ons such as special projects, gainshare and contract variations.

Barnet keep talking about the savings that Capita have made. They may have made savings on the core contract but all the extras are costing a fortune and as a net figure I see no savings whatsoever.

Barnet Council Agency Staff Spend - reducing but still very high

Earlier this week I attended the Performance & Contract Management meeting at which I asked a number of questions about the procurement failure of the Enablement Homecare Contract. As is often the case, no criticism of Capita was allowed and even when Cllr Finn agreed with one of my points, he was stopped in his tracks by Cllr Zinkin who is the Praetorian Guard of the Capita contract. The debate then moved to the topic of Interim and Agency spend which has seen a decline from the high point of last finance year. It is nevertheless still very significant and, as Cllr Edwards pointed out, how is that agency spend going to be affected once Brexit happens?
To set this in context the chart below illustrates the huge growth in Interim and Agency staff spend over the last 5 years.


It was always envisaged that the Interim and Agency staff spend would decrease after the two large outsourcing contracts were signed whereas in reality it has continued to grow year on year to the point where it has become a massive embarrassment for the council. Steps have been taken to try and reduce this spend and my latest forecast for the year end spend look like the outturn will be around £16.5 million down on the £19.88 million of last year but still double what it was in 2011/12 and we still have 8 months of the financial year to run.

I would also note that the Interim and Agency spend has a nasty sting attached. At the year end 2016/17 the council stated that the agency spend was in fact £21.194 million a difference of £1.3  million over the spend shown in monthly payments. This did puzzle me until I carried out my inspection of the accounts when it became clear that Capita were paid £1.3 million in Gainshare payments for "savings" made on the interim and agency contract with Comensura. I have still not been shown the evidence to support the claims of these savings but Barnet is quite happy to pay Capita £1.3m on top of the £19.88 million paid to the agencies and that, I believe, is why the Council's figure is higher. I have raised this with the external auditor and I await his findings.

The last point to make is that Capita are the council's HR provider and one would have hoped they would have come up with some clever recruitment strategies to bring in more permanent staff and reduce the use of agency staff. Perhaps this is the re-run of their recruitment role for the Army  which has turned out to be a disaster. Or maybe they quite like the gainshare payments which are directly linked to the spend on agency staff - the more agency staff the more gainshare payment.




Tuesday, 12 September 2017

Is Peterborough the new Luton - Barnet outsources its homeless

“Peterborough is a growing city in the heart of rural east England with a population of approximately 200,000. The city and its region have an important place in the history of Britain and modern Peterborough is thriving.”

According to Rightmove, last year most property sales in Peterborough involved terraced properties which sold for on average £141,356. Semi-detached properties sold for an average price of £175,686, while detached properties fetched £272,491.

Wages in Peterborough are below the UK average but it is nevertheless a growing city.

So what you may ask? Well clearly the officers at Barnet Council think Peterborough is a great place to live because the Council are spending millions buying property there. With an official duty to house the homeless in temporary accommodation and with property prices growing ever higher in Barnet, the Council decided in May 2017 to spend £8 million buying properties outside the borough. Relocating people out of London isn’t something new. During 2015/16, 233 households were placed outside of London by Barnet Homes and Barnet purchased 48 properties of which 28 were in Bedfordshire - many in or around Luton.What’s new now is that Barnet are spreading the net much wider and further away from Barnet. These new properties will be let and managed by Barnet Homes.

Delegated powers reports reveal that 30 properties have been purchased so far of which 23 are in Peterborough. For those families who are housed there “temporarily”  it may be that they are glad to be in such a thriving, growing area. But I suspect that for many the 76 miles may seem a long way if they have children in school, or jobs, or a support network of family and friends in Barnet.


























In the original report presented to the Policy and Resources Committee Barnet Home provided a summary of the housing situation in Barnet which makes grim reading and illustrates the failing of the current housing policy.

Interestingly the officer's report states that "women and members of Barnet’s black and minority ethnic communities are over represented among those living in temporary accommodation. Over 70% of households in temporary accommodation are from non-white households, compared to around 40% of the Borough’s population as a whole. Of those in temporary accommodation the main applicant is female in 65% of households." However the report also states that "a full equalities impact assessment was completed for The Housing Strategy 2015-2025 which identified that the Strategy would have a positive impact on all sections of Barnet’s Community". I struggle to see how shipping single mother families so far from Barnet is a positive step.

But I am sure you will all be saying "but it must save a fortune?" Well the report suggest otherwise.    
Existing temporary accommodation rental rates mean that for each new household placed in 2-bed emergency temporary accommodation costs the Council almost £2,400 net per annum. With bad debt provision and management costs factored in, this figure increases to approximately £3,400 net per annum, per household. Where rental properties are sourced outside London, these costs reduce significantly, however it still represents a net cost per unit of almost £1,900 per annum at current prices. By comparison, buying properties saves a whopping...... £3k over 30 years once borrowing costs are taken into account.

I am not an expert and if I have got this wrong please let me know but simplistically this is my understanding. The reason the saving is so small is that Local Housing Allowance in Peterborough is £115/ week compared to £255 in Barnet. This means that while rents in Barnet are high so is the Local Housing Allowance the government pays. The difference between the two is what Barnet pays.  So, yes, buying cheap property in Peterborough saves the general tax payer money in housing benefit but the savings for Barnet are comparatively modest.

That is where I might have ended this blog but as you will be aware I am interested in the details.  In the original report it stated that the best case for refurbishment costs and fees would be £23,669 and worst case £31,890.
So when the Delegated Powers report was published with the decision maker designated as Barnet's Deputy Chief Executive, the figures told a different story.

Only one property came in at or below the best case for other costs and fees and another came in just below the worst case estimates. The other 22 properties all exceeded the worst case and in total the average other costs came in at £44,717, £21k above the best case and £13k above the worst case. Even taking into account lower purchase prices, the average cost is still £11k above the worst case total cost. This matters because the savings set out in the business case justifying the relocation of families so far away from Barnet are relatively modest and at this level it calls into question whether this is a viable policy.

When I tried to ask Barnet Council for more information about these other costs they waited until my FOI was overdue and then told me Barnet don't hold this information and that all housing matters are dealt with by Barnet Homes. Well I for one hope that Cath Shaw, Barnet's Deputy Chief Executive, does know why these costs are exceeding the worst case and if she doesn't then that makes me worry even more.

Lack of affordable housing is one of Barnet Residents' biggest concerns. Barnet Council don't want poor people and are happy to ship those families most in need to Peterborough. We need a radical change but shifting the problem to another borough 76 miles away is not the answer.

Wednesday, 2 August 2017

Barnet Payments for June - Capita earn a fortune and a booze up on the Council

June was a particularly expensive month with a total suppliers payments bill of £70 million, double the average. A few payments stand out as follows:

Re (the Capita joint venture that runs, planning, environmental health trading standards and many other regulatory services) were paid £20.36 million. That includes their monthly contract fee of £ 4.2 million plus assorted small payments plus one large one for £15.92 million. I will have to investigate why so much was paid to Re and for what - the summary merely says "various"

Capita were also paid a fraction under £2 million on the Customer Support contract. I find this surprising  given that, as the recent audit meeting identified, "as at 31 March 2017, the Council has a prepayment balance of £44.7 million in respect of its Customer and Support Group (CSG) contract". Barnet keep saying they are hard up and have to make cuts to key services, yet they can afford to make a massive advance payment to Capita. We were supposed to receive a credit of £500,000 for making the advance payment last December but so far I have seen no credit for this amount (but I have seen a bill for £500k  in May - I wonder if they got it muddled up?).

Comensura , through which all agency and interim staff are consolidated, billed Barnet £1.53 million in June. There was talk of the Council making major inroads into the agency staff bill, but in the first three months of this financial year they have already spent £4.23 million which doesn't bode well.

At a more micro level, yet again the council's desire for town twinning meant a nice party at The Haven Bistro & Bar in Whetstone. This happened last year as you can read here. This year they spend £30 less but still managed  to run up a bill of £1,521.90. Given everyone is being asked to volunteer and councillors do receive a generous allowance, especially if they chair a committee, I would have expected each attendee to have chipped in £50 to cover the bill. But this is Barnet and they don't do things that way here.



Friday, 28 July 2017

A Night of Shame But Who's to Blame - Last Night's Audit Fiasco


  • Mis-statement of £153 million worth of internal recharges
  • Material omissions from the grant income note
  • Errors in the exit packages note
  • Failure to submit Pensions Financial Statement on time
  • Concerns about contract monitoring

These were just a few of the problems discussed at last night's Audit Committee exposing Capita's shortcomings as the outsourced finance department of Barnet Council.

It started last week when the papers for the audit committee were published minus the critical External Auditor's report. It is pretty hard for an audit committee to sign off the annual accounts if they don't have the external auditor's report to review. The deadline for public questions was 10am on Monday morning but there was still no external auditors report. Eventually at 5.30pm on Tuesday I was told the report had now been published. The significance of this is however much greater as not only was this the first opportunity for the public to review the report but it was also the first opportunity for Committee Members to read it. The report can be read here and my questions and the responses can be read at the bottom of the page.

Cllr Hugh Rayner is the new Chairman of the Audit Committee and this was definitely a difficult first meeting. He introduced the meeting and allowed me to ask my supplementary questions. They simply highlighted the very real shortcomings of Capita in the audit process. Most of the points in my supplementary questions are then covered within the rest of this blog but one point glossed over in the meeting relates to the failure of a number of council members to submit related party disclosures.  This is a key part of the audit process and the auditor remarked that it was poor compared to other councils. In my supplementary question I asked why they wouldn't name and shame these seven councillors. They replied that the number had now fallen to five (although the auditor said he was still awaiting seven disclosures). Given that members knew this was being raised tonight and still hadn't bother to submit their disclosures suggests a level of complacency that is insulting to ordinary residents.

Cllr Rayner then changed the order of agenda to bring Auditors report up next. He started by expressing his and the committees dissatisfaction with the audit process and fact that members had only 24 hours to read the report. He noted that the report had so many "ifs and buts" that it was difficult to make a value judgement and finally he noted the failure to mention the Children's OFSTED report which is of major importance as part of the audit process.

The external auditor then got their chance to speak, expressing their concern at being unable to provide a final report. A couple of reasonable questions from Cllr Hutton and Cllr Finn and then Cllr Zinkin weighed in. He was concerned about the process - yes we all agree with that - and called the report from the auditors a "complete shambles". Whoa hang on a minute. The incompleteness of the report seemed entirely down to the errors and omissions made by Capita yet no criticism of them?

Cllr Zinkin then made reference to the lack of any mention of the OFSTED report on Children's services. The response from the Auditor was that officers had not brought it to their attention that the report had been received and that they had only discovered the report yesterday on the OFSTED website. Such a poor OFSTED report will now mean that the auditor is obliged to qualify the audit report on the use of resources, something that as far as I am aware has not happened previously. Cllr Zinkin followed up with a damning statement saying that if the auditor wasn't aware of the OFSTED report what other things are they not aware of. The auditors' defence was that the accounts were in such a mess that they had to throw more resources at sorting them out first.  From my perspective Cllr Zinkin needs to stop attacking the auditor and throw some of his outrage in the direction of Capita whose errors, omission and failures precipitated the situation. At this point Cllr Finn weighed in and, no doubt using his experience as an accountant, steered Cllr Zinkin away from scapegoating the auditor. Yes they should have let the chair of the audit committee know what a mess the accounts were in but they shouldn't be held responsible for the mess. He recommended "giving Capita a kick" as they are paid lots of money and haven't performed.

Cllr Khatri then hit the nail on the head by highlighting that there are different organisations involved here, the council, Capita, (plus all the other outsourced services such as Re, Cambridge education, NSL etc) and the auditors. All along I have been saying that the fragmentation of so many critical services represents a major risk that one hand doesn't know what the other is doing and that important matters fall down the cracks in between all the different parties.

At the urging of Cllr Cooke the meeting then moved onto the meat of the report. The auditors expressed concerns about how certain items were expressed and concerns about the adequacy and complexity of the IT systems including the billing of CIL payments at the right time and how reports are produced. There was some debate as to whether these were old problems or had occurred since Capita took over the finance and IT functions. Despite suggestions by Capita that these were long standing, the Director of Resources confirmed that CIL billing is the responsibility of Re (the Capita JV) and the accounting system was changed when Capita took over the contract in 2013. Yes, Barnet had paid a fortune for a sophisticated SAP system which upon appointment was duly dumped by Capita in favour of their own Integra system which seems to be at the root of a number of the issues that have arisen.

Next the discussion turned to pensions. An independent actuary is used to assess both the liabilities and the assets of the pension fund to give a net position. In terms of the liabilities these were adequately calculated but in terms of the assets the actuary was not given the details of the investment portfolio in time and therefore had to make assumptions which turned out to be incorrect and there will material changes to the net pension position. Capita are responsible for preparation of the pension fund accounts.

Next up was the issues of exit packages, the payoffs to officers, whereby exit packages should be disclosed when they are agreed not when they are paid. Does this mean that a number of exit packages are still to be disclosed having been agreed before year end but paid after year end?

They then moved on to the issue of budget and the fact that the council continue to overspend, this year drawing £18.5 million from reserves and general fund to meet the shortfall. "You are overspending" said the auditor. Perhaps the Tory strategy of multiple years of council tax freeze is now coming back to haunt them and residents.

Next was the the issue of contract monitoring. Given how heavily the council rely on outsourced services the auditor was surprised that a number of matters on contract management had been picked up by internal audit when they should have been picked up in the first instance by contract management. This is something I have raised repeatedly with councillors. Let's hope they will now listen to the auditor saying it as well.

The net outcome is there will now be an additional audit meeting on the 19th of September to go over the final audit report and to pick up all the outstanding points of which there are many.

This was a night of shame for Barnet; failure to meet government deadlines, numerous errors and omissions, failure of communications between officers, Capita and the auditors, over complex and inadequate IT systems, problems with contract monitoring and unsustainable overspending. I suspect that if more members of the public were aware of all these shortcoming they would maybe take a different perspective on how well the council is run.  It is a mess and outsourcing of critical functions  such as finance and IT seems to be at the heart of it.

I am sure that Mrs Angry who was also in attendance will give a far more accurate and readable appraisal of the meeting and I urge you to read her blog as well.




Monday, 17 July 2017

Children at Risk: Time to take responsibility

A joint statement from the Barnet Bloggers
  
“There are widespread and serious failures in the services provided to children and their families in Barnet. Inspectors identified a legacy of widespread poor practice and ongoing systemic failures and services that neither adequately ensure the safety, nor promote the welfare of children and young people”. 
Ofsted Inspection Report on Barnet Children’s Service July 2017

Over nearly a decade of scrutiny by Barnet bloggers, we have investigated and reported the seemingly endless sequence of scandals, blunders, and political folly created by Barnet’s Conservative councillors. The incomprehensible tale of the MetPro fiasco, the disgraceful confiscation of travel passes for disabled residents, the cutting of vital respite care for children at Mapledown School, which cares for children with profound disabilities, the illegal CPZ parking charges, are only some of the many examples of administrative incompetence – and worse – that we have pursued.

In all this time, in response to all of these disastrous situations, not one Conservative member has taken responsibility for the failure in services to what are very often the most vulnerable members of our community.

No one could be more vulnerable than a child: especially a child in care, whose well being has become the responsibility of the local authority, standing as a corporate parent.

Yet now we see the emergence of a most damning report from OFSTED, one that slates the provision of care services in Barnet for such children: a report that should shame any local authority, and would – anywhere else but in Barnet.

“The vast majority of care planning is ineffective. There is a lack of focus on measuring progress for children or their outcomes. When there is no progress, this is not re-evaluated or escalated effectively. This leads to drift and delay. This is particularly stark for a significant number of children who are victims of chronic long-term neglect and emotional abuse, who do not have the impact of this risk recognised, responded to or reduced, despite spending long periods subject to child protection planning … ”.

“Young people who go missing from care receive a poor service, because social workers do not find out enough about the risks to them. This means that young people who go missing are not always kept safe enough from dangers, such as gangs or adults sexually exploiting them”.

In any circumstances where there has been proven wrongdoing, or a failure in standards, it is usually the case, in Barnet, that officers are held responsible, and those elected members tasked with the responsibility – and paid generous allowances for those duties –of overseeing the enforcement of their own policies remain distanced from the consequences of their actions. We believe that this is wrong, and that Councillors should be held accountable.

In this case, we believe, the fault lies in a serious failure in leadership, oversight and scrutiny by the Children, Education, Libraries and Safeguarding Committee, chaired by Conservative Councillor Reuben Thompstone.

The same committee was responsible for the Mapledown cuts – later reversed, after protests from parents, and a public outcry; and was also the instrument of approval for the devastating programme of cuts to our library service, presented to residents as mere ‘refurbishment’, but which has seen the closure of children’s libraries, and the removal of access for under sixteen year olds from any library operating the newly unstaffed hours.

It seems to us that under this Conservative administration, children are seen not as our most precious asset, but an easy target for cuts, and the lowering of standards meant to ensure their protection, and wellbeing.

In 2014 Tory members approved a cost cutting restructuring of Family Services which has resulted in the use of agency social workers soaring from none in 2013, to £3.05 million per annum in 2016/17.

With the average agency social worker staying just 202 days, there has been a constant turnover of staff, and throughout this period, Children’s Services have been under constant pressure to meet the budget savings forecast.

We believe that pressure on budgets for local social workers responsible for ensuring the safety of young people has lead to the near destruction of the service, and a situation where there are simply not the resources to ensure vulnerable young people are given the life chances they deserve.

This cannot possibly be in the best interests of the children of this borough.

We therefore make the following suggestions: 
  • That there must be a full open, transparent, and independent public inquiry into what went wrong.
  • This inquiry must include a forensic audit of all correspondence between the Conservative administration and officers, regarding Children’s Services, to ensure that political interference has not, and cannot in future, prejudice the standard of care.
  • This inquiry should be concluded prior to May 2018, to allow the people of Barnet to pass their own judgement on the administration.
  • We call for the resignation of the Councillor in charge of Children’s Services, Cllr Reuben Thompstone.

  
Derek Dishman
John Dix
Theresa Musgrove
Roger Tichborne


Sunday, 2 July 2017

Supplier Payments for May

Yet again Capita have received a large payment (£1.9 million) in spite of  receiving an advance payment in December 2016 of £26.9 million.

The interim and agency staff contract with Comensura was lower this month but still hit £1.24 million. Time will tell whether Barnet really can get this down to a more realistic level.

I am currently going through all of the Capita and Re invoices for 2016-17 and will report back when I have a more detailed analysis.


Wednesday, 7 June 2017

Why I'll be voting Labour tomorrow - It's common sense

For the first time in many years we are faced with an election where there is a very clear difference between the two main parties. For me this is a choice between hope and despondency. It is now nine years since the global economic crisis, seven of those years under a Conservative government yet we are told that we face many more years of austerity, further cuts to services, tough working conditions and low pay.

In the past I worked with businesses that were failing. In some businesses it was necessary to make cuts to spending, in others it was pricing policy where they were covering marginal costs but not the underlying costs of the business. Often it was about growing the business out of trouble, typically by investing in the business to make it more effective and able to sell more products. In many ways this country is the same. In some areas there may be the need to make some savings but after so many years of cuts I doubt there is much left. If anything I think the cuts have gone too far restricting our ability to grow the economy and that has created a vicious circle from which we seem unable to escape without a radical change in policy. As such we need to invest in the country, building infrastructure, enhancing employment skills stimulating demand and positioning Britain as a forward thinking, effective and growing economy. Part of that is also about getting companies and the very richest in society to pay their fair share of tax to cover the underlying costs of our society, such as schools, hospitals and care for the elderly.

I looked at the Office of National Statistics figures for underemployment in the UK. Those are people who are willing and capable of working more hours. The latest figures show that there are 3.5 million in that group, a massive under-utilised resource that could be generating growth for the economy. However, the incentives to invest in new equipment and machinery seem limited if the growth of the economy is uncertain and if people have little spare money in their pockets to buy products.  I have spent the last three weeks looking for jobs. What continues to shock me is how many employers in central London still expect people to hold down responsible jobs for £7.50 and hour and for under 25s, even less (£5.60/hour for 18-20 year olds and £7.05 for 21-24 year olds). Given that the tube fare into London can be £47/week it leaves a minimal amount to survive on. Pushing the minimum wage up to £10/hr will help some of the very poorest, allowing them to spend some of that extra money buying goods and services. It will save on state benefits that will no longer be payable and generate additional tax income, both income tax and VAT on goods and services purchased.

Labour's proposals for investing in major infrastructure projects, building lots of new affordable homes and pushing up minimum wage all seem entirely sensible solutions creating jobs, creating demand for products and putting money into people's pockets. The construction sector reckon that around 90% of construction supplies are sourced in the UK. That is why it is such an effective economic stimulator as well as meeting the need of millions who are in cramped, expensive and insecure accommodation. In addition, the more people who are in work and spending money, the more tax is generated and the fewer benefits are paid out. Again it just makes sense.

Another Labour policy is the abolition of University tuition fees which also seems an eminently sensible idea. From my perspective the Student Loan scheme is one of the largest Ponzi schemes  ever conceived. The House of Commons Library analysis of student loan debt says; "The Government has projected that the outstanding cash value of publicly owned student debt in England will increase to around £100 billion in 2016-17, £500 billion in the mid-2030s and £1,000 billion (£1 trillion) in the late 2040s". The report also says that it estimates that 60% of post 2012 students(when tuition fees rose to £9,000 a year) will have some of their loans written off due to the failure to repay them in 25 years. This means the amount written off will run to hundreds of billions of pounds. In effect the government is lending money today and in 25 years time someone else will have to pick up the mess. At least a government paying for fees now is an honest way of treating this investment in growing our skills base.

Investing in the NHS is also an eminently sensible idea, There does need to be change to make sure patients get the best possible service, cost effectively, but closing A&E departments and running hospitals at 98% bed occupancy isn't the way to do it. The Conservatives will press ahead with the Naylor report which will result in NHS land and assets being sold off. The risk is that it will generate some cash in the short term but will limit the options for developing new treatment solutions such as polyclinics, and intermediate/ re-ablement care facilities in the future, something that seems to happen with depressing regularity.

There are lots of other reasons why voting Labour seems the only sensible option but probably more than anything else, it offers hope that things will get better. Another five years of austerity, low wages, declining public services and a growing inequity in society seems to be what the Conservatives are offering and that is not for me.





Friday, 5 May 2017

Barnet salaries May 2017

Below is a chart showing all the Barnet council employees paid more than an MP's salary (£74,000). For the full list of all senior salaries, you can find them here.


Friday, 28 April 2017

Barnet Year End Supplier Payments - as bad as anticipated

The March supplier payments are out today and I can now collate the entire financial year figures for 2016-17.



Let's start with Capita who in total this year have received £105 million on the CSG and Re contracts. Even though Capita were paid £26.9 million up front for 2017 charges last December they are still billing Barnet for reasons I cannot understand. In February it was £1.32 million and in March it was £1.54 million.


Since the start of the contract we have paid Capita £277 million and yet again I ask Richard Cornelius to show me the savings!

As for the other out of control contract, for agency and interim staff, it is, as predicted, within a whisker of £20 million. Barnet have consistently told me they are going to get this contract value down but it continues to rise. Four companies take a commission on the agency and interim staff spend which is money wasted. In addition having such a high proportion of agency and interim staff leads to a lack of consistency, new staff who have to be constantly re-briefed and who lack corporate memory of what has gone before. Agency and interim staff inevitably have less loyalty to Barnet which inevitably impacts on the quality of service residents receive.


Barnet spends a massive amount of money annually and I just don't get the impression someone is making sure every penny is wisely spent.


Thursday, 20 April 2017

My Submission to the Re Contract Review

Next week is a public meeting to take evidence from the Barnet residents about the Capita joint venture contract (Re) that runs Barnet's Development and Regulatory Services. I have prepared a detailed submission which I have attached below. Overall I get the impression that Barnet simply don't have a handle on contract performance.

I know Richard Cornelius and the other Tory Councillors keep saying this contract is saving us money but I genuinely cannot see any evidence of the savings promised. Unlike the other Capita contract (Customer Service Group) which is all about automating activities and moving staff to low cost areas, the Re contract is dependent on locally based, skilled staff: Planners, Environmental Health Officers, Trading Standard Officers, Highways Engineers etc. Indeed, in the original business case for this contract, the operating cost savings identified were minimal with the lion's share of the "savings" being generated by increased income from new contracts and additional charges.

 I will update you after the review meeting.

















Thursday, 30 March 2017

Is anyone monitoring Capita?

Barnet's supplier payments for February have been published and as usual I have gone through them in some detail. One set of payments jumped out of the spreadsheet which was to Capita. There were 14 payments and two small credits amounting to a total of  £1,321,887.55 which were designated as "CSG Services Contract Payment".

So what you may say? Well, on 15 November 2016 Councillors agreed to make an advance payment to Capita of £26.9 million to cover CSG contract payments for 2017 and this formed part of the £39 million paid to Capita on the CSG contract in December. This was supposed to generate a saving of £500,000 which is due to be paid on 3 April (based on a response to a specific question I asked in February).

So we have paid £26.9 million up front, we haven't had the savings payment yet but nevertheless we still paid Capita another £1.32 million. To my mind this is unacceptable. No further payments should have been made to Capita on the CSG contract until the entire £26.9m advance payment has been exhausted. It also rubs salt into the wound that we still haven't been credited the £500,000 saving yet.

I would also point out that within the Re contract payments, which are also made to Capita, there is a payment classified as "CSG Services Contract Payment" for £167,500. This should have either been included under the Capita payments or has been incorrectly labelled. Either way it is poor practice.

What I want to know is who is monitoring these payments (other than me) and why are these payments being made? Maybe one of the many readers within Capita or Barnet Council who visit my blog daily would care to give me an explanation.

So far Barnet have paid Capita £273 million on the two contracts. That is £102 million more than the contracted value yet everyone maintains these contracts are saving money. I can't find those savings!


The other long running sore is the contract for interim and agency staff with Comensura. In February Comensura billed £1.68 million bringing the year to date total to £18.3 million with a month still to go and an estimated year end cost of a shade under £20 million. That equates to £400,000 a week from which 4 separate organisations take a commission.


  Barnet have now conceded they can't run the council without all these agency staff as was disclosed during the budget setting meeting. Cllr Jack Cohen had put forward an alternative budget which included significant cuts to agency staff but had those savings capped by Council Officers at just £129,500 for the entire year or just 0.6% of the annual cost as he was told the council couldn't operate without those staff. That does not strike me as an efficient organisation.

Monday, 13 March 2017

Is 43p a week too much to ask?

In Barnet we are facing a 3% council tax increase specifically for social care which, as we all know, is in crisis. However, the council had the opportunity to increase the council tax by a further 1.99% to cover all the other services provided by the council such as street cleaning, refuse collection, libraries and children's services. The council have put forward a budget for 2017/18 which shows a shortfall of just under £20 million and that takes into account the 3% social care precept. To balance the budget the council are using reserves, increasing charges and making cuts to services.

As I am sure many people are aware, adult social care and children's services make up the majority of council costs. Whether local tax payers should be paying for what many see as a national problem is a matter of debate but in Barnet we have the highest number of residential/nursing homes of any London borough reflecting the borough's mature resident profile and that drives demand for social care.

Since 2010 Barnet Council have frozen council tax and in 2014 they cut the council tax just before the last election. In the early years there was money from central government to hold down council tax rises which Barnet took but they failed to grasp freezing council tax in one year means that rise is lost every year for ever.

At a recent Council Committee meeting I asked the council the cost of a freeze to council tax  this year over the next 10 years. In fact they calculated it incorrectly at £31 million (its actually just under £34 million) but it signifies the impact of a single year of council tax freeze. When you look at the impact over 7 years the difference is significant.



Some people, including Cllr Cornelius, may argue that council tax is a regressive tax but there is banding by property value and there are also approximately 30,000 households that receive some form of Council Tax discount or exemption.

Even setting aside the growing demand for adult social care, inflation alone adds over £4 million a year to costs and includes, for example, the automatic inflation clauses included in the Capita contract.

If the council had increased council tax this year by the 1.99% allowed by government (in addition to the 3% social care precept) it would have cost the average Band D household the princely sum of 43p a week. It wouldn't have stopped all of the cuts but if the council had taken modest increases of 1.99% each year since 2010, then there wouldn't be a £20 million shortfall this year.

One question I asked the committee was, "Do the council think residents would prefer cuts or a 43p a week increase?" to which Richard Cornelius said that was a political decision and that is undoubtedly true. I speak to many residents who would prefer modest increases so long as it is spent on frontline service but they are never asked that question. However, in Barnet, the council are happy to spent an extra £800,000 on additional PR staff. They are prepared to spend £400,000 a week on interim and agency staff.  They are prepared to pay Capita millions for 'special project' consultancy work. They are prepare to spend £360,000 a year on both a Chief Executive Office AND a Chief Operating Officer in a commissioning council where many of the services are outsourced.

In 14 months time we have another council election. I just hope the electorate see through this shortsighted strategy which damages council services in both the short term and the long term but then again some people my just read the headlines of council tax freeze and not give a damn about how that affects services.