Saturday, 16 June 2018

ICO Judgement - Barnet Must Release Capita Day Rates

Since the start of the Capita contract I have been concerned about the cost of "special projects" which are billed as an extra on top of the contract price agreed with Capita. In particular, these projects are charged at an agreed consultancy day rate, listed in the contract but redacted from public view. This has concerned me given the enormous size of the special projects bill. In 2016/17 special projects cost Barnet residents £16.8 million - that's on top of the core contract fee of £29.48 million they already receive.

The contract stated that the day rates would be commercially sensitive for three years so last year I duly asked for a copy so that I could see exactly how much we are being charged for each project and to assess whether we are getting value for money. While some of these projects need very specialist expertise, some could be done by salaried staff at a much lower cost as a council officer confirmed to me at a council meeting.

With Barnet having refused to provide these day rates and refusing an internal review, I took my complaint to the Information Commissioner's Office (ICO). After some prolonged deliberation they initially came back saying that Capita had stated that disclosure would undermine their ability to compete in the market place. Barnet Council also objected saying that disclosure would undermine their ability to secure other consultancy at competitive rates. I argued that if the day rates were higher than the marketplace then we should know and it might encourage Barnet to renegotiate them with Capita. If they were low it would help to drive down rates from other consultancy contracts. I made it clear to the ICO that Barnet was under severe financial pressures and keeping the details of such a large cost secret was not appropriate especially as both Capita and Barnet had signed a contract saying the day rates would be released after three years,  a contract to which residents may not be a signatory but are definitely a stakeholder.

After another prolonged period I heard last Friday that the ICO had ruled in my favour and required Barnet to publish the day rates. They have now published the full judgement on the ICO website. You can read it in full here. I wait to see if Barnet appeal the decision or publish the information.

Thursday, 14 June 2018

Financial failure - It looks like Capita run Re was a major problem

Reading the Barnet Council draft accounts I was curious to understand where the overspend in 2017/18 occurred. There was a lot of talk about the growing demands for family services and adult social care and sure enough some of the overspend was down to that. But what jumped off the page was the biggest single overspend of £3.95 million. Guess where? The Capita run Re (Regional Enterprise) contract. What I can't understand is that on a contract that is supposed to guarantee financial performance it ended up costing us nearly £4 million extra.

I have consistently said at Council meetings that there is no financial transparency on the Re contract and I keep being told not to worry.  Indeed on 27 February 2018, I raised the issued of transparency and Re's performance at the Performance & Contract Management Committee.

At that meeting the report showed that Re was overspent by £285,000 and that with a top up from reserves that brought it down to £44,000 overspend. This was apparently down to legal costs which are contractual liabilities payable by Barnet as you can see in the note below the table. Just to be clear, this was 4 weeks before year end.

So four weeks later the overspend has jumped from £44,000 to £3,954,000. I will be asking why this overspend has occurred but my concern is that it may be linked to the disputed invoice of £4.599 million identified at last year's audit.
This was due to a shortfall in guaranteed income promised by Re. At the Audit committee meeting last year I was reassured by the Director of Resources that this sum would be recoverable but I also noted that the Capita Partnership Director described it as a "disputed" amount. I blogged about it here and expressed my concern that little or none of it would be recoverable. That looks to have come true and the debt has been written off. I may be wrong but given the size of the sum and the fact that it occurred after quarter 3 results, this appears to be the most logical conclusion.

We are now at a tipping point. The CSG contract is under-performing with the Council considering bringing part of the finance function back in house; the Re contract predicated on guaranteed income appears to unenforceable. There are other matters which will come to light by the next audit meeting, which I cannot disclose at this time but which will have serious repercussion for the entire Capita contract.

Barnet must recognise the reputational and financial damage that these Capita contracts are inflicting and do the right thing. End the contracts with Capita.

Tuesday, 12 June 2018

Incompetence, Naivety or Worse - Financial Disaster Looms in Barnet

I have spent the last eight years trying to get Barnet Council to act in a more financially responsible manner. Last night we saw just what a policy of constant Council Tax freezes and poor management has done for Barnet finances. I blogged about this last week which set out my concerns and the questions I had submitted to the Policy & Resources Committee. Last night I got answers, although not to the questions I had asked. That is the Barnet way and something I have come to expect.
You can read the answers here but to be honest they tell you very little.  In summary:
  • They didn't find out about the budget shortfall until May, after the election when they were closing the final accounts - although Cllr Cornelius' throw away line that "Purdah was unusually strict" seems to undermine that answer.
  • Even though Barnet forecast these problems 6 years ago in the graph of doom they do not accept that constant council tax freezes have turned it into a reality.
  • They will now hold another meeting in July to decide what they are going to do to try and sort out this mess and to consider an option to bring strategic finance back in house.
  • They are thinking about potentially introducing a freeze on recruitment - something they should be doing today.
  • Actively monitoring payroll on a monthly basis is "challenging"
  • They will be reviewing all capital projects but they can't say which ones.
  • They will have to think about different strategies to address the increasing demand for adult social care.
  • They are going to start public consultation in July on the radical changes to the council needed to balance the budget.
  • Barnet will seek to recover the costs of up to £500,000 from Capita for the the investigation into financial reporting being undertaken by Grant Thornton.
  • And even though they have already paid Grant Thornton £138,600 on this review of financial reporting they haven't yet agreed the workplan or the objectives of the study - something I simply do not believe.
One of the biggest problems is the failure to put up council tax since 2010.  I have been suggesting modest rises since 2010 but I also came across a video of a Budget Overview & Scrutiny meeting back in September 2012. It illustrates how back in 2012 Cllr Dan Thomas was already considering an increase but was somehow persuaded to introduce a freeze instead. If Cllr Thomas had stuck to his guns then we wouldn't be in such a mess now. (Credit must go to the late great Barnet Bugle, Dan Hope, who recorded so many council meetings and who we all miss very much.)

 I have set out below the speech I gave to the committee, Labour councillors listened and I was pleased that they proposed an additional recommendation to consider bringing strategic finance back in house, something which will be considered at the new July meeting.

This is a financial mess and nothing in this report shows me how you are going to get out of it. We need to make massive savings quickly but all I see is inertia. From where I am sitting Barnet looks to be on the same trajectory as Northamptonshire County Council. Decimated services and mass redundancies. Rather than spend my 3 minutes going through the reason as to how you have got us in this mess I thought it would be more constructive to give you my views on how you can try to address the problem.

Put a ban on all new recruitment without CEO or 151 officer approval.  It mentions it in the report as a possible option but it needs to happen straightaway. Force HR to come up with a clear plan of how they are going to cut agency costs to 2010/11 levels (£9m). Review the flash figures for payroll within three days of month end and challenge any unbudgeted spending immediately.

Take a leaf out of Northamptonshire’s restructuring playbook for financial control and implement an independent procurement panel to review all expenditure over an agreed limit of say £10,000 including all Capita special projects. You also need to get a much stronger grip on capital spending . If you can cut capital projects to balance the books then maybe they shouldn’t have been approved in the first place.

Renegotiate the Capita and Re contracts with the first target being the gainshare arrangement which appears to be a licence to print money, £23 million on procurement alone. The financial function isn’t delivering and right now you need a clear joined up financial perspective with timely and accurate reporting. The logical solution to get that control is to bring it back in house as quickly as possible.

The Barnet Group has a large duplicate management structure including CEO, Finance Director right down to a duplicate FOI department. Five separate boards 20 different board directors. Barnet homes management costs are £21.1 million yet operational costs are half that. Re-integrating Barnet Group within the council structure could rationalise the management and duplicated admin function taking out a significant chunk of those costs as well as providing a more integrated and efficient service for users.

You duplicate many roles by having commissioning officers on 6 figure salaries and then pay Capita, Re, Cambridge Education etc for senior management to implement services. This needs a radical overhaul which I suspect will mean bringing more services back in house.

This isn’t about political dogma it’s about plain speaking  common sense, something which has been absent for a long time in Barnet.

Notes:  Council tax freeze impact
Blog in 2012 
Blog in 2013
Blog in 2014
Blog in 2017 and chart from that blog below

Pledgebank promise to review monthly spending from 2011.

"I will pledge to give up 4 hours of my time every month to scrutinise and challenge all invoices over £10,000 to help the Council reduce unnecessary spending so long as five other people will make a similar time commitment to sit on the panel and that Barnet Council will genuinely participate in the process and listen to the advice and opinions given." 
 Read about it here

Saturday, 9 June 2018

Politics before the Environment - higher nitrogen dioxide output, doubling dioxin emissions to save 4p a week

On Tuesday Barnet Conservatives voted to end the brown bin food waste collections in Barnet. Instead people will now be required to throw their food waste in with general refuse and it will be burned in an incinerator at Edmonton. The reason for this retrograde step is that it will allegedly save £300,000 a year or roughly 4p per household per week.

Currently 5,000 tons of food waste is collected annually and sent to an anaerobic digester. There the food waste is converted into methane which is then burned to generate electricity. According to the Society For General Microbiology:
In addition, what is left at the end of the process is sold to farmers as fertiliser and is a direct replacement for chemical fertilisers, typically made using fossil fuels. From an environmental perspective it just seems to be the right thing to do and is supported by both Central Government and the London Assembly whose paper in March 2018 made separate food waste collections a key recommendation.

Barnet have to pay to process the food waste but because it is such a good quality "feedstock" for the anaerobic digester (AD), it is highly valued and as such the price paid to process food waste is much lower than for other products used at other facilities such as sewage slurry.

Barnet will now send the food waste for incineration, a process which is much more harmful to the environment that AD. Don't take my word for it. Below is an extract from a scientific paper submitted to The 8th International Conference on Applied Energy – ICAE 2016 "Comparison between the technologies for food waste treatment" which you can read in detail here.

I know it looks a bit technical but the key facts are that incinerating food waste is much worse for the environment that AD. Incineration of food waste generates much more nitrogen dioxide and twice as much dioxin, a substance harmful to humans, than AD.

This week I have spoken with four different AD operators in the London area. All expressed their surprise that Barnet would be taking such a retrograde step. All said that household food waste is a highly valuable feedstock for the AD process because it generates so much energy and that 100 tons a week, consistently throughout the year, would make it an exceptionally large and attractive contract.

So now let's look at the alternatives, the ones that weren't discussed at the meeting. Before the election  Barnet Conservatives made much of promising to retain weekly bin collections. However at the same time they recognised that recycling rates have fallen back and we are miles away from achieving the 50% target they set. A number of boroughs have moved to fortnightly general waste collection not just to save money but because it forces people to recycle more. In Barnet the obvious solution would be to retain weekly recycling collections, blue and brown bins, and to move to fortnightly black bin collections, incentivising people to recycle and to divert more of their food waste to the brown bin.

I don't have the specific figures but I am sure that cutting black bin collections to once a fortnight would save a heck of a lot more money than cutting brown bin collections which are picked up at the same time as the blue bins. The problem is Council Officers were unable to offer that option because the Tory manifesto said they would keep weekly bin collections.

It is also worth noting that by scrapping the brown bin collections it will make it impossible to shift to fortnightly black bin collections in the future because the food waste will stink after two weeks especially during the summer months.

The final nail in the environmental coffin is that the redundant brown food bins and kitchen caddies from every household won't be recycled - they will be burned in the Edmonton incinerator.

I do not believe councillors were given all the information and residents definitely weren't consulted about this change of policy. This decision is a bad one, environmentally and financially, and must be overturned. Please sign the petition and ask your local councillors to try and overturn this bad and entirely political decision. Click here for the petition

Tuesday, 5 June 2018

Financial Meltdown in Barnet - Should we have been told about this before the election?

Yesterday Barnet published the agenda for the Policy & Resources committee next Monday which you can read here.  I am used to surprises but this one was gobsmacking. I blogged just a couple of weeks ago about the parlous state of Barnet's finances including the Medium Term Financial Strategy  (MTFS) published in February. Yesterday Barnet published a revised MTFS. The summary is set out below:
So whereas in February they were forecasting a shortfall of £2.79 million in 2018/19 they are now forecasting a £9.5 million shortfall and in 2019/20 the shortfall jumps from £8.2 million to £19.3 million all in the space of four months. The long term prospects are apocalyptic with a shortfall of £42 million in  2021/22 and by 2023/24 a "high level calculation" showing a shortfall of £62 million. This means the council can no longer exist in its current form.

I simply cannot believe that in February - before the election - no one was aware of just how bad the financial situation was, in which case were the electorate misled?

The committee meeting dealing with these matters is next Monday and I have submitted questions. Will I get any answers? Unlikely.

  1.  The MTFS indicates a budget gap for this year of £9.45 million and a gap next year of £19.27 million yet at this committee in February there was no forecast gap for this year and a gap of £6 million next year. What has happened in 4 months to have made such a huge difference to the budget shortfalls?
  2. At the end of Q 3 2017/18 the forecast outturn was a shortfall of £6.6 million yet by year end the shortfall had risen to £13.5 million. Did something dramatic happen in Q4 or is this a problem of poor/out of date financial reporting and if so who is to blame?
  3. At 1.5.4 it proposes a new corporate plan for April 2019 reflecting the Conservative manifesto including keeping council tax low. Given that in the final year of this administration the budget shortfall is forecast at £42 million do you think keeping council tax low is prudent or denial of the financial reality?
  4. If the high level calculations for 2023/24 prove to be correct in forecasting a £62 million budget shortfall, who should I hold accountable for this financial apocalypse?
  5. By reallocating the NHB to support the revenue position it will cost an additional £1.3m per annum in capital financing. Is this simply storing up problems for later years?
  6. If the current S151 Officer believes that we should have a reserve of £15.1 million why did the previous S151 Officer allow it to fall to £9.6 million at the start of the last financial year?
  7. If this committee had been made aware of the seriousness of the financial situation in February do you think they would have still voted to freeze council tax (excluding the social care precept) for this financial year?
  8. These budget shortfalls do not include the impact of the additional cost of borrowing to complete the Brent Cross Thameslink station. When that is factored in what is overall forecast budget shortfall for 2019/20 and 2020/21?
  9. Who was responsible for making you aware of the additional borrowing requirement for the Brent Cross Thameslink station and why didn’t they do it sooner?
  10. At 1.5.14 you identify managing demand as a way to reduce the budget gap. Given that you have been saying that for at least the last 6 years  since you published the graph of doom and that it is a policy that has repeated failed to deliver, do think you need to change the people who keep recycling this approach.
  11. The report talks about radical options for the future of local services but fails to mention any engagement with local residents at the early stages of this process to help develop these options. Please will you confirm that you will publish a resident engagement/involvement plan before the process commences.
  12. Given the foregoing issues raised under agenda item 7  and the need to cut capital borrowing why is the council  considering making a 30 year loan to Saracens to enable the construction of a new West Stand at Allianz Park?
  13. Given that Capita are responsible for the finance function in the Council  why is Barnet paying for Grant Thornton support following a review of financial procedures and practices?
  14. Before confirming a spend of up to £500,000 what are the specific objectives of this exercise and how will you measure whether their input has met those objectives?

Sunday, 3 June 2018

April Supplier Payments - Good job someone reads these spreadsheets

As you may know I keep a running track of supplier payments each month. April's figures were published last Wednesday but reading through them it was quite clear there was a problem.  First of all there was £8 million of redacted payments classified as personal data. This is many time more than would usually be seen. In addition there were no payments to Comensura. which are typically between £1.3 and £1.8 million.

I asked for Capita to go back and check the data and on Friday they republished the list. Redacted payments fell from £8 million to £2 million, Comensura payment were £1.4 million  plus a range of other payments adding up to a further £4.6 million. Interestingly there was a payment of  £225,394 to London Borough of Harrow for fuel. This is because Barnet share Harrow's depot for some of the refuse vehicles and have to buy their fuel via Harrow. Are we getting the best deal - who knows but because Barnet messed up the Oakleigh Road depot, which is too small, we have no alternative.

Capita had no substantial payments this month but Re had a payment of £2.9 million, surprising given that they received an advance payment of £16 million last year - that must have run out.

I do wish someone would check these payments before they are published rather than leave it to the public to tell them they have got it wrong.

Tuesday, 29 May 2018

Questions for the Environment Committee - Are they getting half the story?

Next Tuesday is the Environment Committee  will consider some massive changes to the refuse service (which you can read here) including the removal of the food waste brown bin collection and a suspension of green bin collection for 3 months over the winter. I have been through the report in detail and have submitted the following questions. It will be interesting to see what answers I get.

Agenda Item 7
  1. At  1.4 in the report it identifies the problem with the transfer station floor and attributes the blame to Wilmott Dixon. At some point during the construction process a surveyor must have signed off this element of construction in order for Wilmott Dixon to be paid. If the floor was not laid to the correct specification why wasn’t this picked up at that stage and does this call into question the quality of project management?
  2. I was told by a councillor that they were told the floor repair would only take “a couple of days” yet the disruption caused seemed to last much longer. How long was this area out of action and why were councillors given inaccurate information?
  3. At 1.8 the report says the average payment rate is 69% but fails to mention that Littering makes up 83% of the fines with a 73% payment rate, Duty of Care notices make up 8.4% of fines with a  72% payment rate yet Flytipping, which is a very serious problem, represents only 8.7% of fines and had only a 34% payment rate. As such:
  4. Other than Harrow have there been any other benchmarks to give confidence that the payment rate for littering will not fall when  the early payment discount is removed?
  5. Have you calculated the impact of stopping the early payment discount on small businesses who may have failed to get their duty of care paperwork in order within 7 days given the pressures they are under already?
  6. Have you asked NSL why they have failed to collect two thirds of the flytipping fines given that if they were collected at the same rate as other fines (72%) that would generate an additional £107,000 of income?
  7. How much of the total environmental enforcement fine income comes to the council and how much goes to NSL and who will benefit most from the removal of this early payment discount, LBB or NSL?
  8. At 1.11 the report identifies the cost of the waste and recycling service. How much extra does it cost having to run the service out of two depots including one which is outside of the borough and would costs be reduced if all services were run from one depot?
  9. At 1.17 the report talks about double shifting. Please can you clarify at what time the earliest rounds would start and at what time would the latest rounds finish?
  10. At 1.17 the report talks about local alternative bulking points. Given the difficulty in finding the Oakleigh Road Depot and the likely planning opposition you will get from residents when they find they are going to have waste tipped and bulked close to their homes, do you think this is a realistic option?
  11. At 1.22 you state that the cost of separate food waste collection is approximately £300,000 per annum. Given that it is collected with the blue bins by the same crew, that the food waste is tipped into a compartment on the blue waste refuse vehicle, can you explain how the £300,000 saving is calculated.
  12. To what extent will the removal of brown bins and the combining of food and general waste undermine the Courtauld Commitment 2025 to reduce food waste especially if you can’t measure it?
  13. Have the council undertaken any of the initiatives set out in WRAP Household food waste collections guidance: Section 11 which saw tonnage rates increase in 18 of the 19 pilot projects and with more than half showing tonnage rates increase by more than 13% (with the highest at 62%)?
  14. To what extent will the 20% reduction in throughput of the IVC at Edmonton affect its viability and what was NLWA response to this proposed reduction.?
  15. Has anyone considered what signal the withdrawal of food bin will sent to residents and is the risk that it will be interpreted that people can throw anything in the black bin, impacting recycling rates?
  16. What will happen to all the redundant brown bins and kitchen caddies and what is the cost of recycling them?
  17. To what extent will the removal of the last 16 bring sites lead to more flytipping or recyclable product being thrown in the black bins?
  18. In the 3 month winter  period 2016/17 how much green waste was collected?
  19. What is the risk that green waste will either be flytipped or put into black bins when the green bin collection is suspended.
  20. To what extent have you consulted with the many small gardening businesses in Barnet who work through the winter and typically place the garden waste they gather at a resident’s home in the resident’s green bin and has anyone asked them what the impact may be either in term of cost or whether their services simply will not be used during the suspension period?
  21. Will green bin collection staff be laid off during the service suspension and how easy will it be to ramp up staffing levels when the service recommences?
  22. Why do private contractors have to comply with time banded collections in town centre, will it make it more inconvenient/expensive for them and is this simply a strategy to give the council’s commercial waste collection an unfair advantage?
  23. Given that the energy cost of streetlighting is underspent will you take this opportunity to increase the lux levels of streetlight which are now at an unreasonably low level?

Wednesday, 23 May 2018

Physician Heal Thyself

Over the next three years Barnet is going to experience a serious financial shortfall. By 2020/21 there will be a budget gap of £32.5 million. Those aren't my figures; they are the forecasts in Barnet's Medium Term Financial Strategy (MTFS) which you can see here. To set that £32.5 million shortfall in context, the total revenue raised from council tax is around £160 million so the shortfall is around 20% of the total council tax revenue.

Part of the problem is the cuts from central government. However, Barnet have insisted on a policy of council tax freezes since 2010 which has stored up a massive problem that will now be coming home to roost. The cynic in me thinks that the Conservatives didn't take a council tax rise in April (other than the social care precept) because they thought Labour would win and be forced to increase council tax, labelling them as the tax raising party. Barnet could have increased the council tax element by the 2.99% allowed. Many councils have taken that rise knowing that come 2020/21 there is going to be a meltdown in local authority finances.

This year there will be £9 million of service reductions and next year that rises to £12 million but come 2020/21 who knows what cuts will be made? They will have to be huge. A very bleak outlook.

So that leads me back to the title of this blog. Barnet are making cuts to lots of services. They, or rather Capita who run the finance function in Barnet, are reviewing all of the contracts and services to see where savings can be made. However, one of the largest contracts seems to be exempt from this process and that is Capita. Well that's no surprise; why would Capita look at saving money on its own contract; Turkeys, Christmas and all that?

If you look how much money we have paid Capita since the start of the contract it is a somewhat shocking £335 million.  The CSG contract contains an indexation clause which means it automatically rises each year and because services are contractually specified it is very hard to make savings by reducing the service Capita provide.

If we look at the CSG contract, Barnet say they have made savings on the core contract. The problem is we are paying a fortune for everything else. Set out below is a chart that shows how those savings have been eroded even before you add in the massive payments for special projects, charged at consultancy rates which we are forbidden to know.

According to the Council's figures, the savings to date on the core contract are £17.2 million, which looks good, but then you have to deduct all the elements which Capita claim back from Barnet. The scale of contract variations illustrate the complexity of the contract, the problems of missing out elements and the fact that with such a long contract period (10 years with the option to extend for another 5 years) means that requirements will inevitably change.

The gainshare on reducing the number of people claiming the Single Person Discount and additional council tax income seems strange to me as Capita are already being paid to provide those services. So in effect we are paying for poor service and rewarding them extra for delivering the service we have every right to expect in the first place.

I haven't seen the specific details of what they have generated on the additional income but Capita are allowed to offset all of their costs before claiming a share. As a result, they take 47% of the additional income generated and that doesn't seem fair to me.

On the procurement gainshare I have blogged about this repeatedly. I have challenged with the external auditor the right of Capita to claim gainshare on framework contracts (contracts that are available to public sector organisations) and which could have been accessed by Barnet council staff.
In total Capita are forecast to claim £23.4 million in procurement gainshare and "Agreed Procurement Price Recovery".

There is then additional work. For example, last year Capita claimed £428,267 for additional caseload on revenues and benefits work. Every element of work in the contract has a volume attached to that and if we go over that limit we pay extra. I thought the number of people claiming benefits was going down but apparently not in Barnet.

From my perspective, the payments to Capita at £335 million should be one of the first areas Barnet looks at to save money if there is any chance of meeting the £32.5 million shortfall come 2020/21. But because the outsourcing programme is so high profile there seems a complete reluctance to look at any possible changes. Barnet need to be brave and look at their contract with as much rigor as they are for other vital services, such as Children's Services and Adult Social Care. So to Capita I would say - Physician Heal Thyself .

Saturday, 12 May 2018

Lots more senior staff in Barnet plus some big pay rises

I like to keep an eye on Barnet senior salaries which are published on a monthly basis; you can read them here. The list looked longer than I was expecting so I investigated a bit further.

Last August a number of staff got some very large pay rises so I compared the May 2018 senior salaries list to the same list from December 2017.

A few things that I identified:
  • 21 new post (excluding one temporary post covering maternity leave);
  • 6 posts removed so a net increase of 15 new posts;
  • a net additional cost of  £1.1 million per annum;
  • 8 staff received pay rises ranging from a rather modest £1,189 to a very sizeable £12,500 with the majority of rises £8,000 per annum;
  • 1 staff member did get promoted to a new role and got a £21,000 pay rise.
With so much talk about cuts to services it does seem rather strange so many new posts have been created and such substantial pay rises have been pushed through. In terms of the new posts I suspect that part of this increase is merely a reflection of the reduction in interim and agency staff whereby interim staff are being taken off agency status and taken on as full time staff due the tightening up of tax rules for the self employed by HMRC.

In terms of the pay rises, last time I raised this with Richard Cornelius he said it was necessary to stop staff from leaving. Maybe the Council should look a little deeper as to why staff want to leave?

Tuesday, 1 May 2018

Year End Supplier Payments - Where All The Money Is Going

Today Barnet have published the March 2018 supplier payments which give us a complete picture for the financial year.

In March Capita were paid £7.3 million and Re were paid £1.04 million with Comensura receiving just under £2 million.

Other interesting payments include £101,202.76 to Blue 9 Security. It would be helpful to understand how much of that is for the additional security staff at our "unmanned" libraries.  By way of comparison in the financial year 2014-15 Blue 9 Security were paid £581,632 but this financial year, 2017-18, they were paid £1,149,873. So in three years the cost of security have doubled with the only significant variable being the introduction of security staff at libraries.

We paid PA Consulting £219,950 for "IT & Comms". Now we have Capita who are supposed to run the council's IT services so what are we paying an external consultancy £219,950 for and who authorised it?

Albeit a more modest sum, we paid an organisation called Policy into Practice £20,317. One of the services they provide is Council Tax reduction modelling; you can see what they provide here. I don't know if that is what they helped with but it does seem to coincide with Barnet's plans to increase the amount the poorest families in Barnet have to pay towards their Council Tax next year see here.

So as we are at the year end I thought it would be helpful to summarise the key spending this year. Set out below is the chart showing the top 10 supplier payments for 2017/18.

Other than the Barnet Group and the Greater London Authority the three largest supplier payments are to Re, Capita and Comensura all of which deserve greater scrutiny. One thing to bear  in mind with the Capita payments is that we made a large advance payment last year which is why payments this year have been lower - although I don't think that will be happening again any time soon.

Set out below is the year end summary of the Capita and Re contracts. From this you can see that the contracted value to date of the two contracts is £211 million but, in addition to that contracted value, we have paid a further £124 million for all the extra services, special projects, contract variations, excess charges and gainshare. When Richard Cornelius keeps saying this contract is saving Barnet residents £1 million a month, perhaps you can understand why I find that hard to believe. Yes the core contract may be saving money but we are paying a fortune for the extras and that seems to more than cancel out any potential savings. As yet I still haven't had a resolution to my objections to the accounts for 2016/17 in relation to gainshare payments to Capita and we are now a month into 2018/19.

We also pay a fortune to a company called Comensura who supply the council with agency and interim staff. Having hit a high water mark of almost £20 million last year there was a concerted attempt to make inroads into that figure in 2017-18. Sadly the reduction has only been around 10% so we are back to where we were in 2015/16 but still at more than double the spend of 2011/12. In the 12 months prior to the commencement of the Capita contract, the council used significantly more agency staff. This was because many staff were leaving the council to avoid being made redundant and it was almost impossible to recruit new staff as they knew they would soon find themselves out of a job. Yet nearly five years into the contract with Capita we are still using large numbers of agency staff in far fewer service areas. That indicates to me an organisation that has lost its way, that can't hold a fixed workforce, that isn't doing its utmost to engage, motivate and retain its most valuable resource, its employees.

It is time for a change in Barnet and on Thursday Barnet residents can use their vote to bring about that change. Please make that vote count.

Friday, 20 April 2018

Enough is Enough - Time to Sack Capita

Between the two contracts, CSG and Re, we have paid Capita £327 million. Let that sink in for a minute; £327 million to a private company from just one London Borough. Ever since the contract was proposed I have challenged how such a pervasive outsourcing programme can work in the best interests of Barnet residents.

I have always made it clear that, ideologically, I have no problem with outsourcing so long as it is being done for the right reasons. Typically this is where it involves very specialist, non core activities where technical expertise may be difficult to secure and retain in house. In Barnet's case this outsourcing programme covered so many services which were core to the running of the council and which in 2010 were rated as 4 star (good). Barnet has been an experiment in mass outsourcing and almost five years in, it appears to be a failure.

Last night's audit committee was a litany of service problems, system failures, lack of controls, under performance, a major fraud. Internal audit saying issues were a problem, Capita saying they weren't.

Councillor Khatri, the now independent councillor for Mill Hill, deselected by the Conservative group, gave a quiet and persuasive evisceration of the Capita contract. He has long been a sceptic of the Capita contract believing that it does not offer value money for residents. Cllr Khatri is no fool, with an MSc and 34 years government experience in Export Credits Guarantee Department he is a shrewd and analytical person with great experience of business.

Some people have said that this contract is too large to fail, too large to bring back in house, so we are stuck with it no matter how poorly it performs. Unsurprisingly, I have a different view.  I believe that with a properly planned programme, the service can be brought back in house efficiently and cost effectively. We have an opportunity to redesign the council to ensure that departments deliver excellent service. This will allow a large number of senior commissioning posts to be removed saving millions.

The first phase will require Finance, Pensions Administration, IT, HR and Procurement to be brought back in house. These are the key levers by which you can control the business. It provides you with the information you need to understand which parts of the business are performing well or badly. The next phase is to set up a call centre in Barnet to deal with customer enquiries and the revenue and benefits service. Staff 100 or 200 miles away working for a number of councils simply don't have the local knowledge required to quickly deal with problems.

In terms of the Re contract that is a joint venture between Barnet and Capita. It just doesn't seem to work  as was exemplified last night at the audit committee. The CEO of Barnet who is a board director of Re has failed to get Capita to agree to new KPI's to more effectively manage the Highways contract. This has been dragging on for a year and there is still no clear outcome. There is what I described as a contractual gordian knot with exceptionally complex contractual relationships between Barnet and the companies that actually deliver services. This means that contracts aren't being effectively monitored and managed. I have yet to see any real financial benefits of the Re relationship - they have failed to sell services to other councils. This is a contract that can be brought back in house very rapidly simply by dissolving the JV and transferring staff back into the council. It cuts out the middleman of Capita and the profit they extract from the arrangement.

It can be done and it should be done. It is time to part company with Capita and take control of how Barnet operates.

Wednesday, 18 April 2018

Something Very Wrong in Barnet

Back in January I wrote a series of blogs about the very serious concerns regarding the gainshare arrangements in Barnet. In particular, I wrote about an energy contract on which Capita had claimed a gainshare of £313,215 which appears to be entirely unjustified. You can read about it here but in simple terms we paid an energy supplier a premium to, in theory, save money on overcharges by having a fully managed service. As I understand the contract, we pay a premium of approximately 1.5% on our energy charges for this service. Now here is the rub. Capita say they helped to secure this contract - even though it seems to have come via the London Electricity Project, a London Councils' initiative. As a result they are claiming they made the savings on the potential overcharges and want a third of them over a three year period, all in a single upfront payment.

To me and, I think, any rational human being this seems like a false claim. As a result I lodged an objection to the accounts on the basis that this money should not have been paid to Capita. That was on the 14 July 2017. Nine months later BDO, the external auditor, has still not resolved this matter.  I get the impression that no one actually believes that Capita deserves this money but because the correct boxes have been ticked they have been paid.

Frankly this disgusts me. Services are being cut, money is incredibly tight but because Barnet signed up to a contract which no councillors read in detail, we are being stuffed. This is nothing short of a scandal.

Last week I was at last given the details of the guaranteed procurement savings that Capita have to make for the rest of the contract. These savings are net of a further payment to Capita of something called the Agreed Procurement Price Recovery which is still redacted. Between now and the end of the contract they have to make over £43.7 million of procurement savings of which they keep around £13.5 million. The problem will be whether they can make real tangible savings or whether we will get further repeats of "contract savings" like this energy deal.

Barnet Supplier Payments for February

I had prepared the supplier payments for April and passed them on to a fellow blogger but forgot to publish them here, so the full detail is set out below.

While payments to Capita and Re look relatively modest that is because of the large advance payments paid last year which you can see more clearly in the chart below:

Comensura is still receiving large sums of money and while this month that was "only" £1.15 million, to date we have paid Comensura £16 million with one month of the financial year remaining as you can see in the chart below:

I will update at the end of the month when we will have the final year end spend by supplier.

Monday, 16 April 2018

Questions to the Audit Committee

I have submitted the following questions to the forthcoming audit committee this Thursday. I hold out little hope of getting appropriate answers.

Agenda Item 7
  • At 1.3.1 the numbers do not seem to add up. Should it read 49 high priority actions (not 45)?
  • On accounts payable the report states that “Because these controls rely on data being entered correctly, they have historically not been very successful at automatically detecting duplicates”. Is the report implying that data is not being entered correctly?
  • The reports states that “CAFT have found that the high number of false duplicates identified make it uneconomical to investigate these transactions”. When did CAFT first identify the high number of false duplicates, why has this not been raised with the audit committee before this meeting given the Integra system has been in place for 4½ years, and who made the judgement that it was “uneconomic to investigate the transactions”?
  • Given that there are no detective controls, outside of the annual National Fraud Initiative (NFI) data matching exercise, to identify potential duplicate payments made and, more seriously, that the  Accounts Payable team have not been able to perform their own review of data to identify duplicate invoices submitted for payment, what is the risk that over the last 4½ years duplicate payments have been made but not investigated.
  • Why didn’t the Accounts Payable team disclose before this internal audit that they were unable to perform their own review of duplicate payments and why didn’t the Commissioning Group Finance identify this problem before now.
  • Please can you clarify the issue relating to the BACS payment run – is it that confirmation was received for the total amount being paid but not individual payments, or that there was no audit trail to evidence the preparation of the BACS report i.e. were the BACS payments correct in the first place?
  • Will ensuring all policies and procedures are uploaded to an appropriate shared drive so employees have remote access to all relevant documents ensure that staff in Sussex and Darlington actually read or familiarise themselves with the policies and procedures. What measure are in place to ensure this is more than just a box ticking exercise?
  • In the separate 19 page Internal Audit Report it highlights a high risk problem with the Cashbook Team. The sample of 25 unallocated receipts amounted to £559,000. What is the current total of all unallocated receipts?
  • Who is responsible for the Cashbook team, Capita or LBB.
  • If 19 of the 25 unallocated receipts were not investigated at all and 6 of the 25 were partially investigated but not followed up or resolved how many residents has been hassled unnecessarily or worse, have had the matter referred to a debt collection agency when the debt had been paid?
  • In the Outstanding actions section the highways actions have been deferred yet again. On point 1 why are Re taking so long to agree additional performance indicators proposed by the Council given that Re is supposed to be a JV between the Council and Capita?
  • On point 2 if the KPIs in question will only include the elements that Re can influence yet Re are the council’s agent for monitoring the LoHAC contract with Conway, how can we have any confidence that the LoHAC work will be delivered satisfactorily and that there is a rigid monitoring system in place?
  • Given that Capita have claimed and received a large gainshare payment for the “savings” on the LoHAC contract and that Re received a large payment from Barnet for advice on the LoHAC contract, surely they should accept responsibility for the delivery of that contract and the consequent KPIs.
  • On point 3, is requesting supporting information from the contractor the most appropriate way to validate performance if you already have concerns about the performance data provided by the contractor. Surely there should be a separate third party or Council validation process?
  • At Point 21 of the completed actions I note that “arrangements to streamline and make capturing and collation of DBS data more efficient will be implemented”. However, in light of the revelations identified in the recent Private Eye article where a Capita Director allegedly stated that “in the vast majority of cases the level of check could not be evidenced and in many cases was not correct”  and that such failures “will result in the DBS considering suspension or cancellation of our registration to use the DBS service”, please can you provide some reassurance that streamlining the capturing and collation of DBS data does not render the checks invalid?
Agenda item 8
  • The CAFT report highlights an on-going financial fraud investigation case. While I understand that you do not wish to discuss the specifics of this case, I am sufficiently alarmed by shortcomings under agenda item 7  that I believe it is important that any investigation into how the system failures permitted this fraud to take place must be addressed immediately to ensure that no further fraud can take place. Please can you confirm that the systemic faults that allowed this fraud have been identified and addressed already, that you will investigate how the systemic failure were allowed to exist in the first place and why Capita, the Commissioning Finance Team or internal audit did not identify the systemic risk sooner?
Agenda item 9
  • In light of the financial fraud investigation, do you think the additional allocation of 455 days for  blue badge investigations is appropriate and that instead the additional time should be allocated to identifying and stopping staff and financial fraud?
Agenda item 11
  • I note the audit plan recognises the additional powers and duties of the external auditor and, in particular, the point that these powers allow electors to raise questions about the accounts and consider objections. What it fails to address is the time taken to address these questions and objections. As such do you think it is acceptable that it has taken the Council 9 months to provide information to the external auditor in relation to an objection to the accounts and that the objection has still not been resolved.
  • I note that the external audit will bring in specialist support to review Use of Resources. Can you provide details of the particular areas they will be examining?

Thursday, 1 March 2018

Barnet Supplier Payments - Interim & Agency Spend Escalates

The supplier payments for January have been published. For the first month in a long time Capita are not in the top ten of payments. However, the interim and agency supplier Comensura billed more than £1.9 million.

In terms of Capita, they received a more modest £708,603 on both the CSG and Re contracts. However, we are still using up the advance payments balance as can be seen from the chart below.

In terms of the interim and agency bill there have been repeated  statements that they are getting these costs under control. Barnet spends a huge amount on agency staff and in addition Capita claims a very large amount under the gainshare clause. Last year we spend just under £20 million . This year, with two months still to run in the financial year, Barnet have already spent £14.8 million and it looks like they will hit just under £18 million by year end. That is still a vast amount of money to be spending on temporary staff and on which we pay 4 separate amounts of commission.

As always, I will  continue to monitor spending at Barnet.

Thursday, 22 February 2018

Is Barnet Capable of Managing its Outsourced Contracts?

Next Tuesday is the Performance and Contract Management Committee meeting. Reading the 119 page Performance Monitoring Report it makes my heart sink at how poorly some of the contracts are being monitored and managed and how performance management seems to be a box ticking exercise. You can read the report here at agenda item 7.

I have submitted a series of questions on a number of agenda items set out below. It will be interesting to see the responses.

  1. Can you explain why the Commissioning Group budget has risen from £20.2 m in 2016/17 to £35 million in 2017/18?
  2. On page 42 risk AC028 identifies the lack of a fully functioning case management system. Who is responsible for managing and maintaining this system and how confident are you that the draft plan to implement remedial works is actually working?
  3. On page 44 reference is made to Barnet’s Children’s Commissioner and her report of January 2018. At 4.23.3 of her report she made specific reference to the role of the PCM Committee, raising a question over whether that Committee has the capacity or capability to scrutinise and monitor complex children’s services effectively. Why was this not highlighted in the papers for this meeting and how are you going to actually address this serious concern?
  4. The Children’s Commissioner also noted that there is a culture in Barnet of over optimistic and over reassuring reporting to members. How confident are you that the reports you are receiving in these papers are not over optimistic and over reassuring and what steps are you taking to ensure that culture is changed?
  5. At page 94 there is a report regarding the performance of Cambridge Education. As part of this contract, school meals were subcontracted to ISS. School meals was a profit centre generating £240,000 of profit before it was outsourced and the business case identified it as a major source of additional income generated outside the borough to support the business case. Why is there no information on the financial performance of the ISS subcontract and will you provide an update of ISS’s current financial and operational performance?
  6. At page 97 it notes that there will be an additional charge for Revs & Bens work from DWP. In 2016/17 Capita charged £330,000 for additional Revs & Bens work plus £98,000 for face to face support. How much is Capita likely to charge in 2017/18?
  7. At page 99 the reports states that there is a rebate from Comensura and administration charges to other services, totalling £1.986m. Please can you clarify how this rebate from Comensura is calculated, and what proportion of the £1.986m it represents?
  8. One of the CSG contract variations identified in Table 12 is for £1,004,038 for dilapidations to NLBP Building 4 “to increase the funds to cover cost until October 2018”. Given that Barnet should have existed NLBP 4 in October 2015 why are we still paying into a dilapidations fund and why are we paying it to Capita, not the building freeholder?
  9. At Page 103 the report states we are paying £78,908.65 to Capita to assist with Family Services recruitment. Given that we paid Capita £248,000 for the same task last financial year are you sure this further payment represents value for money?
  10. At page 106 the report provides details on Re’s financial performance yet there is no mention of how much additional revenue they generated, a key component of the overall financial performance. Please can you tell me how Re are performing against revenue generation targets?
  11. To what extent has the contingency plan recognised that Capita provide services through a range of different service companies (for example pensions administration is operated through Capita Employee Benefits Limited) and that with such a complex operating structure some companies  might continue to trade while others are placed into some form of insolvency measure?
  12. To what extent has the contingency plan recognised issues such as retention of title, where for example if a Barnet contractor has purchased but not fully paid for essential equipment (such as IT hardware) the original supplier may uplift that equipment?
  13. To what extent has the contingency plan recognised that before a  company goes into some form of insolvency measure, it may experience a prolonged period where cashflow is highly restricted, preventing investment in key equipment and failing to replace staff that leave which would have a highly detrimental impact on service standards?
  14. Have you taken specific professional advice from an insolvency practitioner, for example from the external auditor BDO, to ensure the contingency plans are robust?
  15. At the Audit Committee of 31st January 2018 the Chair, Cllr Rayner, said that he was referring the issue of gainshare on the CSG contract back to this committee for a review. There is no mention of this in the forward work programme. When is it scheduled to take place?

Friday, 9 February 2018

You get what you pay for - should Barnet residents pay more?

Next Tuesday the all powerful Policy & Resources Committee will assess whether to increase Council Tax or not. There is a recommendation that they should add a 3% social care precept. Social care is in crisis, not just in Barnet, but throughout the UK so this makes sense. However, this money is ring fenced and the council are obliged to prove it has not been used for other purposes.

The Council are also allowed to increase Council tax by a further 2.99% without having to hold a local referendum but the recommendation is that this should be frozen. This follows a pattern with Barnet having frozen or cut Council tax every year since 2010. In 2016/17 they did include a 1.7% social care precept but this mirrored a 1.7% reduction due to the Olympic levy coming to an end - so no overall net increase.

The problem we have is that Barnet have been using reserves to make up some of the shortfall and they are getting to a point where they will reach the minimum threshold a local authority is required to hold. Barnet are proud that they have made real term cuts to council tax of 20% but that has a very significant cost in terms of the reduction of services. Most departments are being required to cut their budgets, including services like Children's and Adults. For details of all of the budget cuts you can read them here with a summary below.

Currently Barnet is being propped up by a central government grant called New Homes Bonus which is linked to the number of new homes are built. This year it is roughly £10 million so you can see why Barnet is so keen to push through every new housing development. However, this grant is being cut and there is no certainty as to how much longer it will continue.

So now we come to the tough bit; should residents be prepared to pay a little bit more? From my perspective the answer is, unfortunately, yes. Failure to do so is just building problems for the future. I was talking to someone about this the other day and it is a bit like only paying off the minimum balance on your credit card each month  - you know it's not enough but you don't have to worry about it this month.

Even if Barnet had taken a very modest 1% increase in council tax each year, it would mean we would have around £14 million more to spend this year, negating the need for this year's cuts and borrowing from the reserves. The argument for not taking a council tax rise is that many families are hard pressed financially. That is also true but this whole problem has been brought about by central government cuts to local authority financing and all three constituencies returned Conservative MP's who have voted through these cuts.

I would also say that there are some savings still to be made at Barnet Council. We know about the very expensive PR & Communications team which you can read about here and the huge salary rises for some of the most senior staff but ultimately people have to be realistic and pay for key services like Children's and Adult Social Care.

I have raised a number of questions regarding the budget which I have set out below and I will update you when I get some answers.

  1. At the Policy & Resources Committee last year the detailed revenue budget showed an “original estimate” for 2017/18 of £270,333,880. This included £ 6,863,000 for Additional Income from Council Tax. In this year’s detailed revenue budget it states the “original estimate” for 2017/18 was £277,196,880 with the Additional Income from Council Tax left blank. How can the “original estimate” have changed and what has happened to the missing £6.8 million?
  2. Given that the external auditor said in the audit completion report “there is little margin available in reserves and balances to support any further revenue budget overspends or slippage on savings plans and management will need to revisit how these reserves are being utilised in the event of continued pressures on budgets”, do you think it is wise to recommend a budget that recognises pressures yet freezes Council tax and depends on reserves to make up some of the deficit?
  3. Given that the Council will be unable to levy a social care precept in 2019/20, and that you are forecasting a budget gap after savings and reserves of £5.965 million, even with a 2.99% council tax increase, do you think it is fiscally responsible to freeze council tax yet again this year?
  4. The report states that “it may become necessary to go to alternate weekly collection if recycling rates continue to plateau and/or the savings identified are not realised” does this two weekly collection refer just to residual waste or would it include two weekly collection of recycling and food waste as well?
  5. How confident are you that the savings forecast on the Your Choice Barnet contract aren’t simply adding to the deficit in The Barnet Group and what safeguards are in place to stop that happening?
  6. Can you clarify how the £300,000 decrease in concessionary fares will be achieved?
  7. Under Central Expenses can you clarify why, in the expenditure breakdown, the current estimate of capital financing for 2017/18 is approximately £11 million less than the original estimate for 2017/18 but that the original estimate for 2018/19 increases by £12.6 million over this year’s current estimate?
  8. Are the efficiency savings on third party contracts identified in the Children’s & Family services budget net or gross of any gainshare payments to Capita?
  9. Given the inadequate OFSTED report rating of Children’s Services and the fact that the original budget was overspent by £6 million to try and help resolve some of the issues identified, is it wise to forecast savings for 2018/19 of £2.1 million on Children’s Family Services for 2018/19?
  10. Why are no financial savings shown against the HB Law service – have they achieved the pinnacle of efficiency?

Friday, 2 February 2018

Barnet Supplier Payments - yet another reason why we need to start planning for change

This has been an eventful week in Barnet. Capita's share price has crashed, with Barnet having to draw up contingency plans in the event of its failure. The same day as the crash, the Audit Committee heard a catalogue of Capita failures.

Today I have published the supplier payments for December 2017. As you can see from the chart below, we are still paying Capita/Re a fortune even though we have made huge advance payments to them on both contracts.

The monthly bill for agency and interim staff is declining slightly but it is still forecast to hit £17.2 million by the year end. With a commissioning council and so many services outsourced it is beyond belief that we are spending more on agency staff now than we were when no services were outsourced. Below are the charts showing the payments to Capita and Re as well as for Interim and Agency staff.

I have had a number of discussions today with people asking whether the contract with Capita can be terminated. I have referred them to the contract (page 167) on the Barnet Council website which seemingly makes it clear that, yes, we can terminate the contract. We would have to pay a fee (which Capita do not want me to see as explained in an earlier blog) but given the massive cost of the current contract that may well be a price worth paying.

What is important now is to start discussing what a redesigned Council could look like and how it could be structured. I had a great discussion with someone who has great experience of the council. They identified what services should be working much more closely together to make them more effective at delivering services (and which would save a significant number of managers). That made me even more convinced than we need to start the process of creating a masterplan for the council and then start bringing service back in house to fit within the new structure.

The message to Barnet residents should be one of hope and the genuine belief that without Capita we can have a better, more efficient council that can deliver the best possible services, cost effectively.

Thursday, 1 February 2018

Capita's problems or a one off opportunity for Barnet

Last night I attended Barnet's Audit committee. It was a catalogue of  Capita failures. Failures to meet the promises made 5 years ago when Barnet decided to appoint this company who promised to deliver services better and cheaper. Last night I said that the council needed to do something now and that doing nothing was not an option. I mused on this further and chatted with people who understand Barnet Council and why the Capita contract has delivered so poorly. The more I talked with them the more I saw Capita's failures in Barnet and their disastrous performance on the stock market as representing a one off window of opportunity for Barnet.

Yesterday I asked for Barnet councillors to start bringing key services such as finance and pensions back in house. Today I am asking for something more radical. We have a window of opportunity to think about how we design a local authority from scratch, a blank sheet of paper. Yes, the council clearly has to deliver a range of specific services but how they are delivered is up for grabs and what other services they provide is up for debate.

Prior to Capita taking over Barnet, there were established customs and practices, physical and organisational structures that restricted how change was implemented. Some aspects of the service were great; remember Barnet was rated a four star council. Other aspects were poor, often restricted by a lack of investment in good technology. We were told that Barnet could not afford to invest in technology and that is what Capita would deliver. Ironically, as soon as Capita were appointed Barnet found the money for investment and gave it to Capita. The services were outsourced but instead of coming up with a radical and bespoke organisational solution we simply transitioned to Capita's established customs and practices, Capita's physical and organisational structures. Is it any better? Well the evidence suggest it is no better at all and in many ways it is much worse. The recent Children's Commissioner's report criticised Barnet for its "Silo Structures" made worse by outsourcing. The report also said that Barnet was process heavy which slowed down decision making. In the review of the Capita joint venture, Re, the report noted, "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".

My attention was drawn recently to how the cost of the commissioning function in the council has grown since the contracts with Capita were signed. Barnet are having to throw more and more resources in to managing the contract with highly paid "strategy staff". The commissioning budget has risen from £8 million to over £20 million in three years yet we still don't seem to have enough staff monitoring the contracts.

So can we start again from scratch; design an organisational structure that reflects Barnet's needs now but with the flexibility to adapt as the role of local authorities change and develop? We can develop a efficient structure that gives councillors and the public a clear joined up view of the council and how it is performing. That might mean some services are outsourced, typically those that are highly specialised and non-core to the running of the council. But they would be outsourced to market leading specialists rather than "we can do it all" suppliers like Capita.

I know some people will say we can't afford it but it is important to distinguish between capital and revenue. Borrowing to invest in services that will save money makes plenty of sense. Indeed Barnet are making many capital investments to save or generate revenue such as the new leisure centres.

It is clear to me that the Capita contract is not performing anyway near to the level we were promised. There are lots of extras we are being charged for. But most importantly Capita and the council do not share common goals. With the problems Capita are experiencing now, that goal divergence is likely to get worse, not better, as pressure increases to improve profitability of its remaining contracts.

The die hard defenders of outsourcing will trot out all the old phrases but my view is they are living with an outdated and broken model. We need fresh thinking and innovative ideas.

If I was leading a party into the forthcoming local elections I would be selling the opportunity to change the way the council is run, to get the best advice for a new and efficient model. A model that suits us, not a remote, corporate organisation going through its own massive restructuring exercise.

That means preparing a masterplan for the council with a phased withdrawal from the Capita contract. Indeed, as one of my fellow bloggers mentioned, Capita might be pleased to seek an exit from the JV contract, especially as it is struggling to deliver the promised returns. Bringing finance back as quickly as possible is essential because without control of finance any other plan will struggle. There will be lots of specific questions like, do we need to bring a call centre back to Barnet? There are plenty of organisations that could help set up a call centre quickly in Barnet staffed by people who are connected with the area, who know what services Barnet provide and have a connection with the area. There are lots of specific questions, but what is essential is to have a vision of what a great council looks like.

We have a window of opportunity. I just hope we have some councillors who have the courage to innovate and deliver something new, efficient, a new council that meets our needs not those of the suppliers.

Monday, 29 January 2018

Six Blogs and a Damning Report - Why we need a change at Barnet Council

Over the last week I have published a series of blogs about the costs of Barnet's contract with Capita.  I am a regular attendee at the Performance & Contract Management Committee meetings where I have consistently raised concerns about the performance of Capita and the costs we are paying. There is an equally consistent approach by Conservative Councillors who always say everything is fine and dandy, which I find both frustrating and worrying given that there is no rigorous challenge.

On Friday we saw the publication of a damning report by the Children's Commissioner for Barnet which you can read here. The background is as follows:

Barnet’s services for children were inspected by Ofsted in April and May 2017. They were found to be inadequate across all reported categories. The inspection raised serious questions surrounding the quality of practice and leadership, including the Borough’s focus on children, its quality assurance systems and the quality of management oversight. The Barnet Safeguarding Children Board (BSCB) was also found to be inadequate. As a result, an independent Children's Commissioner was appointed by the Secretary of State and is required to report to the Minister of State for Children & Families - so pretty serious stuff.

The report looks into the underlying problems that brought about the failure and what barriers are preventing the service from improving quickly. Problems had been identified in 2016 and experts from Essex County Council brought in to advise Barnet but a year later when OFSTED inspected many of the problems still existed.

Identifying why change hadn't been implemented, even though the problems were known, is a key element of this report. It is pretty damning with some of the key headlines as follows:

  • The lack of ‘turn-around’ leadership experience and expertise presents the clearest barrier to improvement in Barnet. It has led to a lack of clarity, inconsistency and poor engagement in terms of setting expectations around practice standards and protocols across children's social care services.
  • A robust, inclusive Improvement Board was needed, supported by a structure which ensures actions are taken and monitored. The Improvement Board in operation was an internal Board, chaired by the Chief Executive which met too infrequently to impact on practice and received over-optimistic and unspecific reports on progress.
  • Silo working was pervasive throughout the Council. While lack of ‘join up’ is often seen in large organisations, the silos found in Barnet at the corporate level mitigated against the potential of SCB to make a strong contribution to support the improvement for children. Equally, silos across children’s services and partners more generally, including between safeguarding and education services, did not maximise improvement capacity.
  • There are some cultural issues to be addressed at the corporate level which may relate to the legacy of the commissioning/delivery split. Because the focus of SCB had become higher level transformational and strategic change issues, day to day ‘business as usual’ matters began to be seen as less important and were not normally discussed at top level.
  • The Council is a process-heavy organisation with multiple approval requirements for even fairly straightforward matters. This leads to frustrations and delays which mitigate against establishing a nimble and creative improvement culture.
  • While many within the service were acutely aware of the failings described by Ofsted, both before and after the inspection, there was a general lack of in-depth understanding elsewhere. Prior to the inspection, this was exacerbated by over-optimistic reporting of progress, including to the Improvement Board, and by inaccurate information arising from audits and quality assurance processes.
  • While there is a clear understanding about the importance of using performance and management information to drive improvement and monitor impact for children, systems and approaches are poor. This represents a distinct barrier to further improvement and is also a contributory factor as to why the impact of improvement activity since 2016 has not been sufficient.
  • There are significant amounts of data and information about performance within the borough but analysis and use of that data and information are under-developed.
  • Monitoring has tended to focus on quantitative indicators without significant reference to the quality of practice and the impact on children.
  • There is a serious disconnect between senior managers in children's social care and the front line. This is a significant barrier to improvement and also a core reason for the lack of impact of improvement efforts so far.
  • The lack of purposeful and systematic engagement with staff in Barnet leads to a lack of clarity and understanding about what is required of them. Equally, staff do not feel that they have the opportunity to contribute their expertise to developments – they are ‘receivers’ of change rather than agents of change. Many staff report frustration about the lack of follow-up when suggestions or requests are made.
  • It became clear that governance in Barnet has not been sufficiently focused on safeguarding children. Most members did not have a good understanding of safeguarding issues; of safeguarding work in the borough; of the needs of vulnerable children in the borough; and, significantly, of the problems growing in the service and the implications for children of the findings highlighted in the recent Ofsted inspection.
  • Following the serious issues raised in the Essex report in March 2016, bilateral discussions were had between the DCS and individual members. The Leader and Lead member (Chair of CELS) were well briefed by the DCS on concerns raised, and the restructuring took place to give the DCS full responsibility and accountability for the service, as outlined in paragraph 2.6. However, the CELS Committee did not receive any reports relating to concerns highlighted in the Essex work.
  • There are a variety of issues and questions arising from this unsatisfactory history. They include:
  1. whether the remit of the CELS Committee is too broad. There is no doubt that the Committee had full agendas during the period concerned, taking controversial items including on libraries, school funding and school places;
  2. whether the split is appropriate between CELS as a ‘theme’ Committee tasked with looking at strategy, ‘transformation’ and policy but not performance, and PCM as the Committee that looks at performance across the Council. Given that PCM’s prime focus has generally been Barnet’s large outsourced contracts, there is a question over whether that Committee has the capacity or capability to scrutinise and monitor complex children’s services effectively;
  3. why the culture in Barnet leads to over-optimistic and over-reassuring reporting to members. This may be due to factors such as the marginal nature of the borough’s politics; the concern to maintain Barnet’s reputation; custom and practice; and/or a misplaced concern to make serious safeguarding issues public prior to an Ofsted inspection.

The Director for Social Care and Education at Essex County Council, will remain the Chair of the London Borough of Barnet’s Improvement Board, and report progress on a regular basis to the DfE. Barnet cannot be trusted to fulfil this key role.

The last three points are indicative of wider problems at Barnet; is the committee structure appropriate to adequately scrutinise the performance of the Council? The split between the theme committees and the performance committee is an issue I have highlighted repeatedly. It is akin to two people driving a car, one holding the steering wheel and someone else operating the accelerator and brakes. Critically, the issue of over optimistic reporting to save face is something I experience regularly in Barnet. This all has to end if we are not to see similar problems arising in other parts of the council.

We need a change of administration and a complete rethink on the way the council is run.