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.