Ending the Capita contracts - time is running out

Labour won control of Barnet last week with a large majority. They will be under serious pressure to make lots of changes to the way the council is run but I would plead that the two Capita contracts should be a top priority.

As I have said for the last 9 years, the two Capita contracts do no favours for Barnet residents. The catalogue of failure has been well documented on this blog, and as part of the review that has been dragged out over the last two years, it is evident that bringing services back in house can either directly save money or provide a better, more competent, service. 

The looming problem Barnet Labour Cllrs face is that, because the previous regime delayed the decision on whether or not to extend the contracts until after the election, it has left just 3 months to take that decision or face having to extend the contracts for at least another year simply because the transition arrangements haven't been put in place.

Both contracts expire on 5th August 2023 but there are specific clauses which relate to what has to take place to meet that expiry date. 

In the CSG contract it states at 47.3.7 that: 

On or before a date falling no later than twelve (12) months prior to the Expiry Date (where this Agreement expires by effluxion of time) or during the period from service of any Termination Notice until the Termination Date of this Agreement, the Authority shall notify the Service Provider in writing whether it wishes to retender the provision of the Services.

It then goes on to clarify at 47.3.9 that:

If the Authority does not wish to retender the Services then the Authority will indicate which Service Provider Exclusive Assets and Service Provider Traded Service Assets (or part of the Assets) shall transfer to the Authority on the Expiry Date or Termination Date in accordance with clause 5 (Assets and Equipment) and the Service Provider shall promptly undertake all necessary actions by the Expiry Date or Termination Date (as the case may be) including any further actions required pursuant to clause 5 (Assets and Equipment).

Probably the most critical element is the transfer of data and the transitioning of the IT system. When Southampton Council took the Capita contract back in house it took them 12 months to set up their own systems and transfer all of the data.

In the CSG contract it notes at 47.3.2 that 

The Service Provider shall (subject to any condition imposed on the Service Provider or any Sub-Contractor by Legislation):

(d) no later than six (6) months and no earlier than twelve (12) months before the Expiry Date, supply to the Authority within twenty (20) Business Days of the relevant date or request all information reasonably required by the Authority to carry out the Services (including but not limited to information (subject to the DPA) referred to in Schedule 33 (TUPE Information for Retendering) in relation to employment of all employees of the Service Provider or any sub-contractor (including the Sub- Contractors) employed in the provision of the Services and information relating to the Assets and Authority Assets) and the Service Provider warrants that at the point when given and, to the best of its knowledge and belief, such information is accurate in all material respects.

At 47.4.7 Surveys on Expiry or Termination - Final Survey, it states:

twelve (12) months prior to the Expiry Date or during any period leading up to the Termination Date, the Authority shall be entitled to procure the carrying out by a suitably qualified independent surveyor (not being an employee of the Authority) of a final survey of the Assets and Authority Assets to assess whether they have been and are being maintained by the Service Provider in accordance with its obligations under clause 6.1 (Maintenance).

At 47.4.5 Retention Fund it states that:

If the Service Provider has been notified under clause 47.4.3 (Results of Survey) that rectification and/or maintenance work is required, twelve (12) months prior to the Expiry Date or in the period prior to the Termination Date the Authority shall (to the extent that the Outstanding Work has not been carried out in the interim) deduct the costs of that work as quantified by that survey referred to in clause 47.4.1 (Final Survey) from the next following instalment (or, if the amount of such instalment is insufficient, the next instalments as necessary) of the Periodic Service Payment and pay such amount into an interest bearing account (the Retention Fund Account) until this Agreement has expired or terminated (subject to clause 47.4.6 (Costs).

At 7.3.2 it notes that: 

Six (6) months (or such other period agreed to by the parties acting reasonably) prior to the Termination Date or Expiry Date (as applicable) the parties shall agree:

(a) which of the contracts used in the provision of the Services shall transfer (either by novation or other mechanism) to the Authority or Future Service Provider (the Transferring Contracts);

(b) the costs and a reconciliation of any payments made in advance or arrears in respect of the Transferring Contracts on the basis that the Service Provider shall be responsible for all costs and charges which arise prior to the Termination Date and/or Expiry Date (as applicable) and the Authority shall be responsible for all costs and charges which arise after the Termination Date and/or Expiry Date (as applicable).

(c) the process and timetable for transfer and handover of management responsibilities in respect of the Transferring Contracts together with the provision of relevant documentation and information in respect of issues such as performance and payments to date.

This will require a lot of pre-planning and that needs to start very soon so that by 6 months before expiry you know exactly which contracts you want to retain.

The Re Contract is a joint venture and as such the unwinding process is more complex. In that contract it states at clause 2.3 that if Barnet wish to extend the contract by 5 years then that notice has to be provide 18 months before the expiry of the contract. This is repeated at clause 55.3.6. I just hope that the previous regime did not provided that notice.  

At 27.1.1 it states that:

Subject to clause 29.2.4 and 29.2.5 in the event of termination or expiry of this Agreement the Authority shall have the option exercisable within six (6) months of the Termination Date or Expiry Date to:

 a) purchase from the Service Provider at their Net Book Value any or all of the Exclusive Asset(s), unless:

 i. the cost of any such Exclusive Asset(s) has been fully paid for through the Periodic Service Payment or otherwise amortised at the time of expiry or termination of this Agreement; or

 ii. any such Exclusive Asset(s) were transferred and delivered to the Service · Provider as Initial Transferring Assets in accordance  with clause 29.2, and in which case such Exclusive Asset(s) shall be transferred to the Authority at nil cost; and

 iii. the cost of any such Exclusive Asset(s) has been partly paid for through the Periodic Service Payment or otherwise partly amortised at  the  Expiry Date or Termination Date then a proportional part payment shall be deducted from the Net Book Value;

 (b) receive (or a nominated party receives) a non-exclusive licence on reasonable commercial terms and at a reasonable commercial rental for the non-exclusive use of the Shared Assets (or a part thereof as nominated by the Authority);

At clause 30.8.1 the final survey (similar to the CSG contract) can be carried out 18 months prior to the expiry date and at 30.8.5, the Retention Fund, as with the CSG contract should be identified 12 months prior to the expiry date. 

In each contract there is an entire schedule  (Schedule 17 in the Re Contract and Schedule 18 in the CSG Contract) specifically relating to the exit arrangement and includes, for example, the requirement for Barnet to appoint an 'Exit Manager'. Capita have to have an exit plan already prepared which they have to update annually. It will be critical to see if that plan is up to date and the extent to which they have assumed the contract will be extended.

My biggest fear at the minute is that the new Labour regime will be told by officers that this fall into the "too difficult" category and that the proposals identified by the previous regime should be enacted. That would be a disaster, would limit what changes could be made to the way the council is structured and critically, would signal that Officers make the key policy decision, not the elected members. Time is short to take decisions, because the last scheduled full council meeting before 5 August is on 26 July, just 10 weeks from now. Please don't waste that time otherwise we will be stuck with Capita for years to come.

Please read this before you vote

 It is the local election on Thursday, the one and only time in the four year cycle when the council actually have to pay attention to the views of residents through the ballot box. 

There is a lot of spin at this time but I just want to look back over the last four years since the last election and see what has changed for the better or worse. 

Council Tax has risen significantly over the last 5 years and no matter what Conservative councillors may say, the council tax has risen every year, including this year - so no, not a freeze. Set out below is a chart showing the increase year on year. (This excludes the amount paid to the GLA)

In addition, if you have a green bin, you now have to pay an extra £70 a year to have that collected, a clever way to avoid showing the real increase in council tax. Now don't get me wrong, Barnet had no option but to increase council tax because previously they had frozen council tax and in 2014 actually cut council tax by 1% just before the 2014 election. What irks me is the way council taxes went up by 3.99% and 4.99% in the last two years so that, in an election year, the increase can be limited to 1% while saying it is frozen.

Bin Collection is also a matter the local Conservatives are keen to focus on. They promised they would keep weekly bin collections in 2018 only to withdraw the brown bin food waste collection weeks after the election and two years later introduced the £70 green bin charge. Barnet is the only London borough not to have a dedicated food waste collection. Instead of sending the waste for anaerobic digestion which is environmentally friendly, generates electricity from the gas produced and provides a valuable fertiliser as a by-product, we send it to the Edmonton to be burned in the incinerator. Interestingly, there was a business case developed in 2018 by council officers to move to fortnightly general waste collections which, with a retained weekly food waste  and recycling collection, could not only have saved more than £900,000 a year, but would have helped to push up recycling rates by forcing people to separate out their waste more effectively. Political ideology won the day at the cost to Barnet residents and the environment.

Transparency is another thing which has deteriorated over the last four years. In 2019 Barnet Conservatives introduced new rules which stopped Barnet residents from addressing committees in person and dramatically limited the number of questions that could be asked. It was claimed that this would save £42,000 a year of officer time answering questions posed by residents at committee meetings. In reality it was simply to stop residents asking serious questions about the way the council was being run. There was always a time limit of 30 minutes in any committee meeting for residents' questions and speeches, speeches were limited to 3 minutes and questions were taken turn and turn about so no one person could take up all of the time with their questions. Occasionally, not all of the questions were addressed in the 30 minute slot, but at least there was a written record of the council's response. Now, you are not allowed to address the committee in person or be questioned by committee members, you get one question per agenda item and no more than two people can ask a question about each agenda item. When you are dealing with the annual budget, one question simply isn't enough. For example, at the Policy & Resources Committee in February this year, the papers for the budget agenda item comprised 386 pages including, changes to charges levied on residents, debt management policy, capital strategy, risk register, housing revenue account, medium term financial strategy, to name but a few, yet residents are allowed to ask just one question. I suspect that the real reason for gagging residents was not to save an alleged £42,000 from a council budget of  £344 million, but to stop a well informed and curious resident base from asking difficult and inconvenient questions.

We have also seen other changes on transparency such as the removal of senior officer salary data. We used to get a detailed breakdown of how much all officer paid over £55,000 a year were paid. Below is a graph I used to produce showing how much each officer was paid - I limited the range to those officers paid more than an MP and I never published the officers' names even though the data was available.

The data available then changed so this is all that was published.

Not only was the number of posts listed dramatically reduced but all the historical data was removed from the council's website. I suspect this was because there was a level of transparency which allowed residents to see the increases received by some council officers when their posts were regraded or when they received above inflation increases. No data has been published on the Council's website since September 2019.

Performance of the Capita contract has also suffered from a lack of transparency. Historically, a table known as "Benefits Realisation" was provided for the Capita CSG contract which showed how much (or little) the Capita contract had actually saved. When it became clear it wasn't saving anywhere near what we had been originally been told, they stopped publishing it. Data on Capita's performance at answering the phone to Barnet residents also stopped being published until just recently, and after much pestering from me, as it showed how poor the performance actually was. Having changed the targets twice to make them easier to meet, the latest data shows Capita still aren't answering the phone within the target time of 2 minutes and the data set remains incomplete.

Minutes of the Strategic Commission Board (Council Management Team) used to be published. They were not normally that informative although from time to time they included real insight into the way the council operates. In one set one minutes from February 2018 but published after the election, it highlights a practice known as 'telephony service degradation'. I suspect it was linked to an issue I  raised as part of the inspection of accounts which highlighted that if calls to Barnet exceeded a certain threshold, Capita were able to charge extra and in the financial year 2017/18 that amounted to an extra charge of £247,000. As a way to generate savings, the proposal was to introduce  'telephony service degradation' i.e. make the service worse so as to reduce the number of calls being answered and thereby cut the extra charges being made by Capita. Barnet stopped publishing these meeting minutes before the start of the pandemic and have yet to restart their publication.

Development is another contentious issue in Barnet. Conservatives are saying that they are opposed to over development but if you look at the huge amount of development along the A5 that clearly does not apply there. I know some of the people impacted by the Sainsburys development at the Hyde where Barnet pushed through a development of 1,309 flats in blocks up to 28 storeys even though it sits outside the agreed development area and is not in a town centre. All of their views were ignored including the home owners which will be very badly hit by loss of light. We now have a series of developments which will create 2,500 new flats on a 400 metre stretch of the A5 but without the infrastructure to support anywhere between 5,000 and 7,000 new residents.  The massive development at Homebase in Cricklewood was another example where Conservative councillors were saying what an awful scheme it was yet voted for its approval. Yes, we need new homes especially for families, but what we are getting is a mass of small 1 and 2 bed flats which remain out of reach for most of the people who actually need them.

Barnet became addicted to a central government grant, New Homes Bonus, and in 2019 were forecasting an average of £10.8 million per annum. The more homes you built above a threshold, the more New Homes Bonus you received. It was a crude measure to boost housing builds but Barnet saw it as a useful revenue stream and so were incentivised to build more and more homes, typically 1 and 2 bed flats even though the top priority is for three bed homes for families. However, each year since 2019, that has been adjusted down so that next year we are now forecasting only £4.8million compared to an original estimate of £10.9 million. I raised this issue in 2019 of how reliable New Homes Bonus payments would be, but that was dismissed as pessimistic. It is exactly for these reason that residents need to be questioning the council and why gagging residents is so short-sighted.

The most recent example of Barnet's planning committee not listening to local residents is the Hendon Hub, a massive development at The Burroughs in Hendon which will destroy the beautiful, albeit downsized, Hendon library and a scheme which Historic England did not support. Local residents have launched a Judicial Review. You can read more about the Hendon Hub here.

This leads into our Library service and the way it has been decimated over the last five years. We were told that this was all about saving money and that people didn't really need libraries in an age of kindles, but now more than ever, when people are choosing whether to eat or heat, monthly broadband charges look like a nicety, not a necessity. Libraries were great places for people who didn't have internet access to work, study, apply for jobs, search out information and carry out other day to day functions, not just about somewhere to read and borrow books. In New Barnet, when the writing was on the wall for the old East Barnet Library (2017) I asked if it could be relocated in the proposed new leisure centre which would allow it to stay open all the hours the leisure centre was open. It was still too small but at least if it was open 90 hours a week it would allow people to access books, study space and the library computers. The reality is that we have a library located within a leisure centre open 90 hours a week, with a manned reception right next to the library area, yet the library is only open for just 17 hours per week. With the prospect of  thousand of people moving into New Barnet in the assortment of new developments, a tiny room open just 17 hours a week does not seem like a library we should expect. If you live in New Barnet you will get a chance to visit it on polling day as it is the local polling station - however you will not be able to use the Library - voting only.

Care Homes is another area which Barnet outsourced and which has proved to be a disaster. Apthorp Care Home was outsourced to Catalyst and run by another company Fremantle. You can read all the details here but the net result is the care home was run into the ground, the care offered was appalling and rated inadequate by the CQC. There was a massive backlog of repairs which meant living conditions were unacceptable. Fremantle handed back the running of the home to Barnet in 2019 and in 2021 Barnet decided that the backlog of maintenance was so bad that they would close the home. Now this isn't an old home, it was only opened in the early 2000's. I asked about monitoring in the period before the damning CQC report and it was clear that Barnet did not keep a log of all the monitoring visits nor was there a sanctions or penalty regime in place to make the provider improve. They outsourced the care of our elderly family and friends and did not do enough to ensure their care was safe and secure, something which is unforgivable.

Capita contract is the other issue that remains a running sore in Barnet. In 2018, after the election we told about a massive fraud carried out by a member of Capita's staff, stealing over £2 million in 62 separate transactions over a period of 17 months in 2016 and 2017. The fraud went undiscovered and only came to light after the fraudster's bank alerted Barnet Council to the potential problem. Grant Thornton were brought in to see how on earth such a massive fraud could take place and their findings showed fundamental weakness in the Capita systems and, that " there has also been insufficiently close scrutiny and client side management on the part of the Council and the Chief Officers coupled with an over reliance on the limited scope and frequency of work carried out by the Internal Audit service, to highlight issues. This is likely to have contributed to the lack of focus on effective controls". 

This was followed in 2019 by another fraud in the Capita run Pensions admin department, this time  seven different payments for a total of just over £70,000. Yet again Capita systems were found to be wanting. 

Set out below is the current cost of the Capita contract and shows that so far we have paid Capita £586 million, £225 million more than the contracted sum. It is also important to understand that Barnet have already taken back a number of services including Finance and HR which were in the original contracted sum so, in reality, we are paying even more than is shown.

Following the major fraud, the finance function along with HR was brought back in house and Barnet has been discussing what elements will be returned to the council ever since. We still do not have a definitive list of which council services that will be retained by Capita and we won't get a decision until after the election even though this should have been decided more than two years ago. In 2021 the review of Capita services was accompanied by a “Market Insights” report prepared by Grant Thornton in which the Executive Summary opens with the statement:

“Historically procurement has been ideologically driven and highly political”

 It also goes on to say:

“The gap between cost and efficiency for delivery between the public and private sector has been significantly squeezed over the last decade as a result of market pressures. This means that outsourcing is not always the most cost effective option by default”

I think this first statement sums up so much about the way Barnet Council has been run, ideologically driven and highly political. 

So when you are thinking about which way to vote on Thursday, ask yourself if you want another four years of the same or whether you think there is a better way to run Barnet. Whatever way you vote just please make sure you use your vote, as it will be the only way to show your views and to get politicians to listen for the next four years.