The Tail Wagging the Dog: Capita and Barnet

A Joint Blog from the Barnet Bloggers

Barnet's Conservative led administration has never been so divided.

Since the local elections last May, new members of the Tory group have been confronted with the legacy of their longer serving colleagues’ failure in office: the crisis over the Capita contracts, a massive budget deficit, and the exposure of fraud by a Capita manager, enabled by a failure to put in place any adequate system of financial controls.

Members of the previous administration appear not to have grasped the seriousness of the situation, or at least are reluctant to acknowledge the extent of the problems facing this borough.

After receiving payment of a paltry £4 million from Capita in ‘compensation’, Tory councillors have now voted to delay any immediate severance of ties, in favour of a long drawn out process of assessment, during which time Capita will continue its contractual partnership with this borough, and our services will continue to be left in their control.

We believe this is quite wrong, and, it seems, so do some Tory members.

At last week's Audit meeting, for example, it was revealed that BDO, the authority's external auditors, are now obliged to visit Capita's offices in Darlington, where their administration of Barnet's Local Government Pension Scheme is based. This extra work will incur an additional charge on top of the audit fee. Capita continue to administer this scheme, despite very serious concerns about standards of performance.

Also at last week's Audit meeting, there was discussion about why new systems that should have been implemented following the £2 million fraud by a Capita employee were not in use.

Grant Thornton, Internal Audit, Senior Council Officers and Capita’s Partnership Manager in Barnet had all agreed these control systems should be implemented immediately. A Capita employee, however, based in Chichester, where these payments are handled, had taken it upon themselves not to implement this critical system, a failing only identified when Internal Audit carried out a follow up check.

At least one of the Tory members had grave misgivings about the continuing partnership with Capita.

Councillor for Hale, Laithe Jajeh, said at the meeting, “I find it really worrying that someone from Capita (can do this)..it’s almost the tail wagging the dog …’ He also commented on twitter that assurance from Capita on implementation of Grant Thorntons’ recommendations was ‘not reassuring whatsoever …’

He added that Capita’s performance was not good enough and that he was not confident that promised dates for completion would be met.

Implementation of GT recommendation 15 was not completed due to a Capita employee instructing its’ staff not to undertake the instruction to do so from Cllrs, officers etc. As I put it to the Chair this evening, the tail is wagging the dog. Absolutely not good enough from Capita

— Laithe jajeh (@Laithe_Jajeh) January 31, 2019

At a further point in the audit meeting it was identified that 51% of the internal audit recommendations were not completed, the majority of which were the responsibility of Capita. Labour councillor Alison Moore suggested that such a high level of actions not implemented was a sign of an unhealthy organisation. The Head of Assurance said it was a very serious matter from the officers’ perspective.

The Committee Chairman, however, wanted to take a ‘positive’ view of the situation and suggested that we do not look at criticisms. There was a clear consensus, however, that Councillors, both Conservative and Labour, were not satisfied.

At last there is an acknowledgement, at least from councillors who were not involved with the original outsourcing exercise, that the partnership with Capita may not be the great panacea we were promised, under the lure of ‘Better services for less money’.

We are facing a review of the contract in February, yet there is a very real concern that decisions have already been made.

The dispersed structure of the contract, with Capita offices situated all around the country, makes it hard to implement change, hard to control, and hard to monitor. Different reporting lines in different organisations mean that it is difficult to pin down responsibility for actions or inaction. This exacerbates and complicates the failure in accountability between the management of local services, and the local community itself.

We call upon the council to make the outsourcing review as open and unbiased as possible, held in public, with full and meaningful consultation with residents - and with key roles for some of the new Conservative members such as Cllr Jajeh, and Cllr Prager, who seem to have a more clear sighted view of Capita’s performance - and we urge all members to look at how quickly services can be brought back to Barnet, where they can be properly managed, monitored and controlled. 

Derek Dishman

John Dix

Theresa Musgrove

Roger Tichborne

Two Nights, Two Committees, Two Fingers to Scrutiny - Part 2

If you wanted to witness mindless political dogma at work you should have attended the Children's Education & Library (CEL's) committee last Wednesday.

This committee is chaired by Cllr Thompstone and on this occasion was supported by a phalanx of consultants and officers.

Of particular interest to me is the plan to outsource the Educational Services, including the in house school meals service. To set it in some context Barnet’s Catering Service provides approximately 3.23 million primary schools meals each year and approximately 1.14 million secondary meals.  The service provides freshly prepared meals cooked mainly on site from fresh ingredients in accordance with Government Food Standards. The service also holds the Soil Association Food for Life Silver 
Catering Mark which means farm assured meat, free range eggs and some organic foods. It also makes an annual operating profit of £241,770.

I have blogged about this previously here and here and in summary the situation is as follows:

• Barnet have tendered a contract for which there is only one bidder;
• Barnet didn't know what margin they would achieve on the largest component of the business and are dependent on the sole bidder telling them;
• The company Barnet are in dialogue with don't actually provide the largest component of the service being tendered;
• Capita, who run the two large outsourcing contracts and have the best opportunity for economies of scale, have walked away, which may indicate that the contract isn't viable.

When the CSG and DRS contracts were tendered there was a business case which summarised what Capita had offered, including how much investment they were going to make (which never actually happened) and the net revenue they would generate by service line. This time we are not allowed to know. In fact we aren't even allowed to know what the potential savings or costs are in the last 3 years of the contract. All we are allowed to know is whether or not the contract meets the medium term financial saving target of £5.4 million between now and 2020. We absolutely aren't allowed to know how that will be achieved.

Cllr Thompstone announced that there were two people who had requested to speak. Up pop two head teachers extolling the virtues of Cambridge Education and how they had been consulted during the tender process. One was head of an Academy and used a contract caterer that was part of the academy package. Cllr Thompstone then announced that that was the end of public speakers. No, not again! This is not the first time that someone has accidentally forgotten to register my request to speak. Cllr Thompstone in an act of "kindness" said that I could ask my questions and maybe I could cover my point then. Luckily I am not a shrinking violet and told Cllr Thompstone that I had requested to speak and ask questions and that I intended to do both. Nervous huffing and puffing and then surprise surprise an officer discovers that, yes, I had requested to speak. It's not that I'm paranoid but these antics to try and stop me speaking are wearing a bit thin.

I gave my speech which I have set out at the end of this post. It made it clear that while I have no objection to outsourcing the majority of education services (although I think it is a somewhat pointless exercise as schools are free to purchase services from Cambridge Education already). Any questions from committee members? No not one.

I then had the opportunity to ask supplementary questions to the ones submitted and largely unanswered by officers. You can see the questions and the answers provided here . Critically the responses tell us that:

• There was no catering expert on the evaluation panel, even though the school meals service makes up 77% of the current revenue.
• Details of the last 3 years of the contract are secret and the public have no right to know the details.
• We have no right to know what upfront investment is being made, how much revenue the company will generate, or where savings will be made.
• We know that there is a gainshare clause on the contract but we are not allowed to know the upside of the contract and therefore how much gainshare is up for grabs.
• The council will have no contractual relationship with the company supplying the catering service.

The topic was then opened up to councillors. A few questions from conservative councillors. One that particularly alarmed me was from Cllr Alison Cornelius asking whether there have been any problems with the proposed catering subcontractor. Well Cllr Cornelius why didn't you Google that before the meeting; did you ask anyone if the caterer serviced any schools in Barnet and why, for example, they lost the contract for school meals at a school in North Finchley in July this year? 

Don't get me wrong, I have no specific problem with ISS. I am sure they are a perfectly good caterer. My issue is that this £7.2 million a year contract has simply been handed to a company without any real competitive process - the decision to use ISS rests entirely with Cambridge Education and not Barnet Council. 

All of the important financial details, I was told are in a separate secret report for Cllrs' eyes only so I was expecting that at some point during the meeting the committee would move into private session and interrogate the details. However, Cllr Hutton asked if the contract could be amended to take school meals out of the contract package. No absolutely not said the lady from Capita. Cllr Thompstone said that if Cllr Hutton wanted to propose an amendment if would have to be to the recommendation of acceptance of the report. A form of words was agreed and then it was put straight to the vote. Defeated on party lines 5 votes to 4 and that was the end of it. No questioning of figures in the secret report, no challenge, no questioning. Frankly every single Cllr should be utterly ashamed of their performance. Why bother having a committee when nobody challenges or questions what officers are doing in their name. But this is Barnet and that is the norm.

My speech to the CELS committee:

Tonight you’re being asked to approve a tender which is fundamentally flawed. I want to make it clear from the outset that I am not opposed to the outsourcing of the Education services but I am concerned about the subcontracting of the school meals service. Barnet has a school meals service providing 4.3 million meals a year, which is successful, has won external work and is profitable. It was originally included in this business case to sweeten the deal for the other services as it currently contributes 78% of the total revenue.

You started with six companies and you’ve ended up with just one bid from a company that does not operate a catering service. Catering will be subcontracted to ISS with whom Barnet council will have no contractual relationship. I’ve asked how much additional revenue ISS are promising to  generate but I am not allowed to know that. Bear in mind that the key driver for including catering in this contract was forecast £963,000 of net profit it would generate.

If this project was about efficiency and cost effectiveness, the logical option would have been to market test the catering service separately where there is a very healthy competitive market.

However I am sure you are also aware that in the Department of Education Survey from January 2015  it noted that school meal prices charged by private catering companies are on average 6.5% higher than in house or local authority catering services.

You had no catering expert on the tender evaluation panel for a contract that may last up to 10 years so I hope you have read appendix B thoroughly. Unlike the CSG and Re contracts where there was a reasonable amount of disclosure this will receive no public scrutiny and the assumption will be that you have read and understood the implications of Appendix B. For example  are you clear on the VAT status of this contract bearing in mind it became a significant issue in the Your Choice contract.

I’m concerned that actually the biggest saving here is the removal of Barnet’s central overhead charges and it’s debatable whether that is a true cashable saving.

I ask you to reject the contract as proposed and to withdraw the school meals service from the contract unless you are entirely satisfied it will deliver savings identified without affecting the quality of the service or cost schools more money. And if you really feel it will benefit the service carry out a separate school meals market testing exercise. In that way you will get a much greater level on transparency on what this service is costing and how realistic the savings really are.

Tail wags dog in Barnet

We are only a few days in to the contract with capita and already decisions are being made because of the contractual relationship.  At the Planning & Environment Committee next week they are discussing the changes made to the planning application process.

To set this in some context, previously there were three planning committees which were delineated on parliamentary constituency boundaries, Chipping Barnet, Finchley and Golders Green and Hendon. That worked fine until some bright spark said let's cut costs and reduce the number of committees down to two. As a results committee meetings were stuffed and often overran. Rather than go back to three committees they decided to make it harder for people to object so that more applications could be dealt with by officers under delegated powers. Instead of three objections being required to trigger an application to be considered at committee, it now requires five objections.  These changes were made subject to a review and it is this review that is being considered next Wednesday.

In the papers they state that by maintaining this change it will save £60,000 a year. However I would point out that due national planning fee increases and some increase in volume of applications the Council has already forecast an increase in INCOME from planning of £1.7 million over the next ten year. I would have thought that maybe we could afford a better system that we had previously.

But here is the rub. At paragraph 9.9 in the report it says:

"The Planning Service forms part of the Development Regulatory Service (DRS) which will shortly be an outsourced delivery unit in the commissioning council. The successful bidder is fully aware that the costs associated with processing planning applications dealt with under delegated powers are significantly less than those costs associated with applications presented to Planning Committees. If the Committee did not agree to maintain current delegated powers then the successful bidder could have a case to ask the council to meet those extra costs".

Hang on a minute. What were all those statements about guarantees we were given. This is not about what is best for residents but what is best for Capita. I said this would happen but to happen so quickly is quite a shock. This is now the new world we live in where everything is considered not by its merits but by the contractual handcuffs of the contract. Welcome to the London Borough of Capita.