Sunday, 1 July 2018

Are we on the brink of victory or will it be a missed opportunity - The future of Capita in Barnet

On Friday, Barnet made an admission, a big admission; an admission that Capita is not delivering for Barnet. For me that comes as no surprise. I have been concerned about the scale and complexity of this contract since 2011 when the first clear contractual details emerged.
Sadly they are leaving a number of services with Capita that are either; under-performing; costing a fortune; or where Capita add little or no value. 

Set out below are a few examples of why they are mistaken in leaving these services with Capita.

In terms of procurement, Barnet will have to pay Capita £14.3 million over the next 5 years in “Gainshare” where they get a share of any savings, yet most of the “savings” could have been secured through standard framework contracts available to all local authorities. In addition, some savings are calculated against a budget. Imaging walking into a shop to buy a new vacuum cleaner. The shop keeper says "what's your budget" and you say "£200". The shopkeeper offers you a vacuum cleaner priced at £100. "There you go", says the shopkeeper "that will be £133".  But it only cost £100. "Ah yes", says the shopkeeper "but your budget was £200. I saved you £100 so I'm entitled to a third of the saving plus the cost of the cleaner". I know that sounds nonsensical but I have an almost identical example of this sharp practice from last year's Capita invoices but sadly the sums involved were significantly greater.

This department has had significant problems. In terms of "transactional services" I am not sure what they mean precisely but if you look at the last audit report accounts payable, run by Capita received only limited assurance (which is poor) with problems in
  • "Potential Duplicate payments (high risk) – Control design"
  • "BACs Reconciliation (high risk) – Control operating effectiveness"
  • "Policies, Procedures and Process notes (medium risk) – Control design"
Revs & Bens:
Barnet have been charged an additional £521,000  in the last two years for the “extra caseload” in Revenue & Benefits. That’s on top of the core fee we already pay. What you also need to recall was that back in 2012 the in-house Revs & Bens team were rated the second highest performing in London as rated by the DWP.

This area has had on going problems and it has been recognised that the Capita Integra system has significant problems. Prior to Capita, the council had invested in SAP a sophisticated system that integrates many different functions within one system and is used by some of the very largest organisations - expensive but good.

Last year we were charged an extra £189,823 for printing - that is on top of the core fee.

HR Payroll:
There have been lost of errors with the payroll. In 2016/17 Capita had to repay £187,630 in service credits (a sort of fine) specifically for failings in payroll accuracy.

Pensions Administration:
There have been repeated problems with Pensions administration which culminated last year in Barnet being fined by the Pensions Regulator for the failings in pension administration. The Pensions Board have raised serious concerns about Pensions Administration.

Customer Service:
On customer service Capita charged Barnet £416,000 last year for “excess customer service volume”.  Capita set a baseline figure in the contract and anything over that we get charged extra. There is currently a plan currently to try and get these volumes down by cutting Face to Face services and to create "savings opportunities from telephony service degradation". That is something I find shocking but it shows how the tightly drawn contract with Capita forces these bizarre actions to get the extra costs down.

Planning and Planning Enforcement:
This is an area where so many residents are unhappy especially as Re not only assess planning applications but also generate income from planning advice. Enforcement has been very poor although that is now receiving close attention. When I attended the Re four year review almost every representation from members of the public were complaints about Planning or Planning enforcement.

Licensing also creates potential conflicts of interest and I saw a case recently where licensing had earned a fee to advise a license applicant but Environmental Health, another part of Re were opposing the application. As for Environmental Health and Trading Standards my view is that these are well outside the core skills of Capita. Former Barnet employees brought the skills, they do a good job so why pay a fee to Capita for no real added value.

So given all that information I am at a loss why Barnet are content to leave all these services with Capita. 

Over the next few days I will set out why taking a much more strategic view as to how the services could be restructured  would not only save money but could also deliver a better service for residents.

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