Tuesday 23 July 2019

Not good enough - the verdict from Barnet's Audit Committee

Barnet's Internal Auditor has given the council a "Limited Assurance" rating for the second year running, something which was discussed at last week's Audit Committee. We had a new chairman, Cllr Rohit Grover. I have never seen him at an Audit Committee before but he assured members that he had listened to the tapes of previous meetings and was aware of what had been discussed.

We had the 30 minutes of comments and questions from myself and @BrokenBarnet.  you can read the questions here. One of @BrokenBarnet's questions was linked to the limited assurance rating given to the Capita run Pensions Administration  and related to an error in the  qualification age of Barnet pensioners.  The response to the question was that following a review it was found that 1,880 members had an incorrect normal retirement age. Now this represents nearly 20% of the total pension membership and could have financial consequences on the pension fund. The records were amended on 11 April but we were told that on 1 April that there were only 953 live errors. This is an issue that was subsequently picked up at the Pension Board and raises serious questions about whether Capita have really got to the bottom of the data quality problems.

The speech I gave is at the bottom of this blog but I focused on the Code of Governance and how the culture of the council seems to have a blindspot when it comes to scrutiny and challenge of Capita, a theme that recurred throughout the three hours of the meeting.

When discussing the Chief Executive's report Cllr Arjun Mittra questioned the change in public participation rules that will be ratified by the council on 30 July and asked the External Auditor for their opinion. The response was both surprising and very positive. The External Auditor reminded members of the principles of public scrutiny introduced by Lord Pickles and said that this is the only council where  you have a strong armchair auditor presence and that he positively welcome members of the public telling him of their concerns. He said they wanted to know about these things, real nuggets of information they can follow up on. It sounded like a ringing endorsement of the public questions and comments to me but whether Conservative Councillors will listen is another matter. This is the second time in a week that Lord Pickles presence has been felt in Barnet, the previous time as reported here by Broken Barnet.

Normally the co-opted members of the audit committee sit in silence but at this meeting both spoke out regarding the limited assurance rating given to the Council. Richard Harbord who is a former Council Chief Executive and a regular contributor to 151 website which focuses on local authority finance, said he was surprised a council such as Barnet should have received a Limited Assurance rating two years running and that a lot of work would be necessary to turn the situation around. He also said there was a there was a period when scant regard was being paid to internal audit reports, something I have been saying for several years. I just wish Mr Harbord had expressed those views in audit meetings before now. The other co-opted  member Geraldine Chadwick also noted that she was disappointed how few individual "Substantial" ratings (a good rating) the council had gained in the year (just two) and that she would have expected Barnet to have received more.

A senior person from Capita was present at the meeting and was asked to come and explain the poor performance of the pensions administration. Yet again we had someone who is new to the company, he has been with Capita since January, so distanced himself from the historical problems but promised that things would get better. He said that for a number of years the focus in Capita "had been on financial metrics", that they must refocus on staff, that staff salaries "were probably substandard" and that they wanted to lift the standard and professionalism of their staff. This is a staggering admission of failure and while it is good that they have at last admitted their failings, it provides little comfort given that we are six years into this awful contract. When Cllr Kathy Levine asked about the difficulties of communication between payroll and pensions (which are highly dependent on each other for information) the man from Capita said there was "a culture of silence in Capita", again another shocking admission. He talked about Capita's transformational journey but that provides me wit little comfort as they are changing their company on our time. It is also important to point out that we pay Capita millions each year to help with the "transformation" of Barnet. I serious worry that they can't deliver transformation in Barnet adequately if they are so focused on transforming their own organisation.

Interestingly Cllr Laithe Jajeh challenged the man from Capita saying that every meeting he had attended for audit he had heard promises from Capita staff  but that "things just hadn't been good enough at all"   He said it takes up a significant amount of time dealing with missed deadlines and promises that haven't been delivered, that time and time again deadlines are missed and how could he have confidence they would be delivered this time. Cllr Jajeh also talked about the progress with Capita being one step forward one step and sometimes two steps back. He also talked about Capita giving the council false hope. All I will say is well done Cllr Jajeh for saying what everyone knows to be true but other Conservative Councillors are afraid to say. Capita is without a doubt a classic example of emperors new clothes and for once we were hearing a Conservative councillor calling it as it is.

Ironically the man from Capita said "what we have now is a transparent relationship". Transparent to whom, certainly not the public in Barnet.

My Speech to the Committee

“Further improvements are required to improve the adequacy and effectiveness of governance and control compliance”
 “Gaps in delivery or governance oversight”
“As in the previous year, governance issues were noted across a number of audits,”
Those quotes comes from your internal auditor yet when I read The Code of Corporate Governance it seems to have been written about a completely different borough. 
Apparently, “Shared values that are integrated into the culture of the organisation, and are reflected in behaviour and policy, are hallmarks of good governance”. When I read the Internal Audit report it suggests the hallmarks of weak and inadequate governance.  Shared values are not integrated into the culture of the organisation. In fact the culture of the organisation is seriously flawed. It is a culture that refuses to recognise and address failure and now wants to prevent any form of public scrutiny especially when it comes to Capita.
Capita consistently fail to perform,  even when given second, third, and fourth chances. If council staff behaved like this they would be sacked yet Capita appear exempt from censure.
The governance statement says you will set appropriate KPI’s yet you admit that Capita have failed some critical KPI’s every year since the contract started 6 years ago.
It says you are “Ensuring that there are structures in place to encourage public participation”. Laughable when, from 31 July, you intend to gag residents and prevent them from participating and scrutinising the council. No one will be allowed to comment in person at this committee and I can ask only one question per agenda item unless a couple of people get in first in which case any questions I submit will be rejected.
So why is the Code of Corporate Governance so out of line with what the Internal Auditor is saying in their reports?
Maybe because there is a blind spot in this council when it come Capita, a cataract that blurs their failures, their underperformance and their cavalier attitude.  A comforting haze means you cannot or maybe do not want to see  who is to blame for the failures around you like the massive fraud, the pensions admin chaos, the failure of Highways. They hold a status that appears to be untouchable and defies most of the objectives within this document. Governance statement? No. A cut and paste job that bear no relation to what is happening in Barnet. Please do your jobs and start challenging the quality of governance in Barnet or we risk much greater problems in the future.

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