Monday 31 January 2022

Capita Savings - The Myths Exposed

It's 2022 and this year there are local elections in Barnet. I have eased back on blogs since Covid but now is the time to start communicating again, so let's start with the latest state of play on the Capita contract. I listened to the council meeting last week where Cllr Dan Thomas reiterated the myth that the Capita contract has saved £125 million. To be clear, there is not a single piece of evidence to support that figure and a great deal of evidence to suggest that the contract has not saved anything at all other than the face of those councillors who voted for this overly complex, badly structured contract. The latest figures for the month ending 31st December 2021 indicate that we have now paid Capita £577 million, £225 million more than the contract value. 

Tomorrow the Financial Performance and Contracts Committee meet to discuss the the latest details  on which Capita services will be brought back in house and which will stay with Capita, either for a couple of years while Barnet decide what to do or for a 5 year extension until 2028. It was agreed last week at Full Council that the following services will all be brought back in-house: Procurement; Trading Standards; Environmental Health; Licensing; Regeneration and Highways. This comes as no great surprise as none of these services generate an income for Capita. Procurement used to be a money spinner for Capita, with its gainshare clause, but this was negotiated out of the contract following the £2m fraud and the monumental mess Capita made on the failed Mosaic casework system implementation, which has cost millions to sort out. I had hoped that there would have been more  progress on providing certainty on whether the other services would be retained by Capita since the last meeting in November but it is apparent that this is a very politically sensitive matter so any further decisions have been kicked into the long grass until after the elections in May. I have asked for the financial details of the services being brought back in house to be disclosed but yet again I have been told the public cannot see these figures even though councillors have seen them in the secret "Blue Papers" and formed the basis of the decision they took last week.  We will not see them before the election, as I suspect they will show that bringing this group of services back in house will actually save money on what we are being charged by Capita and that would be far too embarrassing in the run up to the elections.  So much for Cllr Dan Thomas' statements that Capita are saving money when we could have been running them cheaper in house for years.

The entire Capita contract has a stench about it. As I blogged about in May last year, Grant Thornton wrote  in a summary of the outsourcing process in their Market Insights Report "procurement has been ideologically driven and highly political". Not me saying that, but external advisors, Grant Thornton - extract from their report below:

The level of secrecy surrounding this contract remains high. I have had discussions with the chair of the Committee and the senior officer carrying out the report and managed to get the concerns I raised included in the engagement report, albeit they were then largely dismissed. Critically, we are not allowed to know the real operating costs of this contract and what revenue Barnet is missing out on by having Capita in place.

The lucrative elements of the contract remain for Capita. Revs & Bens, where they can charge extra for exceeding volume targets and where gainshare still exists on council tax collection, housing benefit recovery, withdrawing single person discounts etc. Planning, which generates significant fees, stays with Capita where they get to keep a chunk of the profit. Capita are hanging on to IT, even though their IT system, Integra, has been criticised on numerous occasions for failing to provide the information and flexibility we need. I raised the point that Capita provide both the IT system and the advice on which IT system to use. Surprise, surprise, they recommend using their own bespoke system, Integra. Pre-Capita, Barnet spent over £20 million implementing and integrating SAP, a world class ERP (Enterprise Resource Planning) System. Indeed the S151 Officer has asked for a new ERP but the advice provided comes from Capita so we will be stuck with Integra. I flagged this as a massive conflict of interest and suggested that for the council to respond to the rapidly changing demands for technology and systems, they should consider employing their own chief information/technology officer but yet again this was dismissed.

Capita are having the contract extended for Accounts Payable,  yet this service has received more critical reports from internal audit over the last 8 years than any other service with 4 Limited Assurance reports

Customer Services, mainly the telephone answering system, stays with Capita and we are told they are doing a fabulous job. I wonder how many people have tried to get through the automated answering system at Barnet? Until 2018 Barnet used to publish data on call answering and it demonstrated that calls to Council Tax and Revs & Bens were consistently failing to meet the minimum response time targets, with thousands of calls being abandoned as people gave up trying to get through to Barnet. Unfortunately, Barnet's response was simply to stop publishing the figures. 

Capita was a massive, complex contract, implemented without the resources to adequately manage and monitor it.  Even worse, the people who devised the complex systems all cleared off once the contract was signed. Councillors were warned about the consequences of this ill conceived contract back in 2013 yet Barnet pressed on, as Grant Thornton says, for ideological and highly political reasons, a situation that continues to persist. Unless there is full transparency on this process there will be no confidence that this is anything other than a stitch up.

So when candidate comes knocking at your door telling you that the Capita contract is saving a fortune, ask to see the evidence because there isn't any!