Gagging Part 2- Serious questions about the role of Audit in Barnet

Yesterday I published a list of questions I would have asked Barnet's Financial Performance & Contracts committee if I had not been gagged. Today, I have published the list of questions I would have asked at Audit Committee.  However, there is a broader and more serious point here. The Audit Committee received internal audit reports on  the performance of Capita but they are buried away on hyperlinks within the officers' report and not attached to the agenda. These reports detail a catalogue of problems and failings by both the Highways service run by Capita Re and Accounts Payable run by Capita CSG but also of the systems that are there to check the services are being delivered properly. Highways gets a "No Assurance" rating and Accounts Payable, a "Limited Assurance" rating - both of which are terrible given Capita have been running the service for over 6 years and we are paying them a fortune.

I, fellow bloggers and engaged residents have been saying for years that Capita are providing a diabolical service but these comments have been dismissed as "political" by Barnet's ruling Conservative group and as such ignored. This time last year there was a review of the service following the £2 million fraud and it was decided to bring a number of services back in house. Highways were an obvious candidate for in-sourcing given their dismal performance and accounts payable seemed a natural fit along with the finance function which was to be brought back in house as a result of the fraud. However, at some stage at the back end of 2018 the Chief Executive of Capita came to visit senior managers and councillors at Barnet, a deal was done for compensation and after that things changed. We have no record of the meeting or what was discussed or agreed other than a meeting was held. All we do know is that a number of services that had previously been identified for in-sourcing were now to be kept with Capita. This has proved disastrous for Barnet. Pensions administration run  by Capita has attracted an Improvement Notice from The Pensions Regulator, the first time one has been issued to a public body. Payroll (run by Capita) are still generating  an unacceptable level of errors (as deemed by the contract).  It looks like there is another fraud involving 7 false bank accounts. Millions of pounds worth of Highways work is not being properly checked or inspected. Special projects are not being authorised appropriately and LBB were unable to identify what payments had been made on specific special projects even though this is something I managed to obtain and collate during my inspection of the accounts.

Overall the Audit report should embarrass and shame every single Councillor of Barnet, make every resident question how our money is being wasted through inadequate systems and non existent management checks and ask why, after 6 years and a total cost of £438 million, we still have a service that is failing.

I have been gagged from asking serious questions and making a public comment, written or spoken, yet we have a service that is catastrophically bad  and that continues to attract criticism internally and externally. I have reached the point where I believe Barnet is now a failing council and requires a new management team to sort out the mess we are in. We have a looming budget deficit of £118 million over the next 5 years and with Capita failing to deliver on the most basic services like highways I can only see that budget gap widening. Many of the issues I have raised over the last five years, especially areas like the cost of special projects, have now been shown to be out of control with inadequate checks and raising questions as to whether we are receiving value for money.  I have set out the questions I would have submitted below but I suspect very few if any of the issues I have raised will be addressed. That is the Barnet way.

Questions to the Audit Committee

Agenda Item 7

• In the Highways no assurance report – the 54 page one that is not attached to the committee agenda but hidden in a hyperlink within the officer’s report – provides details that 4 of the 6 Special Project audited contained significant financial errors including lac of supporting evidence for charges, resource plans which exceeded the agreed budget and on where costs appear to have been over-charged by £18,000. Who is responsible for checking to cost of special projects, Capita or Barnet, why are they not be checked properly, and if this failure to check the costs of special projects has been on-going for more the last 6 years, how much money has been wasted/overcharged?

• Special projects are not being signed off properly with 5 of the 6 inspected documents lacked sign off by the Senior Responsible Officer, Commercial, Finance and Performance Management Teams and that 5 of the 6 inspected documents contained a picture of the Strategic Director’s signature to act as sign off rather than an actual (‘wet’) signature given the value of the projects was £1.6m. Given the risk of fraud associated by such poor practices, why has it taken 6 years to identify these failing and who in the council was responsible for checking these errors were addressed.

• The report identifies that payments were made on projects before they were signed off which suggests the payments procedures were non compliant. This happened before the Finance function was brought back in-house. What reassurance can we have that this is not still happening and what is the value of the milestone payments paid in June and September before the project initiation was signed off in December?

• The report notes that when asked about payments to a capped budget Special Project, LBB Finance stated that this information was not readily at hand and would ‘take a lot of time for someone to confirm’. Can you clarify if this is because LBB Finance are not up to the job of because Capita handed back the finance system in such a poor state that historical payment data is difficult to track down?

• You identified in 2017/18 that £689,000 of S106 money for Highways was at risk of being clawed back by developers because it hadn’t been spent but it took until June 2019 to get sign off on these projects. Was any of the £689,000 actually clawed back by developers and are systems no in place to speed up the process when dealing with S106 monies that could be clawed back?

• 25% of the special projects had been paid without any evidence to confirm the payment was authorised. Given this presents a very high risk of fraud or over payment who is at fault: Highways for submitting an invoice without authorisation; Finance for paying an invoice without authorisation; or the Senior Responsible Officer for not checking why payments were being made without their authorisation?

• Of the 16 actions from previous highways reviews 1 had not been implemented and 5 had only been partially implemented. Why was this failure to fully implement actions, not identified sooner?

• Why were the findings of the specially commissioned PWC forensic review of Highways Projects in 2016 not followed up to confirm implementation of the actions arising and how much did the PWC Forensic Review cost?

• In 16 of the 25 invoices inspected Internal Audit were not able to reconcile the invoice amounts to supporting calculations or documentation, for example contracts or Bill of Quantity schedules/ contracts provided. What is the total value of these 16 invoices and what is the risk that we have been overcharged for work not carried out?

• The report notes that a credit note in the amount of £95,945.60 was required against an invoice dated October 2018 for the works carried out to resurface Summers Lane but at the time of writing this report in 2019 this credit note had not been processed. Can you confirm that the credit note has now been processed and paid?

• What is the risk that other credits notes have not been processed and why isn’t there a procedure for identifying and tracking credit note processes?

• The report notes that in 20 of the 25 invoices inspected complete evidence for quality checks were not available, that in 6 of the 20 invoices there was no evidence at all of site inspection or quality checks and that in 14 of the 20 there was either missing photographic evidence or site inspection sheets and that it was not possible to link the photographic evidence to the works carried out. Given Barnet have invested £50 million on the Network Recovery Plan how can we have any confidence that the money has not been wasted on inferior works?

• It would appear that Area Committees are being given budget for projects to sign off without a breakdown of how the fee budget has been arrived at. Why didn’t councillors ask for budget breakdowns before agreeing the budgets and does this call into question the process of decision making at Area Committees?

• Capita Re bill LBB for Special Projects based on the time incurred by Re staff at agreed rates. This timesheet data is collected on Excel spreadsheets. Both Capita Re and LBB agree that there are no arrangements in place to ensure that the spreadsheets are accurate. As such how can you have any confidence that LBB has not been ripped off by Capita Re staff logging time they haven’t actually incurred?

• This problem with timesheet recording was identified in 2016 and recommendations were made to resolve these problems but they were not all taken up. If there is no follow up to recommendations what is the point of undertaking reviews?

• The report notes the difficulty of assigning payments for each special project against specific invoices as there may be multiple Special Projects on one invoice. It may be of interest to the Audit Committee that when I inspect Capita’s invoices each year during the Inspection of Accounts period I ask for and have received the detailed breakdown for each Special Project and how that reconciles to each invoice. It does take rather a lot of time to collate the data but it can be done and I do it.  If I, as a resident, can collect and collate that information to understand how much Capita are billing us for each project why can’t you?

• As one of the Advisory Findings it notes that during their review Internal Audit found one payment that appeared to relate to Highways expenditure which was for £367K, and was one of two invoices with a total of £500K. This was entitled ‘Procurement Savings LOHAC to Dec '15’ and purportedly related to the London Highways Alliance Contract (LOHAC). The report notes that the payment related to a contractual issue regarding the Alternative Delivery Model for Education and Skills rather than a Highways payment and was therefore outside the scope of their audit.  I specifically queried these two LOHAC payments of £500,000 in June 2018  and was reassured that rather than duplicate payments they related to two separate years but did relate to the LOHAC contract. Subsequently I was told by the External Auditor that only one payment was made on the LOHAC contract. What Internal Audit appears to be saying now is that two payments did take place, that one of the payments did not relate to the LOHAC contract but to the Alternative Delivery Model for Education and Skills but was still paid. As such it suggests that the information provided to me in July 2018 regarding these two payments was inaccurate. Can you clarify whether this payment will be investigated separately and does it provide yet more evidence that there is inadequate scrutiny of payments on the CSG and Re contracts?

• In report of the Accounts Payable system run by Capita (the 59 page report not attached to the meeting agenda but available only via a hyperlink included within the officer’s report), it states that 2 of the 15 payments reviewed did not have dual authorisation of the purchase orders attached even though this is a requirement for payments over £1 million. How can the systems have allowed this to happen, is this a longstanding problem, and why has it not been addressed before now given the contract has been running for more than 6 years?

• Can you confirm that the stationery order from Office Depot for £3,556.80 was duly received and was not stolen?

• How can purchased for greater than £25,000 have been authorised by persons who only had a £25,000 limit and does that mean the system has a fundamental weakness in allowing unauthorised persons to sign off purchases, similar to the problems identified in the major fraud case by Grant Thornton?

• Processes to identify duplicate payments on a wider scale across Integra through the commissioning and procurement of software, AP Forensics, is in progress, but has not yet been implemented despite being discussed since 2018. What is causing the delay: Capita’s failure to put enough resources into the project; LBB’s failure to manage Capita; or the incompatibility of Integra with other software systems?

• Given that fuzzy logic matching as a technique for detecting invoice fraud has been in use for almost 20 years why has it taken so long to be used in Barnet?

• Given that the data matching exercise identified 7 bank accounts associated with an on-going fraud investigation, can you provide a sense of the scale of this fraud, which must be sizable if it involve 7 different bank accounts, and have Audit Committee members been briefed confidentially of the nature and details of this fraud? In terms of scale, is it hundreds, thousands, tens of thousands, hundreds of thousands or millions of pounds that is involved?

• How can a payment of £858,000 have been made without a supporting invoice?

• In regards to training of Accounts Payable staff, given that Internal Audit have a contractual right to inspect evidence of its operation, for example, the courses assessed, how evaluated and the resulting training identified had been requested by Internal Audit but that Capita have failed to provide the information, surely this amounts to a contractual breach and leads one to draw the conclusion (right or wrong) that Capita has something to hide?

• If the BACS reconciliation system could not mitigate the risk of fraud what reassurance can we have that no frauds have taken place using the method identified?

Agenda Item 9

• Given that BDO were unable to conclude their audit by the 31^st July deadline has this led to any formal action by Government for missing the deadline?

• The delay in concluding the audit was identified as being due to issues over valuations of land, buildings and dwellings, where additional work was required by the valuer and amendments made to the financial statements as a result. Can you clarify if Capita Re carry out the valuations and what steps will be taken regarding valuations to ensure that the deadline is not missed again next year?

Agenda Item 10

• Can you clarify why management has not corrected the financial statements for the material misstatements identified in the Annual Audit Letter given they are very significant sums?

• The auditor’s letter notes that there is an unrecoverable VAT sum of £898,000 which arose from an accounting error resulting in an under claim of input VAT. Who was to blame for this accounting error, LBB or Capita, why wasn’t the VAT claim double checked given the sums involved were so large and why wasn’t this flagged up by financial control systems?

• At 31 March 2019, mobilisation costs for CSG of £2.535 million and Re of £17.621 million remain as prepayments to be recovered from ongoing payments to Capita. However the External Auditor has not been provided with an agreed contract variation or written confirmation from Capita that the remaining balance of mobilisation costs can be transferred to the ongoing contract payment schedule and have requested that management confirm this in the Letter of Representation. Has this Letter of Representation been provided or have we lost out on the £20 million being repaid?

• The audit letter states on page 43 that “the updated MTFS shows an anticipated budget gap of £65 million over the period 2019-24”. However the MTFS published at Policy & Resources committee earlier this month shows a budget gap for the four year period 2020/21 to 2023/24 of £78.4 million and the five year period 2020/21 to 2024/25 of £118.7 million. Can you clarify if the External Auditor was provided with the latest version of the MTFS dated 10 September 2019 and if so why the difference in values?

Joint Post from the Barnet Bloggers

Capita - “Not Minded”

At the Barnet Council Audit Committee on 1 May the external auditor from BDO made some very worrying and serious statements about the controls systems in place. This follows a £2 million fraud last year, and pervasive problems with the pensions and payroll administration.

“You don’t have a particularly strong control environment”, the auditor reported, and then stated that Capita were “not minded” to provide assurance over systems running processes on Barnet Council’s behalf.

This is an astonishing response from Capita.

Responsibility for assurance of these systems, run from Capita’s offices around the United Kingdom, falls to Barnet Council’s Internal Audit Team.

As the External Auditor made clear, the Internal Audit team is doing good work “but it doesn’t give you that level of assurance that you would expect with so much of the service outsourced”.

Given that Capita provide so many of Barnet’s back office systems this is a very serious situation, especially as the external auditor raised this problem two years ago, before the £2 million fraud was discovered.

As bloggers who have closely followed and reported the story of Barnet’s partnership with Capita, we are deeply concerned about this situation and alarmed that neither the auditor nor committee members were aware that assurance of Capita’s systems is a contractual requirement, and not something that could be provided at their discretion.

We ask the following questions of the Council:

·             Why were the audit committee not made aware of the auditor’s concerns when they were raised two years ago?

·             Why are Capita “not minded” to provide assurance over their systems when the contract appears to indicate that they must provide that assurance?

·             Why did Grant Thornton not pick this matter up when they were the Council’s External Auditors or as part of their contract review following the fraud?

·             Why have the Council’s contract monitoring officers not identified this problem before now?

·             If BDO are saying the Council does not have a strong control environment, what are the risks of another fraud or systems failure happening?

And finally,

·             How can Capita continue to retain the confidence of the Council without such assurances?

We ask that the Council arranges for a forensic review/audit of both Capita contracts to address the contractual failures raised by the External Auditor as a matter of the utmost urgency, to be paid for by Capita, before any further decisions are made on what services Capita will continue to provide. Failure to do so can only have the most serious consequences for the financial security of this borough, and the well being of all residents.

Signed:

Derek Dishman

John Dix

Theresa Musgrove

Roger Tichborne

Will the £4m cheque buy Capita another 5 years?

Updated below in Red
Urgency Committee meetings are designed to pick up urgent matters that can't wait to be dealt with at other scheduled meeting. This meeting popped up in the calender last week and will be held this Friday morning at 8.30 am with the single issue of whether the Leader should authorise the acceptance of a £4.12 million cheque.  In most cases people would be cheering at getting a welcome cash injection just before year end. In this case it is what the payment is for that is most troubling.
The report is titled 'Commercial Settlement of Historic Issues' a rather startling title and I think not as intended. I think the intention was to discuss previous (historical) issues but they may have been historic as well in so far as they will be remembered for many years as one of the most disastrous deals ever done in Barnet.

This report provides an overview of the £4.12m cash settlement payment to the Council negotiated between Capita and the Council to resolve historical commercial issues related to the CSG (NSCSO) and Re (DRS) contracts.
The key items that form this proposed commercial settlement are:

• Mosaic (the Adults Social care system) – new IT system implementation that experienced issues with timeliness and quality of delivery;
• Development pipeline – delays in delivering housing on council land;
• Increased monitoring associated with financial controls – to cover cost of Grant Thornton and additional council resources (in addition to first payment made in September 2018);
• Procurement gainshare – settling of respective claims; and
• Miscellaneous items – estates compliance (related to 2013 to 2016); and KPI failures related to the Re contract.

In theory this may look attractive  but a further analysis of the problems suggest that Capita are getting off lightly. The Mosaic Case management systems has been an unmitigated failure and in July the council identified that it would cost £4.2 million and a new supplier to sort it out. The fraud and consequent Grant Thornton Report has not only cost a fortune but taken up huge amounts of senior officer time to try and sort of the mess and to implement control procedures that Capita should have put in place 5 years ago. The gainshare rip off is nothing short of a scandal and deserves much greater scrutiny and the KPI failures are numerous and serious.

So the payment is welcome if somewhat low compared to the actual costs Barnet has been subject to. However the sting in the tail is that paying this £4.12m allows Capita to sidestep their procurement savings guarantees of £30.17 million over the next 5 years. The argument is that we will now receive 100% of the savings. Given that most of the savings have already been squeezed out of the procurement budget, the risk now is that we receive 100% of not very much instead of a guaranteed £30 million.

My really big concern is that this has been pushed through as an urgency item to forestall any decision about Capita's future services to be discussed at the Policy & Resources Committee on 11 December. We have already seen that we are not going to get the agreed full business cases on which services to bring back in house. This cheque has the potential to render the meeting on 11 December entirely redundant other than as a talking shop.

I will blog more about this after the meeting  on Friday but below are the questions I have submitted.

1. Please can you provide the notional allocation of the £4.12 million attributed to each of the 5 items set out at 1.1 (a)-(e)
2. Given that at the July Policy & Resources Committee the report noted that the costs of resolving the problems with the Mosaic system were £4.2 million and that there “are differences in views on who should pay for the £4.2m costs” can you clarify whose views have prevailed in this settlement and how much of the £4.2 million Capita are paying?
3. The report notes that the payment of £4.12 million removes the liability for Capita to deliver net guaranteed procurement savings which amount to £30.17 million over the last 5 years of the contract. What impact does this have on the overall guaranteed savings of £126 million over the lifetime of the CSG contract and what are the risks of these savings not being delivered?
4. In the financial  year 2019/20 will Capita receive £356,000 under the Agreed Procurement Price Recovery (APPR) mechanism as set out at 41.27 of Schedule 4 Price Payment Mechanism?
5. Given that Capita will no longer receive any gainshare on this contract and APPR would have ceased after 2019/20 anyway, what incentives are there for Capita to fully resource the procurement function?
6. Given that Capita have commenced formal redundancy consultations to cut 72% of their Corporate Programmes Team working on the Barnet contract, what reassurances have been provided by Capita that they will not cut the number of staff in their procurement team down to the bare minimum and /or move out the most talented staff to other contracts where they do receive a gainshare?
7. Can you clarify if, by signing this agreement, it precludes the procurement team from being TUPE’d across to Barnet before the end of the contract?
8. The report notes that no gainshare has been paid in 2018. However, advance claims were made and paid in 2016/17 for the entire three years of a contract which include 2018/19. Will those advance payments be recovered and if so what proportion of the £4.12 million do they represent?
9. Can you clarify how much of the net guaranteed procurements savings were actually delivered in 2017/18 and, before this settlement is agreed, can you provide evidence that any shortfall in historical guaranteed procurement savings have been met?
10. The report notes that procurement gainshare payments to Capita in 2017/18 were approximately £2 million. Can you clarify how that sum is broken down given that the Capita invoices suggest that the sum was  £1,665,543.26 and that of that sum, £534,000 was paid at the rate of 100% to Capita under the APPR mechanism (i.e. Capita received 100% of the savings and none was shared with LBB).
11. Can you clarify if, by accepting this payment, this automatically guarantees that Capita will continue to provide the procurement function until the end of the contract irrespective of what the Business Case being presented to P&R in December finds?
12. Does the payment of this sum guarantee that Capita will continue to provide any other services for the remaining 5 years of the contract irrespective of what the Business Case being presented to P&R in December finds and if so what are they?
13. Does the offer of £4.12 million from Capita crystallizes an acknowledgement of financial loss exceeding £500,000 and  by accepting this payment does this preclude Barnet from invoking Step In Rights as set out at 21.1.1 in the contract?

UPDATE: 1 December 2018
I attended and spoke at the committee meeting yesterday. You can listen to what was discussed here and clicking on the sound bar. My appeal to the Councillors was not to refuse the payment but, at this stage, to defer the decision until the Policy & Resources Committee on the 11 December when more councillors would be able to scrutinise this decision and for more information to be provided to inform that decision.  Given that the payment from Capita will not go through until January anyway, deferring this decision by 11 days would have had no impact of the timing of the payment. It would have also allowed this to be discussed alongside the review of the Capita contract so the two items, which are inextricably linked, could be dealt with together. As is the way in Barnet, two councillors, Richard Cornelius and Dan Thomas, made the decision to press ahead, out-voting Barry Rawlings who was in favour of deferring the decision.

One thing that did come out during the course of the meeting is whether these savings are real or not. Because of the way the contract is written with a baseline for costs being set in 2012, it appears that any savings that are made at any time during the 10 years of the contract trigger a gainshare payment for the remaining duration of the contract, even if Capita had little or no involvement in the process. This is what I have always suspected but this seemed to be clarified in the responses and discussion to my supplementary questions. I have blogged about the one sided and anomalous gainshare process many time especially where contracts are let by council consortia. One such contract is the highways contract - LOHAC which is a London Highways Alliance and TfL joint initiative - you can read about it here. In the last two years Capita have claimed £1 million in gainshare on this contract. Part of the deal offered means that they can no longer claim gainshare on any procurement - which is a good thing. What it does do is make a complete nonsense of the often repeated statement that Capita is saving us £1 million a month. Over the period of the contract Capita claimed to save Barnet a net £47 million on procurement.  This meeting highlights that these savings are nothing more than smoke and mirrors and would have been saved anyway with or without Capita as part of the normal council procurement process. 

As such I can start to see why this might be a better deal for Barnet than sticking with the original contract - BUT it fundamentally undermines the rationale for outsourcing in the first place. In which case the best option would be to take the money and sack Capita. The problem is that by taking the money I suspect it makes it much harder to sack them. Cllr Thomas also made the bizarre comment that it was good that we had outsourced because when the contractor fails we can claim compensation unlike in house teams. The issue is if you outsource contracts you don't expect them to go wrong and getting Capita to constantly pay up for failure just means we have a failing service.  

Time will tell what happens but given the tactics employed yesterday I have no confidence that we will see a fair and balanced business case appraisal on 11 December. 

My speech to the committee is below:

"The question is “does this deal represent good value for money. The council’s legal advisors say it represents “good value” but there’s not a single piece of evidence to support that statement. This 5 page report contains no detail, no risk assessment, no analysis of how the sum has been calculated, yet you are being asked to make a decision which could have major financial consequences over the next 5 years. This sum doesn’t cover the cost of fixing the Mosaic system. We still don’t know what the final bill will be for all the additional management time and control systems to address the fraud let alone the total cost of the Grant Thornton report. We’ve paid just shy of £8 million in gainshare on alleged savings which may not have been cashable.

By accepting this offer you remove Capita’s liability to pay £30.17 million of net procurement savings. The contract was back end loaded with two thirds of the savings falling due in the last five years which they will now avoid. You may argue that by taking away the gainshare guarantee we get to keep 100% of the savings. The problem is that the level of savings look entirely unrealistic. The two largest alleged savings were on the Comensura and LOHAC contracts. Comensura has been replaced and LOHAC savings are currently subject to challenge with the external auditor. Some gainshares were only derived because officers had set an indicative budget too high. The risk is  Barnet receives 100% of not very much maybe  £1 -2 million a year at the most. This would leave us with a £20-25m shortfall against the guarantees. There’s no risk analysis, no forward procurement projections, no advice from external procurement experts. Approving this deal without those documents or advice would be nothing short of criminally reckless.

I urge you to defer this decision and deal with it at the Policy & Resources Committee on 11 December alongside the Capita business case review by which time officers can provide the level of detail a decision such as this deserves and allow greater scrutiny by more councillors. The payment is not scheduled till January so deferring the decision for two weeks will have no impact on when you receive the money. Making the decision now could cost the council at least £20 million. Think carefully, you will be held accountable".

Capita Week - Day Two - Revenue & Benefits

Last week someone kindly sent me an email regarding the blog I posted about Revenue and Benefits (Revs/Bens) and  Corporate Anti Fraud Team (CAFT). Set out below is what they said.

At the moment Revs/Bens is 2nd in the league table in London for performance indicators - this is the means by which the Department of Work & Pensions  (DWP) record our performance i.e how quickly we assess new claims and change of circumstances. 

Now bear with me here. Our new claim Performance Indicator (P.I.) is currently about 12 days which is outstanding, despite being massively understaffed. This has been helped by the face to face process introduced where by appointments are made and claims assessed directly at the point of submission.  Giving a low P.I. 
 

Now our friends at Crapita have promised, and I believe this is in the contract, to deliver 10 day P.I's for new claims made. Now the point here is they cannot use face to face facilities based in Blackburn. The only way to achieve such a P.I is to totally disregard the verification process. We expect claims to be processed via the phone. i.e you phone up state your circumstances - the claim is assessed and you write for the verification afterwards.

Open to fraud?! 
 
I know the Corporate Anti Fraud Team (CAFT) are very concerned about a potential lack of verification and no signature on a declaration. It is impossible to achieve a 10 day P.I any other way from outside the borough unless Crapita simply don't care and have no intention of making good that promise of course! 
 
Loads of fraud is flagged up through local knowledge. We know the tenants / landlords who are repeat offenders and addresses in the borough with history. 
 
I thought this needed a bit more digging so I had look at other Councils where Capita operate revenues and benefits. I came across a number of issues in Sheffield with people complaining about how long it took for Capita to deal with housing benefit claims.

There were some very sad cases of delays and unhelpful call centre staff here. More worryingly and linked to the issue of fraud, I came across some statements (which may be false) that last year Capita moved staff dealing with fraud over to dealing with new claims. My view always has been that KPIs can be a blunt tool that unduly focus attention on specific outcomes at the expense of other equally as important deliverables. If the contractor is rewarded for meeting a new claims KPI but not measured on fraud there is inevitably a risk that priorities will be changed.

While I was having a look at Sheffield I also came across their annual complaints report which can be downloaded here.

Table 1a: Complaints recorded on Council’s complaints management system

Complaints Received	2010/11	2011/12
Children, Young People and Families (CYPF)	230	122
Communities	322	251
Deputy Chief Executive’s	20	12
Place (exc. Street Force)	322	207
Resources (exc. Capita Revenues and Benefits)	156	100
Capita Revenues and Benefits	311	310
Total	1361	1002

While complaints generally fell by 20% between 2010/11 and 2011/12, complaints about Capita Revenue and Benefits remained high and made up 30% of all the complaints received by the Council.

Yet again I wonder if our Councillors actually bothered to do their own research, did they go and speak with Councillors in Sheffield about Capita's performance, did they look into the issues of whether KPIs artificially skew resource priorities. Given the importance of this contract, that the decisions they take could have a massive impact on the most vulnerable in our community and that cabinet members are rewarded handsomely for their role they should have done their due diligence. 

Do I think they have done it. NO!

BTW if Capita would care to comment on any of the points raised I would be more than happy to publish their response.