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.

Barnet Council - Commissioning Council At Any Price

Barnet Council have made it clear that they wish to become a Commissioning Council whereby we have a few senior officers who let contracts and a swath of subcontractors who deliver all of the services. Most recently the Council has commenced the outsourcing process of education services
which includes:

• Strategic and financial management of the service
• School improvement
• Special educational needs
• Educational psychology team (part traded)
• Admissions and sufficiency of school places
• Vulnerable pupils
• Post 16 learning
• Traded services including:
• Catering service
• Governor clerking service
• Barnet Partnership for School Improvement (BPSI)
• Newly Qualified Teachers support
• Educational psychology (part)
• Education Welfare Service (part)
• North London Schools International Network (NLSIN)

Much of the justification for pursuing an outsourced joint venture is predicated on generating a large amount of new income from traded services with other local authorities. In total 71% of the financial improvement is from income growth rather than efficiency savings and of that 60% comes from school meals. Given that school meals is such an important component of the outsourcing package you need to be really sure that the company delivering the service is suitably qualified. 

I have questioned the business case because they have used completely unsupported assumptions that show both a commercial ineptitude and and lack of understanding of the way school meals operates. Previously I challenged these margins and received this reply from Barnet Council:

"As stated at the Committee meeting in January, the document presented to Committee was an outline business case, which was based on our assessment of the various options for the future delivery of these services and which of those options was most likely to meet the project’s overall objectives.  The report made it clear that a full business case, based on the outcome of a procurement exercise, would be brought back to Committee for final approval.  It was also made clear to Members that the only true test of the market would come by carrying out this procurement exercise and that proceeding to procurement was the only means of providing certainty over the delivery of the required savings".

When we had three bidders for this contract there was an argument that a dialogue might reveal that the business case was completely wrong. That very rapidly became two bidders, Capita and Mott MacDonald. Capita made it clear that they would subcontract out school meals to Compass so at least everyone knew what they were dealing with. 

This week we found out that this tender competition has become a one horse race with Capita folding, leaving a clear run for Mott MacDonald who trade under the name Cambridge Education. They don't provide school meals services so for the first time this week we found that they would subcontract that element of the business to ISS Catering.

So to summarise the situation:

• Barnet have tendered a contract for which there is only one bidder;
• Barnet don't know what margin they will achieve on the largest component of the business and will depend 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;
• Until this week no one was aware  (other than  a few senior officers) that the now sole bidder would subcontract the largest component;
• 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.

If an in house team had been allowed to bid we would have had a very clear benchmark  against which any other bidders could be measured but in Barnet, in-house teams have been refused permission to bid.

We are faced with a situation now which is entirely unsatisfactory, exposes the council to significant financial risk and from a governance and scrutiny perspective is inadequate.

I also believe that there is a glaring flaw in the entire process. The Barnet business case is for a Joint Venture with Cambridge Education. The largest part of this contract is the school meals service and without that hitting very aggressive growth targets they will fail to deliver the forecast savings.  ISS, the school meals sub contractor, is a major player. They will not be part of the JV, merely a subcontractor to it. When opportunities to bid for more school meals contracts arise, say, in Harrow, Brent or Enfield, will ISS forgo a share of their profit to bid for these contracts as part of the Barnet JV or will they bid for them on their own  - given they are specialist school meals caterers - and keep all of the profit to themselves. The JV model can only work where the partners are the major service suppliers and that is not the case with Cambridge Education. I forecast therefore that if Barnet enters a JV with Cambridge Education they will never hit the massive revenue growth targets which are predominantly school meals driven and as such they will fail to meet the budget savings required. Consequence - disaster.

I call on all councillors to suspend the dialogue process immediately and seek an in house comparator bid to at least provide some form of competition/comparison.I also ask them to reconsider the right to subcontract such a large component of the contract to a third party. If the council continue to push this through with a single bidder with a subcontracted school meals service, then they will have failed in their responsibility to demonstrate best value and in the future that decision will come back to haunt them.

Capita Special Projects - The Barnet Moneyspinner

The Capita contract in Barnet was supposed to help save money yet, as reported repeatedly on this blog, Capita get paid significantly more than the contract price. The forthcoming Performance and Contract Management Committee meeting discloses the most recent Capita payments.

I have highlighted all the "special project" payments which in this statement amount to £3.95 million, or almost half the total quarterly payments. It is also important to point out that the Capita contract is automatically updated for inflation. Now in my naive world I though inflation was currently zero but not in Barnet. As a result Capita's CSG bill was increased by £90,912 for the period 1 January 2015 - 31 March 2015.  The Re contract was increased by £94,865.92 for the year.

In total that is an annual uplift £458,000. Now given that Barnet last year cut council tax by 1%, that additional £458,000 has to be paid for by a cut to another budget and that is the one of the key reasons why freezing or cutting council tax is such a short sighted strategy.

We have also been charged an extra £702,317 for "additional service provider costs". I thought the contract price was supposed to be guaranteed but as with complex contracts of this nature, and as Cllr Hugh Rayner pointed out, contract variations are where contractors makes their money.

It is also interesting to note that we ended up paying £14,268 for occupational health assessments for just 2 months, a cost which was minimal before the Capita contract.

And guess what, the Conservative councillors who voted for this Capita contract never seem to ask a single question about what we are paying.

The latest outsourcing - a case study in political dogma

"Barnet’s Catering Service provides approximately 3.23 million primary schools meals each year and approximately 1.14million 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 £190,470.

Barnet plan to outsource the school meals service as part of a larger package of council educational services including Ed Psych Team, Educational Welfare Services, and the SEN Placements and Performance Team to name just a few. One of the drivers for the council's outsourcing strategy is "the changing educational landscape" in other words the introduction of free school and schools becoming academies.

The business case, unsurprisingly, says that the in-house team should not be allowed to bid because only a private sector organisation has the skills and freedom to make money. Now what I found most alarming is the casual attitude the people who write these business cases take to hard evidence. The business case that justifies outsourcing all these critical services can be read here. As is so often the case in these manufactured documents, they slant the findings to justify their decision. In particular this business case says that the private sector -  a "joint" venture will generate significant new revenues. Currently the schools meals service generates 79% of all the revenues from the proposed services at a profit margin of 2.7% an entirely reasonable margin on a school meals service.

I asked some questions about this at the committee meeting last week and the answers I received were alarming to say the least. The business case suggests that a joint venture would generate £1,847,000 in new income - but this is profit, not gross revenue. The business case suggests that the margin on this business will be 20% so that means they will need to generate £9 million of additional turnover  - a doubling of the current turnover. By generating this additional £1.8  million of profit the business case shows how a joint venture will mean that cuts to the service will not be necessary.

However, the key issue is whether the margin of 20% is a realistic one. For school catering it clearly isn't. So what happens if the margin is 10% - well that means the joint venture will have to generate £18 million of new revenues and if the margin is 5% - still better than just about any other school meal service, they will need to generate an additional £36 million of gross revenues. Now it may be that they can generate the additional from other services but they will have to work incredibly hard if they are to generate £9 million of non schools meal revenues - the equivalent of carrying out the services for four other boroughs the size of Barnet in the first year. The lack of business sense and the unflinching belief in outsourcing everything is terrifying especially when driven by zealots who accept everything they are told without question.

Your Choice Barnet was, in effect, outsourced to Barnet Homes - an arms length management organisation - with a business plan predicated on growing revenues, something it completely failed to do. This has resulted in staff  pay cuts of 9.5% along with with to services. It looks like the educational services are set to repeat exactly the same mistakes.

Barnet Libraries Consultation: A Sham

A Joint Letter from the Barnet Bloggers to the Leader of Barnet Council

Barnet Bloggers are appalled by reported plans to outsource libraries and make them available to commercial exploitation by companies such as Starbucks and Waterstones. The real purpose of proposals to cut and shut libraries in Barnet is now clear.

In April 2013, a High Court ruling found that Barnet Council had failed in its obligation properly to consult residents over the imposition of the whole scale privatisation of local public services, known then as ‘One Barnet’.

The Judicial Review which had reached this conclusion found that legal challenge had been brought too late, and therefore the two massive contracts with Capita, agreed by the Conservative administration, are now in place for a period of at least ten years.

After narrowly being returned to power the new administration has, as predicted, rushed ahead with new plans to outsource most of the remaining services, at the same time as launching plans to impose devastating cuts in budget.

As a result, we now face devastating plans to slash the funding of our library service by a staggering 60%, a disproportionate and punitive amount which is clearly agreed as a means of preparing the argument for yet another act of privatisation.

Councillors have been presented with a report with three equally damaging options for the future of Barnet Libraries, and residents encouraged to take part in what we believe to be a deeply flawed and subjective consultation process, one which an independent report has described as not fit for purpose:

https://www.scribd.com/doc/253017634/Topline-Findings-From-Research-Into-Barnet-Council-s-Library-Reforms

Now we are faced with new information which, if true, would suggest that far from learning the lessons of the Judicial Review, the authority’s latest consultation process, as well as being deliberately designed to minimise opposition to the three options, is itself a complete irrelevance, and that the outcome of the council’s consideration of the three options is already agreed in principle, if not in detail.

And if this is dialogue is typical of the way in which potential business partners negotiate with the authority, it would also raise serious and wider questions over the integrity of the procurement process in Barnet, past and present.

http://wwwbrokenbarnet.blogspot.co.uk/2015/01/exclusive-so-others-can-get-cut-of.html

Whatever the opinions of residents, it seems that there will be closure and sale of library buildings, and the outsourcing of our library service, engineered so as to provide opportunities for commercial exploitation by private contractors.

Such an outcome would be simply unacceptable, and indeed would be an unlawful decision taken in complete disregard of the democratic process.

We ask Councillor Richard Cornelius, leader of the Conservative administration, immediately to halt the discredited consultation currently in place, remove the library proposals from the budget cuts about to be imposed, and to launch an independent investigation into the alleged subversion of the due process of democratic engagement that should decide the governance of our borough, and hold the authority to account in a way that is fair, and transparent.

Derek Dishman

John Dix

Theresa Musgrove

Roger Tichborne

Notes for editors/background:

In April 2013, a High Court ruling found that Barnet Council had failed in its obligation properly to consult residents over the imposition of the whole scale privatisation of local public services, known then as ‘One Barnet’.

The Judicial Review which had reached this conclusion found that legal challenge had been brought too late, and therefore the two massive contracts with Capita, agreed by the Conservative administration, are now in place for a period of at least ten years.

http://barnetalliance.org/wp-content/uploads/2013/08/Nash-v-Barnet-LBC-1-JR-Appeal-judgement-2-Aug-2013.pdf

Important Meeting Tonight - Your Choice Barnet

Bring “Your Choice Barnet” back in-house

Thursday 11th April 2013, 7pm at the Greek Cypriot Centre, Britannia Road, N12

Barnet Council created the Local Authority Trading Company “Your Choice Barnet” to provide social care for adults with learning and physical disabilities.  After only a year the company is in trouble and planning to reduce the quality of services, and Barnet Homes is preparing to pay a £1 million bail-out.

Find out more about this scandal and why we are calling for Barnet Council to bring “Your Choice Barnet” back in-house at our public meeting.

Confirmed speakers include:

• John Sullivan, parent and carer of a service user of the Your Choice day centre;
• Roger Lewis, social worker and disabled, Disabled People Against the Cuts & Social Work Action Network;
• UNISON representative;
• Cllr Sachin Rajput, Cabinet member for Adults Social Services was invited but declined; we hope he may still change his mind and be part of the panel.

Panel to be followed by open discussion.
Come and have your say on bringing this vital service back in-house, as promised by councillors before they outsourced it.
What you can do: Forward this to your networks or print the leaflet and invite your neighbours; sign the petition and spread it among your friends and participate in the e-mail campaign.

• Download a copy of the leaflet here.
• Sign the petition here.

Barnet Councillors should read this blog

I follow the blog of Conservative MP Ian Liddell-Grainger not because I am a Conservative but because he has been outspoken on the subject of the massive outsourcing failures at Southwest One. His blog today reveals what Capita and BT bid when they were competing against IBM. At the same time the local paper in Somerset reveals the Conservative council are now spending between £3 and £5 million on highly paid consultants to take over the jobs of staff made redundant.The article uses phases like "Delivery Agents" and "Change Programmes" and it all has a horrible similarity to what is happening in Barnet.    Reading this blog should be mandatory reading for every single Barnet Councillor to illustrate just how badly wrong outsourcing contracts can go. Does anyone in Barnet believe that Capita BT or EC Harris will deliver value for money. I think the jury is out on that one.

To Richard Cornelius, please do some digging, give Mr Liddell-Grainger a call and find out more about his experience of outsourcing. Get his views as a fellow Conservative. If you are still confident that the One Barnet programme makes sense then tell the public why. However if you are terrified by what he tells you then for goodness sake bring this mad-capped scheme to a halt before it bankrupts Barnet.

One Barnet Outsourcing - The Billion Pound Gamble

It is interesting to see that the Council have made some positive noises about changing some of the mad parking policies. We will have to see what the parking review brings but I suspect it will be minor, the charges will still be sky high but we will be able to pay at a machine with a credit card.

One area where I would like Barnet to reconsider is the whole One Barnet Outsourcing Programme. As I have said previously, I am not ideologically opposed to outsourcing. However the scale and complexity of the two main outsourcing contracts suggest to anyone with an ounce of common sense that this is an exceptionally risky venture.

Last week I was speaking with a very nice chap who runs a multi million pound business. We got on to the subject of Barnet Council and I took the opportunity to ask him his views on the One Barnet programme. His initial view was, unsurprisingly, well there's nothing wrong with outsourcing. However, as I started to talk him through the huge scale of the One Barnet programme his mouth fell open. Yes they are going to outsource the entire finance department, IT department, HR department, planning department, Environmental health, Regeneration to name but a few. "Hang on a minute", he said "what about all the conflicts of interest that will arise". Yes he is right. With regeneration strategic planning, land charges and planning development management all being outsourced to the same company, this will inevitably create huge potential risks for conflicts of interest. We then talked about the length of the contract. "I guess they are going to let it for three years to see how it goes"? he asked. Oh dear he was in for another shock. Ten year minimum with the option to extend for a further five years. At this stage my acquaintance was choking a bit. Are they aware of the risks they are taking on - well frankly I don't think that most of the Councillors do understand the risks involved. The clincher was when I told him the budget for all the consultants advising the council is £9.2 million. How many disadvantaged people could that have helped?

I am going to be speaking to as many local residents as possible and encourage them to ask their Councillors if they are aware of the level of risk they are exposing Barnet ratepayers to because ultimately it is the ratepayers who will pick up the bill if this all goes wrong.

With Brian Coleman losing his grip on the Cabinet, now is definitely the time call a halt to this programme.

One Barnet Outsourcing - Do residents really understand what it is all about

Last night I gave a short talk at the Annual General Meeting of the Friern Barnet & Whetstone Residents' Association. I spoke about One Barnet Outsourcing, what services were going to be outsourced and who was bidding. The impression I got was that a great many people in Barnet are completely unaware of the scale of outsourcing taking place and the fact that so many different services will be run by two, or possibly even one company with all the attendant risks that brings.

I have been concerned about the One Barnet outsourcing scheme from day one. I am not opposed to the principle of outsourcing but only where is makes sense and is not a core element of organisations business. The scale of this outsourcing project is immense with the two main contracts valued at more than £1 Billion.

What marks Barnet Council out as different is the fact that some many of core services will be operated by a single company for ten years. If this current ruling group lose control of the council at the next local election in 2014, the incoming regime will be tied up in these contract that go on well beyond their own term of office.

This is an area that needs much greater debate, something that Barnet Council seem determined to prevent. It might help if BT, Capita and EC Harris, the three companies bidding to win these two outsourcing contracts came and talked to the residents they are proposing to serve. It might help to provide some reassurance that they will not ship jobs off to India, that they will not increase charges, that they will respond quickly and openly to FOI request and that they will engage with residents on scrutiny panels. Here is your chance Capita, BT or EC Harris to prove that you could deliver an excellent service for less money. Get in touch!

A letter to BT and Capita - Please Come and Have a Chat

Dear BT and Capita,

I know you are both currently in the running for the NSCSO outsourcing contract worth an estimated £750 million. I am sure you have spent a long time talking to the Council and their consultants and I realise that you have arranged some time to meet with and talk to the staff at Barnet Council. However, I was wondering if either of you could find some time to talk to some of the residents of Barnet who want to understand what you are proposing, particularly as, potentially, we are going to be your customers and ultimately we, as rate payers, pay the bill.

While you're there Capita perhaps we could talk about the DRS contract (worth an estimated £250 million).

There are a load of questions I am keen to get an answer to but so far Barnet Council have managed to avoid answering. They do not want to engage with the community in any way on the One Barnet Project. We are not allowed to discuss it at our local residents forums and the Scrutiny committee set up to oversee the process was scrapped. If you are serious about taking over such a large element of local services I think it is not unreasonable that you should come and talk to some of the residents as well.

This is a genuine request. I take a great interest in Barnet, it's where I live and a place I care for. With such a massive change on the way I just want to understand what you are planning and how it will affect me and all the other local residents who care so passionately about their community.

I know this may seem a bit rude to poor old EC Harris, who I am sure are very nice people, but everything I hear suggests that you haven't got a cat's chance in hell of winning. However If you want a chat please feel free to get in touch.

Kind regards

Mr Reasonable

Hello BT and Capita – What Barnet Expects

Last night I attended the Cabinet Resources Committee, a meeting with a packed agenda and a very packed room. A large number of people were there to hear about the sale of the Hendon FC ground, something which has been causing controversy for several years. London Jewish Girls High School (LJGHS) had apparently put in a higher offer for the site but this was not considered by the council. Cllr Dan Thomas reassured the committee that he had taken legal advice and that he was sure Barnet Council were in the right. However if you pop over to the Barnet Eye’s website you will see a letter from LJGHS legal advisors, Flagates, threatening the potential of a judicial review if their bid is ignored. Looks like the council lawyers will be clocking up some fees then.

I had submitted some questions regarding the £750 million outsourcing. As ever, I ask questions and the council do their best to avoid answering them.
The key issues which came out last night, and which BT and Capita should take note of, are as follows:

• Any procurement savings have to come back to Barnet Council – Note to Barnet Council you may need to put some serious resources into checking to make sure it happens.

• Cheap and cheerful won’t cut the mustard. Barnet want good quality and cheap – Note to Barnet Council this may be very difficult to achieve so don’t be surprised if one or both are not achieved.

• Savings have to be generated from day one. Interestingly Cllr Thomas illustrated how Barnet Council made £29 million of savings last year alone without the help of BT or Capita, so why we are outsourcing to save another £39 million over the next ten years seems puzzling.

• Check to make sure some of the contracts you are hoping to re-tender haven’t been extended by Barnet.

• Any savings you show in your bid are guaranteed according to Mr Cooper – BT and Capita please note you are on the hook so no whinging when it goes wrong.

• If you are planning to put your call centre in Bangalore you will probably get away with it so long as it is cheap enough, even though other Councillors may disagree. Some of the councillors undertook a study and recommended that you should assist the council in creating local job opportunities, graduate trainee opportunities, apprenticeship opportunities and sub-contract parts of the supply chain (where possible) to local companies within the borough.

• I hope Liverpool and Sefton have nice things to say about you if Barnet take up references with them, although do they really want to hear bad news, maybe not.

• If you plan to “channel shift” - getting everyone to deal with you via the internet - you’ll probably get away with it, so long as it saves money. However, lots of people in the community prefer to deal with the council face to face or on the telephone.

Sadly the rest of the meeting went through at a fast pace with Cllr Coleman shouting agreed to every item – he was obviously in a hurry to get off somewhere. Item 15, the building cleaning contract was withdrawn, I wonder why?
So yet again the rubber stamping experts at Barnet showed their prowess at minimising debate. How very efficient – how very undemocratic.

Open Letter to Richard Cornelius and Nick Walkley from the Barnet Bloggers

Set out below is an open letter to The Chief Executive and Leader of Barnet Council. This matter has been brought to the attention of the Barnet Bloggers but such is the concern that issues like this may get 'buried' because of the current outsourcing process, that we have taken the step of publishing this letter on our blogs.

Dear Mr Cornelius and Mr Walkley,

We would like to draw to your attention the following information, and ask you to respond to some questions on a matter that we consider to be of serious public concern.

We have reason to believe that a Private Company registered as FINANCE MATTERS FOR SCHOOLS LIMITED http://companycheck.co.uk/company/07814930
may have been formed with the intention of securing contracts with schools that currently purchase financial services from the Council.

We understand that all three Directors may be current employees of the Council.

First can you confirm that all three of these Directors are indeed Council employees?

If not then the rest of our questions are not applicable.

If this is indeed the case, we would like to ask the following questions:

- Are these individuals currently employed by the authority?

- If one or more of these Directors are Council employees, can you confirm that it is not a breach of any regulations for employees to set up a private company whilst still being paid by the Council that will deal directly with services directly associated with their current employment?

- Furthermore please confirm that they may continue to have access to confidential data, and that this would not secure unfair advantage over any other possible bidders for these services?

- Do you know how many Barnet schools have given notice that they are terminating their contracts with Barnet Council Financial Services?

- When did they give notice of termination?

- What reason did they give for termination?

- How many schools have signed contracts with FINANCE MATTERS FOR SCHOOLS LIMITED?

- Were any senior managers including the section 151 officer aware of this company

- Have there been public and private discussions amongst senior managers on the creation of this new company within the Council?

We understand that Financial Services to schools are included in the NSCSO One Barnet bundle of services.

It would seem extraordinary, therefore, to us as residents, that council staff could allegedly be openly touting for business during the Competitive Dialogue process, and we would ask you to confirm that an urgent investigation should take place, and that you can assure us that all four bidders will be informed that such an investigation is in progress.

Yours sincerely,

Derek Dishman
John Dix
Vicki Morris
Theresa Musgrove
Roger Tichborne

Barnet Outsourcing Leak - Update

Oh dear! Barnet Council have asked the Barnet Eye to remove the leaked document containing details of the Development and Regulatory Services tender shortlisting process. Roger T has complied pending further legal advice and as such I have removed my previous post containing commentary on the document.

What I would ask the Council to consider is just why everyone is so incensed by this process.

1. There is no democratic mandate for this massive outsourcing project. Back in 2010 I do not recall seeing any of the Conservative election leaflets talking about wholesale privatisation of the council to large commercial companies. Indeed Future Shape was actually about working collaboratively with other public authorities such as the NHS or Police. Just read Mike Freer's interview in the Guardian back in February 2010. Compare what was discussed then and what the residents of Barnet have had imposed on them and the difference is quite striking.

2.The lack of openness and transparency. There was one scrutiny committee that tried to hold the process to account but the council simply disbanded it. There is a great deal of concern about the way this whole process is being driven by faceless consultants who have no ties or committment to Barnet. These consultants are being paid millions of pounds yet we know nothing about them, their ties or relationships with other companies or where their loyalties lie. Given the value of the contract I would have liked the opportunity for the public to be able to question these consultants who are allegedly acting on our behalf.

3. The lack of robust evidence that it will actually work. The business case was incredibly weak, full of assumptions and aspiration but incredibly short on hard evidence. Indeed when the business case was reviewed by a independent expert and former Section 151 officer he said,

"During the thirty years that I have worked in local government finance as a local government officer and management consultant, including some time as Finance Director of a Borough Council, I have seen and written many business cases, business plans and options appraisals. This business case is remarkable for the apparent lack of robust evidence to support its main conclusions that £28million of savings and increased income is achievable and that this can only be delivered through outsourcing.”

4. Lack of public engagement. The council are unwilling to allow any public debate on the entire outsourcing project. Not allowed to discuss it at Residents forums, no public meetings on the topic, no scrutiny committee at which public could at least attend and ask questions.

There are 350,000 people in Barnet whose lives will be affected by this outsourcing project yet no more than a handful are privy to the detail or involved in the decision making. What is taking place here is wholly undemocratic so it is not in the least bit surprising that people are leaking details and even less surprising that there is a desire to make these leaked documents public. Rather than hassling Roger T perhaps the Council should be spending more time engaging with the residents to explain what the hell they are doing and asking why the staff are so unhappy that they feel the need to leak these documents. Doing long term mega-outsourcing deals without public consensus and scrutiny is a both a disgrace and, in the long term, politically unsustainable.

Barnet Outsourcing - What a legal mess

Today, every single Conservative councillor in Barnet should today be very very worried. Over the weekend certain documents have been leaked to the Barnet Bloggers which illustrate what a complete and utter legal minefield the One Barnet programme has become. You can read some of the extracts at the Barnet Futureshape Blog but trust me, there is much more and it is much worse.

The documents set out quite clearly just what a dangerous game the One Barnet protagonists are playing. Some of the roles within departments currently in the process of being outsourced cannot be carried out by anyone other than an employee of the council because they are statutory roles. Problem for the companies bidding? Oh no. To get round this problem the Council have spent a great deal of money getting their lawyers to come up ways around this legal duty.

The documents also reveal that the council don’t mind jobs being outsourced away from Barnet, either elsewhere in this country or overseas. It states that “The Council do not require services to be located locally except where the service specification demands it. The Council will consider both off-shoring and near shoring proposals”. In other words unless jobs have to physically be carried out here in Barnet then the council don’t mind if they are dealt with in India or the Philippines. I think this nails once and for all the garbage that has been put out by the council, especially Councillor Thomas when he said outsourcing is just about whose name goes on your payslip. Lies. Jobs will be shipped overseas if it is cheaper to do so. Given that the Council is one of the largest employers in the borough (along with the NHS), that doesn’t bode well for council employees and all the local shops and businesses where they spend their salaries.

The risks associated with this programme seem completely out of proportion to the potential savings the scheme might make. Just a few listed in these documents include:

- Risk of contract failure – the council are sufficiently worried that they are considering taking out insurance against the risk of failure, a cost which I doubt has been included in the incredibly flimsy business case previously submitted.

- Risk that if offered a long contract, the outsourcing companies “enthusiasm and commitment will wane” – so what are they doing, yes offering a long contract (10 years)with an option to extend for a further five years.

- In terms of pensions “there are risks of potential large deficits being built up by the new employer during the contract period”. And the response? “A recovery plan will need to be put in place well before contract ceases”. So the private company will get all the benefits and local ratepayers will have to pick up the bill at the end of it.

The list goes on and on. If there was a track record of these mega outsourcing deals going well one might consider the risk worthwhile but given the huge problems at Southwest One and the recent decision in Suffolk to scrap mass outsourcing, I would have thought that any rational, sane and business like person would have taken a step back to reconsider their strategy. And therein lies the rub. This isn't a business decison it is purely political. Private sector good public sector bad. Perhaps that is why they have not allowed the in house teams to bid for any of these contracts.

Barnet Council is at a tipping point. If they persist with this mass outsourcing strategy I think councillors could find themselves accused of breaching their fiduciary responsibilities. And don’t let them say this is all about saving money because I don’t believe it and more to the point no one has yet provided a single shred of reliable,sourced and validated evidence that it will. Yes we have lots of opinions and assumptions but where is the hard evidence – there isn’t any. Worse, the consultants’ bills for One Barnet continue to clock up. In September alone Agilisys, the Council’s implementation partner for One Barnet, billed £84,292. That’s a run rate of £1 million a year for just one consultancy firm let alone all the other consultants and lawyers providing advice on One Barnet. Just stopping all of that waste would save millions overnight.

Councillors, you may have been told that One Barnet was the answer to all your problems but it isn’t and if you aren’t careful it could end up costing Barnet residents millions because it is us ultimately who have to bail you out when things go wrong. Read these documents very carefully, ask difficult questions because it strike me that no one has been asking the right (or any) questions up to now. Failure to do so could cost ratepayers a fortune and you your seats at the next election.

“Channel Shifting” In Barnet - Isolating the least advantaged

In the papers for the forthcoming Budget & Performance Overview and Scrutiny Committee we start to see where Barnet Council is going with the outsourcing process and what will be required from the private outsourcing companies. They have included an example of the draft output specification for the new Customer Service Organisation, a service which currently costs a shade under £44m a year.

The output specification doesn’t tell the private companies how to deliver services. The council even states that it is “agnostic” about how they go about providing this service but it does set down some key principles one of which is something called "channel shift". It is a typical buzz phrase but in layman’s terms what they are saying is that they want to change the way people contact the council. They want to shift them away from calling the council on the telephone and or going to council offices to using email or the internet. The reason for this is quite simply financial. It is much cheaper to deal with an inquiry on the internet, which may be automated, than to pay someone to answer a phone or sit at an enquiry or reception desk.

Now in theory that sounds very plausible. However, it does not take into account the very wide diversity of people in Barnet and their very differing ability to access the internet.

Reading through all 797 pages of the very comprehensive Residents Perception Survey it sets out how people prefer to contact the council. Overwhelmingly, people prefer to contact the council on the telephone. Set out below is a brief summary of how people like to contact the council for different tasks:



The survey also breaks these figures down into range of different personal profiles.

I have shown a few examples below to illustrate how different groups access the council for advice and to request or apply to use a service.

First if we look at those people asking for advice or information.

• Overall 4% visit a council office whereas 13.5% of the unemployed visit a council office.

• Overall 24% use the web/email whereas only 12% of over 65 year olds use the web/email.

• Only 10% of council house tenants and 6% of housing association tenants use the web/email.

• 36% of Finchley Church End residents are use the web/email compared to only 14% in Hale ward.

If we now look at people who request or apply to use a service you see similar trends.

• 40% of 18-24 year olds use the web/email compared to only 14% of over 65 year olds.

• For the unemployed 76% use the telephone and 10% attend the office whilst only 13% use the web/email.

There are numerous other examples but what keeps coming out to me is that certain groups are much less likely to channel shift than others and often they are the least advantaged. If you are young, employed or living in an affleunt ward, that may be a great idea, but if you are old or unemployed or a council tenant, it may cause you real problems. Often these are the people who are most likely to need to access council services. A private contractor who is required to get people to “channel shift” (it is one of the key performance indicators) risks leaving a large section of the population disengaged from council services.

I wish the councillors would start looking at their own data in a bit more detail and realise that not everyone in Barnet has the advantages they enjoy. It also show how this outsourcing project could go horribly wrong.

One Barnet Outsourcing - An Alternative View Point

I see today that Barnet Council has selected the shortlisted companies to bid for the New Support and Customer Service Organisation who are as follows:

• Avarto UK
• BT
• Capita Business Services Ltd
• CSC Computer Sciences UK
• HCL Axon (consortium)
• IBM UK Ltd
• Serco.

Now the Council says that staff will be protected when services are outsourced through TUPE (Transfer of Undertakings Protection of Employment) so from my rather simplistic view the big change that will happen is within the management.

All the reports I have read recently all seem to point deficiencies in senior management. So my question to Barnet councillors is therefore why don't you simply employ one of these companies on a management contract. Keep the staff as council employees and outsource the senior management. This way you can offer a much shorter contract, three - five years instead of the proposed ten years and base the management fee directly on their performance both financial and quality. The benefit to the council is that there is no huge transfer of staff, if the outsource companies fail to deliver the benefits then you can get rid of them and replace them quickly because all the people who deliver the frontline services remain employees. The other big benefit of this strategy is that it gives councillors a lot more flexibility to change, amend and adapt budgets and services as circumstances change. From what I can see these outsourcing companies bring new management ideas and "intellectual capital" to use a buzz phrase. In which case why go through all the pain disruption and cost of transferring all the staff when its actually the management you are after. Perhaps it would help to save the fortune that is currently being spent on high priced consultants and lawyers dreaming up these exceptionally complex and largely untested solutions.

Councillors, outsourcing the senior management offers you the opportunity to bring about real change whilst reducing the risk should the outsourcer fail to deliver and retaining the organisation's "corporate memory" with all those skilled middle and lower level management and frontline staff who deliver services to the public day in and day out.

Mega-Relationship Outsourcing - Is it a flawed strategy?

As I'm sure many of you know, Mr Reasonable has major concerns with Barnet Council's outsourcing strategy. Not opposed to the principle of outsourcing, my main issue is that the Council are putting all their eggs in one basket by letting very large contracts to single operators. Now my experience tells me that this is a risky strategy but it was interesting to read that some of the larger outsourcing contracts in the private sector have been going wrong and that it is causing companies to rethink the mega outsourcing contract strategy. The article appears in the Economist

Amongst other examples it gives are as follows: "There has been an uptick in legal disputes over outsourcing. EDS, an IT company, had to pay BSkyB, a media company, £318m ($469m) in damages. The two firms spent an estimated £70m on legal fees and were tied up in court for five months". In another case, "Boeing, America’s biggest aeroplane-maker, decided to follow the example of car firms and hire contractors to do most of the grunt work on its new 787 Dreamliner. The result was a nightmare. Some of the parts did not fit together. Some of the dozens of sub-contractors failed to deliver their components on time, despite having sub-contracted their work to sub-sub-contractors. Boeing had to take over some of the sub-contractors to prevent them from collapsing. If the Dreamliner starts rolling off the production line towards the end of this year, as Boeing promises, it will be billions over budget and three years behind schedule".

What the article goes on to say is that "Companies are rethinking outsourcing, rather than jettisoning it. They are dumping huge long-term deals in favour of smaller, less rigid ones. The annualised value of “mega-relationships” worth $100m or more a year fell by 62% this year compared with last. Companies are forming relationships with several outsourcers, rather than putting all their eggs in few baskets. They are signing shorter contracts, too. But still, they need to think harder about what is their core business, and what is peripheral".

Now this is in the Economist, not some radical left wing publication. It also makes tons of common sense. Barnet Council are proposing to enter into two large contracts, one for £250 million and one for £750 million which will last for between 10 and 15 years.So why on earth does Barnet Council insist on sticking to a strategy which the private sector is rejecting and has been proven unsuccessful.

Sadly I think the answer is that consultants who are pushing this process along have a vested interest in making it as complex as possible so that their contracts continue to generate large slug of fees. Also some officers and councillors will lose credibility if this policy is stopped. But rather a loss of face now than a loss of million of pounds when it all goes wrong.

The tragic death that should never have happened

A concerned Barnet resident has drawn my attention to the exceptionally sad case of Jesse Moores. He was a young man with learning disabilities, autism and Tourettes Sydrome, living at The Chine, a residential home run by Robinia Care, who died of a tragic and preventable accident in 2005.

I would urge everyone to read the Serious Case Review which has just been published and to think about why it happened and the risks of it happening again.

If nothing else it illustrates that there are exceptionally vulnerable people who live in our community and who need to the best possible care to safeguard their lives. When the government and local authorities talk about cuts, it is often the most vulnerable people who suffer. We must ensure that political dogma and the desire for efficiency savings never impact on those whose lives depend on receiving the best possible care.

MetPro - a catalogue of disaster.

Well the Internal Audit report into the MetPro Scandal is out and it doesn't make pleasant reading. It is a catalougue of failures to stick to council procedures. It states:

"No procurement exercise had been undertaken to appoint MetPro, in accordance with the Council’s Contract Procedure Rules (CPR). No written contract between the Council and MetPro could be found. There is no record of an approval and authorisation for the use of MetPro for providing security services.

In the absence of a formal procurement exercise, we could not locate the following documents/confirmation for MetPro, which the CPR require:

- Financial viability of the company
- Equal Opportunities Assessment
- Criminal Records Bureau checks
- Confirmation of company’s Public Liability Insurance arrangements
- Confirmation of the company’s Health and Safety registration
- Confirmation on the SIA licence status of the Company Officers
- An agreed specification which outlined the service to be provided
- An agreed schedule of rates for payment of invoices
- A process for monitoring performance of service delivery to establish if the Council was receiving value for money.

There has been a failure to comply with the Council’s Policies and Procedures with regards to roles and responsibilities. Officers interviewed had assumed a corporate contract was in place and relevant checks on MetPro had therefore been undertaken. Recently, from September 2010, assurance was given to officers we interviewed that a corporate contract was being procured by the CPT as they were aware at that time that no contract was in place with MetPro. At the time of writing this report this procurement exercise had not started, however a detailed specification existed."

Not only that, but it appears that when MetPro changed from Rapid Response to Emergency Response, they gave an invalid VAT number. This may result in the Council facing penalties for the overrecovery of output VAT and as a result there has to be a review carried out to calculate the exact figure the Council has overpaid VAT on MetPro and to immediately contact HMRC.

What the report fails to mention is that this inquiry only happened because of the persistence of the bloggers of Barnet who forced the council to consider the evidence they had identified. If it hadn't been for the half a dozen concerned citizens, there is a good chance that MetPro would still be in place, without licenses and in breach of VAT regulations.

What this report also does not identify is who is to blame and how many other suppliers are operating in breach of council procurement policies. Reading this report I think any reasonable person would be calling for heads to roll and an immediate embargo on any further outsourcing until there is clear evidence that adequate systems are not only in place but are actually being used.

Outsourcing - a time to pause and reconsider

As many readers will know, I have very grave concerns about the outsourcing programme in Barnet. To my mind there are very real financial risks to this programme which is supported by virtually no evidence. Today, a number of the Barnet Bloggers have sent an open letter to councillors asking them to pause and review this policy before we go any further. The letter is set out below:

Time to pull back from the One Barnet Programme

Dear Councillor,

Next Tuesday 17 May is the council’s AGM. As residents we see this as an opportunity for the Council to do some stocktaking and signal a change of direction.

The One Barnet Programme (OBP) was initially presented as the new and innovative approach to the future of Council services. However, as soon as the first reports were published it became clear that there was little evidence behind many of the exaggerated claims being made by the consultants paid to advise on the programme.

We are aware that many councillors doubt whether OBP can deliver the savings and improved services Barnet residents expect. We share those anxieties.

Last week saw the publication of a number of articles in the mainstream press supporting the view that mass outsourcing does not save money, is high risk, and has a negative impact on staff morale. We hope you will take the time to read the extracts from some of those articles which follow.

The fate of Suffolk County Council
Suffolk County Council last September declared its intention to become the first “virtual council”. The Chief Executive pushing this programme, under the name New Strategic Direction (NSD), was being supported by Max Wide, on secondment from BT. As you know, Wide was one of the architects of Future Shape/One Barnet.

Since announcing their intention to outsource most services, Suffolk has been dogged by controversy. In December they were accused of ignoring a £100 million overspend on a deal with BT. (See article.)

In the last few days there have been big changes in the Conservative Party in Suffolk as a result of concerns about NSD, and the scheme has been halted. The Guardian newspaper reports:

The previous council leader, Jeremy Pembroke, who helped oversee the plans... stepped down in April amid concern about the deeply unpopular changes.

An inquiry was begun into morale at the council's legal department after an anonymous whistleblowing letter, sent to councillors, and believed to be from an employee, alleged staff there had been put under "unbearable pressure". The letter refers to "the poisonous atmosphere that exists at present" in the council.

(Full article here)

The BBC has reported on its website:

MPs were concerned that Suffolk County Council chief executive's policies threatened to "rip the heart out" of local communities. Negotiations are reported to be going on between the council and its chief executive Andrea Hill who has not returned to work after a holiday and is now reported to be on "extended leave".

Suffolk Central Conservative MP Dr Dan Poulter said he and fellow MPs had been worried about the direction the council was taking under Ms Hill.
(See the BBC interview with Poulter visit.)

Outsourcing should not be the automatic response to austerity

The public sector IT managers’ association SOCITM has published a research briefing called Costs of outsourcing: uncovering the real risks. The report’s author, Martin Greenwood, warns:

Outsourcing should not be considered an inevitable response to austerity. Even smaller organisations that need to gain economies of scale, and struggle to keep up with technological development, should consider collaboration and sharing with other local public services as a genuine alternative. If they do take the plunge into outsourcing, they should make sure they are aware of the pitfalls and know how to avoid them.

...It is a myth that outsourcing is cheaper, across most areas it is more expensive and people outsource for a range of reasons other than cost.
The report reveals that “when comparing the costs for any service, most elements will be more expensive if outsourced. The risks associated with benchmarking begin at the tender stage when suppliers will benefit from being experts at the process of negotiating contract terms, in contrast with the local authority that will go to market only rarely for a major outsourcing.” (More details)

The government is rowing back on mass outsourcing of public services

The BBC reported a recent meeting between the CBI and the minister for the Cabinet Office, Francis Maude, where the minister explained:

...the government is committed to transforming services, but this would not be a return to the 1990s with wholesale outsourcing to the private sector – this would be unpalatable to the present administration.

The government was not prepared to run the political risk of fully transferring services to the private sector with the result that they could be accused of being naive or allowing excess profitmaking by private sector firms. [Note of meeting by CBI]
(Read more here)

The articles above point to the folly of schemes such as the One Barnet Programme.

In the last two months the Council’s poor procurement and contract monitoring capacity has been demonstrated by the MetPro, Catalyst (legionella bacterium) and SAP cases. These have all harmed the Council’s reputation. Yet these are small contracts when compared to what OBP is proposing. With OBP the risks will be much higher.

We are asking the Conservative administration to bring OBP to a close before it is too late. Millions of pounds of public money has already been spent on consultants, with no discernible savings achieved, and the losses could well be multiplied many fold going forward. Residents and Barnet council staff are increasingly anxious about the future of Barnet council services. Councillors should be too.

Last September the Leader said “I would always listen to the community” when she reversed the decision to increase councillors’ allowances. We are asking you to listen now.

There is still time to put the brakes on the One Barnet Programme. We urge you to do so.

Yours sincerely,

Derek Dishman
John Dix
Vicki Morris
Theresa Musgrove
Roger Tichborne

I urge all Barnet residents to ask their councillors to think again, to consider if the evidence in place supports such a huge financial gamble, and to be brave enough to stop this scheme now before even more money is wasted.