I'm Still Keeping an Eye on Barnet's Finances

Hello to readers out there at this difficult time. I know that some people have been very badly affected by the Covid-19 pandemic and to you I extend my deepest sympathy. Two members of my extended family have been affected one of whom died and one who is still in hospital. Others have been financially affected by lockdown and again that is something with which I can empathise having had first hand experience. I have chosen not to blog about Barnet for the last couple of months as people have had more important priorities, but as the situation seems to be changing I thought it would be appropriate to start up my scrutiny again.

Barnet's supplier payments for the year end came through so it is good to take stock of where we are.

The money paid to Capita this year seems almost beyond belief especially at a time when they have performed so poorly to the point that the pensions administration has been taken away from them. This financial year they were paid more than double the contracted sum, £83.2 million versus the contracted sum of £39.7 million and in total for the duration of the contract we have paid them £189.5 million more than the contracted value.

In terms of payments for agency staff, that has finished the year at £15.11 million, down on last year but a much smaller reduction than was originally anticipated at the start of the financial year.

This is a brief analysis but I will be doing further articles in the next few days.

Financial Performance in Barnet - Some very serious questions

Next Monday is the first meeting of the newly restructured Financial Performance and Contracts Committee. You can view the committee papers here but I warn you they are a long read. This committee last met on 27 February, 4 weeks before year end. At that point no significant mention was made of the poor financial performance. Four months is far too long to wait for a committee dealing with such important matters. Maybe it was because Barnet or Capita were too ashamed of the results.

CSG run by Capita had a dismal performance including failing 18 contract indicators. But not to worry. The footnote makes it clear that although they had all these failures, none of them count as a contract failure so that's Capita off the hook. I absolutely despair of Barnet's ability to enforce performance on these contracts.

Capita run Re also turned in an appalling financial performance. At the committee meeting on 27 February they showed a net overspend of £285,000. By financial year end, 4 weeks later that had increased to £6.7 million. Someone somewhere was not doing their job to have such a massive change in financial performance in the last 4 weeks of the financial year. I would also draw your attention as to how they change the format between reports to make comparison a bit more confusing.

Of critical importance at this meeting is the dire financial situation and what it means for Barnet residents. This financial year Barnet has to make an additional £9.5 million of savings. That is on top of the £9.9 million of savings they have already budgeted (but may fail to achieve). What is worse is that while the reports detail the failings there is no clear indication of how these problems will be resolved. The reports also uses positive narrative and spin to make the situation less serious than it really is, a worrying approach if councillors aren't super vigilant in interpreting what they are being told. Last year Barnet had to use £21 million from reserves and balances to fund the overspend, a situation which is entirely unsustainable but I see no prospect of how they are going to close the  budget gap this year.

Set out below are questions I have submitted to the committee. As always I have low expectations of whether they will be adequately answered. I will update you after the meeting.

1. On 27 February 4 weeks before year end this committee was made aware of an overspend after adjustments from reserves of £4.232 million. In 4 weeks that overspend almost doubled to £7.885 million. Why was there such a serious under reporting of the financial position at the last meeting?
2. Given that this committee was not alerted to the scale of the  financial overspends at the 27 February meeting, 4 weeks before year end, and only discovered in May when the year-end accounts were being closed, how confident are you that this report provides you with an accurate picture of current financial performance?
3. Do you think that the net draw on reserves and balances for 2017/18 of £21.148m is either acceptable or sustainable and what steps are you going to take to ensure this huge draw on reserves and balances does not occur again this year.
4. 1.2.3 implies that the Policy and Resources committee were aware and approved of all the drawdown on reserves and balances which they were not at their meeting on 13 February, 6 weeks before year end. Do you think the wording of this section should be changed to reflect the fact that such a large shortfall was only identified after year end accounts were closed.
5. In the report it states that the overspend was reduced following drawdown from reserves. This is entirely misleading as the overspend was not reduced. Should the report be corrected to say the overspend was offset following drawdown from reserves as that is a more accurate description of the situation.
6. At this meeting in February most of the budget overspends were identified with one significant exception which is the Re budget. In February the Re budget outturn was forecast at £611,000 with reserve movements of £241,000. On that basis paragraph 1.2.18 entirely misrepresents the situation by saying that the budget was overspent by £3.954 million. Can you confirm that the budget was overspent by £6.7 million of which only £290,000 was identified at 27 February.
7. Of the two overspend items in the Re budget, is the £4.5 million guaranteed income the same element that was identified by the external auditor last year and on which the Audit committee were given solid reassurances by the Director of Resources that they would be recovered?
8. Will you be asking the Director of Resources why they gave such a reassurance last year that has failed to materialise?
9. Please can you explain why it took from July last year until after year end before this committee were made aware that this amount was not recoverable?
10. Please can you clarify specifically what you mean by the sum being “accounted for within the HRA budget” given that this sum is not reflected in the HRA budget outturn at Table 3?
11. Can you clarify specifically what the legal advice said as to why the “guaranteed income” should not be included in the General Fund revenue account?
12. If the other major Re overspend of £2.647 million was a contractual liability, why was it not recognised in the performance figures sooner so that other budgets could be adjusted before year end to reflect the liability?
13. At 1.2.23 the report states that “net pressure” is £9.5 million. Can you confirm that this is in addition to the planned savings already forecast of  £9.932 million meaning that total savings required this year are £19.432 million?
14. Given that we are three months into this financial year what is the latest update on the realisation of this £19.432 million of savings?
15. How confident are you that the narrative in this report is balanced and that it provides a true picture of performance?
16. At 1.6 in the report it states that six performance indicators were not met yet at  1.7 the report states that Cambridge Education only failed to meet one contract indicator. Does that mean that the commissioning and corporate plan indicators are not the contractual responsibility of Cambridge Education?
17. The report identifies indicators not met but no reassurance is provided as to how they will be met in the future. How can we be sure that these indicators will have been met when they are next reviewed?
18. At 1.8 no mention is made of the massive financial fraud that took place last year and which it appears was able to take place as a result of failing in the internal financial controls which are the responsibility of CSG. Can you tell me why this was not included in the report?
19. The report states that “a review of internal financial controls was undertaken and improvement implemented”. Is this the Grant Thornton Project Rose study, and if so when were these improvements implemented and will the report either be made public or circulated to members of this committee in private session/ “blue papers”.
20. The report notes that a gainshare working group was set up to review the application and reporting of procurement gainshare. Please can you provide me with more details as follows: what are their terms of reference; who attends the working group; how many times have they met so far; do they publish minutes; what is the timescale for producing a defined output; do Capita attend these meetings; will you be taking public evidence; and will the findings be made public?
21. How confident are you that the gainshare savings stated are real and specifically as a result of Capita expertise or could they have been achieved using standard framework contracts available to local authorities?
22. When I checked on the 23 May 2018, the contracts register for 2018/19 was on line and showed  that 112 contracts had expired before the start of the 2018/19 financial year. On 23 June 2018 the data set had been removed from the Barnet Open data portal. What is going on, it the contract register being maintained up to date, how many contracts are currently being used that have expired?
23. For 2017/18 I understood that the in-year Council Tax and NNDR collection rate were guaranteed at 98.0%. On that basis why is the in-year council tax collection rate shown as only 96.02%  and only 96.89%  for NNDR and will CSG be making up the shortfall?
24. There are a large number of KPI’s not being met or performance is worsening yet the report does not appear to identify what steps are being taken to ensure they situation improves. How can we have any confidence that these matters are being adequately addressed and that this time next year the situation will have improved?
25. Do you think it would be helpful to inform committee members that the caseload charges over and above the core fee for 2017/18 were £190,953 and that CSG customer service volume excess charges were £247,000?
26. Given that the council has now introduced monthly financial reporting can you include in the terms of reference that the quarterly financial reports must reflect a rolling quarter’s data i.e. the three months figures immediately prior to the committee meeting as a way on ensuring you get the most timely and accurate information.
27. When the report says the CFO’s report will give a “broad look” at financial performance it creates ambiguity and risks failing to provide you with important detailed information.  Given the content of the report are listed do you agree that the term “broad look” should be deleted and include the words “and any other information the committee deems important for the monitoring of financial performance”?
28. Do you think it would be advisable to add in the following phase: “The report must be provided in a consistent format which not only allows immediate transparency but facilitates the easy identification of trends in performance over a period of time”?
29. Will this report include details of the Budget Recovery Plan, progress on non-essential discretionary spend controls and any SPIRs that have been frozen?
30. Will the report give details of the Capita contract negotiations – even if they are provided in private session/within confidential “blue” papers?
31. Given that staffing and agency costs are a major source of budget overspends surely this committee should receive details of  staffing, incl. headcount, FTE, agency and sickness absence as these are financial performance issues not policy issues?
32. For the avoidance of doubt, who is the Chief Finance Officer as there is no such post in the LBB senior management structure; are they a Capita employee, the Head of Finance or the Director of Resources/S151 Officer.
33. Will the S151 Officer attend these meetings?
34. Why are we waiting until September to get a report on agency spend when it represents such a major cost to the council given that we will be half way through the financial year at that stage and have less opportunity to act on the findings before year end?

East Barnet Library - sacrificed to balance the books

Barnet Council are proposing to downgrade East Barnet Library to a "Partnership Library". It will be open just 15 hours a week, run entirely by volunteers and it will occupy just one third of the space of the current library. This is to save money apparently, although this will take at least three years before the council breaks even on their investment in technology, using their wildly optimistic assumptions about how much they will get renting out spare library space, in East Barnet's case £54,000 a year. My guess is that the space will never realise the £546,000 a year they anticipate across all the Barnet libraries making the business case even more spurious.

Now you would think that this is a very underused facility to be cut so severely. In fact this is a well used library with more than 9,000 users and over 167,000 transactions a year. But what does that mean in reality. I've just popped into East Barnet Library to meet someone there. The place was full of children coming from school - with two primary schools and a secondary school on the doorstep. There was a mother and daughter working together on one of the computers and people on another three of the computers - one was out of order. There were four mature residents reading newspapers in the soft seating area. Librarians were dealing with a number of requests. The library was buzzing yet this is the same library that Barnet Council have deemed an unnecessary expense to either be run by volunteers or shut. So for all those children the alternative will be to get on a bus either to Osidge library which is to be halved in size to just 2153 sq ft or to Chipping Barnet Library. However, if the children are unaccompanied they probably won't get into either as Osidge will only be staffed for 15.5 hours a week and Chipping Barnet only for 23.5 hours a week. Outside those times unaccompanied children will be excluded.

Barnet could have avoided this problem if they hadn't decided to cut the council tax by 1% just before the 2014 local election. A political hand out to buy voters which has cost us our library service.  Cllr Reuben Thompstone will chair the committee on Monday which will push this through. If you disagree with the proposals to destroy our libraries email him at cllr.r.thompstone@barnet.gov.uk and tell him what you think.

Buying Votes in Barnet

Tonight is the council meeting which will agree the budget for next year. The Conservative group have put forward a 1% cut in Council Tax at a cost of approximately £1.4 million. That may sound a great deal but it works out at around £10 per household per year or around 20p a week. This come at a price however. To give back 20p a week to each household the council is cutting services to the elderly, adults with learning difficulties and children's services. In addition, charges for most council services are rising.

The council seem to judge the appropriateness of their cuts to services by how many people agree with them. If we followed that through to its natural conclusion, the majority would vote for minimal or no council tax but does that make it right that the elderly or adults with learning disabilities get screwed at the same time? Of course not but this council is determined to win votes and therefore cuts to services in return for cuts to the council tax are what we will get.

At tonight's meeting we will also hear three alternative budgets, from Labour, Liberal Democrats and from Brian Coleman. Having read through the details, I have to say that I am disappointed that Labour have chosen to go along with the Council Tax cuts. It is not surprising, I suppose, given that any suggestion they would either freeze or increase Council Tax would be pounced on by the Conservatives, but that doesn't make it right. The Liberal Democrats have proposed a council tax freeze (as opposed to a cut), freeing up £1.4 million to spend on other services and reduce the impact of proposed cuts to children's services. I also like their proposal to delete the political assistants posts for the Labour and Conservative groups, saving £83,000 a year. I have always found it a contradiction that a council that has gone out of its way to eliminate paid union representatives seems quite content for us to pay for its political assistants. In some ways the Liberal Democrats can afford to be more radical in their proposals as they only hold one ward, Childs Hill, and with two of their three councillors retiring (the Palmers) the likelihood of their proposals coming to fruition are limited - but I admire Cllr Jack Cohen for at least making the suggestion.

Looking briefly at Brian Coleman's proposals, one has to wonder what planet he is on. He proposes a further 2% cut in council tax costing £2.86 million. To pay for this he wants those in receipt of benefit to pay 20% towards their council tax  (known as Council tax Support or CTS) instead of 8.5% which is currently required. That would raise £1.76 million although he also includes a provision of  £306k for bad debt against this increase which suggests he is setting up the poorest to fail and be exposed to court action and/or the bailiffs (owned by Capita). A note from officers says that he could not increase CTS this year because it has missed the deadline for setting CTS but it gives you an indication of his priorities. Brian  also proposes reversing the Council's policy to increase the hourly rate of  the lowest paid council employees to the London Living Wage of £8.80 per hour. Keeping people in poverty seems to be a theme here. He also wants to turn off street lights on minor road between midnight and 5 am. Given the council, of which he was a member, spent £27 million on the street lighting PFI to improve lighting levels it does seem somewhat ironic he now wants to turn them off at night. I'm afraid I do have to go along with one of Brian's proposals not mentioned by either of the opposition parties and that is the elimination of the CEO post saving approximately £260k per annum. Currently in Barnet we have both a Chief Executive and a Chief Operating Officer which, in my opinion, is one Chief too many.

Overall the budget proposals are disappointing and short-termist. They fail to address the demographic pressures which the borough is facing and which are set out in the budget report. This is all about the election in May and ensuring that the politicians keep their power and their allowances. Given that the council now have Capita providing most of the services, I would have taken the opportunity to slash the number of councillors to just one per ward saving around £650,000 in councillor allowances. I would have also focused much more on creating jobs in Barnet, stimulating business and benefiting from the proportion of Business Rates the council are now allowed to retain which in turn would allow more to be spent on those who most need the council's services. I would also make serious inroads into the consultancy and interims budget where the council are spending millions unnecessarily.

Let's see if this attempt to buy votes in May works but I hope for the sake of those most in need that it does not.

£16.1 million paid to Capita - still no answers from Barnet Council

The scandal of the £16.1 million paid to Capita continues without a clear response from the Council. Set out below is a joint letter from the Barnet Bloggers asking Councillors for answers:

Dear Councillors

Throughout the history of the One Barnet outsourcing programme, statements by the leader of Barnet council, Cabinet members, Conservative councillors and the senior management team have all maintained that as a fundamental commitment to the NSCSO contract Capita would make a large ‘upfront’ capital investment.

The necessity of this investment by a private sector partner was given as the reason why the authority refused even to consider an in-house option as an alternative to privatisation of council services.

If an in-house option had been adopted, not only would many local jobs have been saved, all efficiencies made through better management of such functions as procurement would have been retained by the authority, as opposed to a limited amount capped in the contractual agreement with Capita. By ignoring this option, it is arguable that the statutory duty of the authority to make the best use of taxpayers' money may have been breached.

We have now learnt that not only has Capita failed to make the promised capital funding but that in August, in a complete reversal of  policy, the Leader of the Council sanctioned the payment to Capita of £16.1 million of taxpayers’ money held in the authority’s reserves, in order to cover the cost of the capital investment.

We believe that not only have the leadership, Conservative members and senior management team of Barnet Council promoted the need for privatisation, and the contract with Capita, on a totally false premise, they have continued to mislead residents by misrepresenting the facts, and maintaining that capital investment is to be given by the company, rather than admitting that money has been taken from the authority's reserves and paid to Capita for this purpose.

After the Cabinet meeting of 6th December 2012 which approved the contract with Capita, Councillor Cornelius made this claim in a statement published on the BBC London news website

Council leader Richard Cornelius said the combination of a saving to the taxpayer of a million pounds a month and an £8m investment in technology by Capita made it a "very, very good deal for the Barnet taxpayer".

http://www.bbc.co.uk/news/uk-england-london-20630442

This misrepresentation of the truth has continued even after the payment £16.1 million was formally authorised by the Leader of the council.

The business model approved by Cabinet on 6th December 2012 stated clearly that this investment was to come from Capita: how can it be lawful, therefore, that having approved the contract on this basis, we now find the reverse is true, and that taxpayers are paying for the investment?

If there is any financial argument for such a fundamental change, why has the authority not been open and transparent about this new agreement, and sought approval through the appropriate procedures?

The authorisation to add £16.1 million to the capital programme in order to pay for the capital investment was made on 5th August this year by Councillor Richard Cornelius, in an action defined as a 'non key' decision.
http://barnet.moderngov.co.uk/ieDecisionDetails.aspx?ID=4903

According to the council's own constitution, key decisions are those that are 'significant in financial terms or in their effect on communities comprising two or more wards'.

Clearly the decision to remove £16.1 million from reserve funds in this way most certainly is a key decision, and departs in the most fundamental way from the business model approved in December.

Quite incredibly, on 6th August, the day on which the contracts were signed, and the very next day after the leader signed off the £16.1 million to cover the capital investment, Barnet Council issued a press release: 

http://www.barnet.gov.uk/news/article/346/barnet_council_and_capita_sign_contracts_to_save_barnet_taxpayer_millions

in which it is stated:

"Capita will also make an £8 million pound investment in technology to improve council back office services".

What is that statement, other than a deliberate misrepresentation of an unpalatable truth?

We note that the explanation of the NSCSO contract on the council's own website, updated after 5th August, continues to maintain falsely that an upfront investment will come from Capita: see here -

http://www.barnet.gov.uk/info/930354/new_support_and_customer_services_organisation_nscso/990/new_support_and_customer_services_organisation_nscso
Capita will make an upfront investment which will provide improved Information Technology and telephone support to improve council back office services.

In regard to the approval of 5th August, the constitution says:

When key decisions are to be discussed or made, notification is published at least 28 days before. If these decisions are to be discussed with council officers at a meeting of the Executive, this will generally be open for the public to attend, except where personal or confidential matters are being discussed. The Executive has to make decisions that are in line with the Council’s overall policies and budget. If it wishes to make a decision that is outside the budget or policy framework, this must be referred to the full Council to decide.

Unless the change of policy, and a radical change to the terms of the business model represented by the decision to use reserve funds for a capital investment payment to Capita has been formally agreed through the relevant constitutional procedures, therefore, it is reasonable to conclude that the payment may well be unlawful, and as residents, taxpayers and citizen journalists in Barnet we object in the strongest terms to what would appear to be a serious breach of the regulations that are supposed to protect our best interests, and we ask you to instigate an immediate investigation into the issues we have raised.

Derek Dishman
John Dix
Theresa Musgrove
Roger Tichborne

(Citizen Barnet has left the borough)

One Barnet - spurious figures, misleading statements undone by a political gesture. It's a basket case!

In the cabinet papers for next week there is an appendix called A Growth Strategy for Barnet. In the executive summary, authored by Richard Cornelius, it states on page 2 that "The One Barnet programme will deliver guaranteed savings of £111 million by the end of the decade".

What I want to know is where is this guarantee coming from; who is providing it and what is the supporting evidence to arrive at the £111 million. If you look on council's website  (yes I did find it) the language is slightly different and says "The programme is currently forecast to deliver £111m in total savings." Now I don't know about you, but in my world there is a massive difference between a forecast and a guarantee. My pension with Equitable Life was forecast to provide me with a comfortable retirement in my old age but sadly that is not going to happen because some slick salesman sold me a load of baloney. Also the guaranteed savings end of the decade is just seven years away whereas the forecast savings are generated over ten years.

 If we dig a bit deeper and look at the two large outsourcing contracts the council's website it states that the DRS contract is due to save £26 million over ten years and for the NSCSO contract it will save £41 million. So together the two massive outsourcing contracts will save £67 million. So where does the other £44 million of savings come from? The shared legal service is forecast to save £190,000 over three years so let's be generous and say £650,000 over ten years. £43.35 million to go then.

Next we look at the Parking Services which are forecast to save £600,000 per annum. Now we all know that so far rather than saving money this contract is actually costing more money than when it was run in house. So perhaps we can discount those savings.

How about the Your Choice Barnet which was the creation of a Local Authority Trading Company to manage Barnet's Adult social care services. That was forecast to have a surplus of £263,000 by 2013/14. Sadly I understand that in fact Your Choice Barnet are forecasting a deficit of £700,000 for 2013/14 so it looks to me like Barnet's forecast savings might not be realisable.

So where are the rest of the £43 million of savings? Redundancies and cuts to services? As someone who believes in evidence I would say the evidence here is shaky to say the least and any claims of guarantees are simply LIES, a word I do not use lightly.

To cap it all this week the council announced a potential council tax freeze. This will impact on the budget for ever year going forward and has the effect of reducing revenue over the period 2013/14 to 2022/23 by approximately £44.6 million or around two thirds of all the savings generated by the two massive One Barnet outsourcing contracts. (I am happy to share my spreadsheet model with any councillor who doesn't believe me).

What I want to know is who on earth is providing the financial advice to the Councillors because from my perspective it looks nothing short of disastrous. Two thirds of the savings of One Barnet outsourcing wiped out by a political decision to freeze council tax. That means the cuts will have to be even deeper, even more life changing to the most vulnerable in our community. The management of Barnet is a basket case and the sooner we get people with common sense running the borough the better.

Barnet's Landmark Library - It will never happen

The rationale behind closing Friern Barnet Library is that it will be replaced, along with North Finchley Library, with a new Landmark Library at the Artsdepot. This week I saw a copy of the feasibility study prepared by Capita Symonds (yes the company bidding for the two One Barnet Contracts)  and dated 3 July 2012 which shows the various options for relocating a library in the Artsdepot.

The study, disclosed under an FOI request, runs to 123 pages and considers 19 options and sub options. These options range in size from a very small 505 sqm (which is discounted as being too small) through to the largest option at 1,005sqm. To set this in context, the floor space of the Chipping Barnet Library is 1,650 sqm, more than three times the size of the smallest option and 50% bigger than the largest option. That tells us that any landmark library at the Artsdepot will be modestly proportioned.

The feasibility study identifies that the minimum space requirement is 750sqm and that the ideal is 1,000sqm. There are numerous visuals which give a feel of how the Artsdepot might look with the new library added.

However, it is when the study considers the costs that things start to go horribly wrong. The cheapest option is £1.2 million for the 505sqm space, one that has already been ruled out for being too small. The most expensive option comes in at £5.4 million for a 960 sqm space, very close to the "ideal" size requirement, although still 690 sqm smaller than Chipping Barnet Library. These are simply the capital costs and take no consideration of rental cost. The current temporary library is costing £34,000  and takes up a space of 94sqm. the ideal sized option would be ten times that at roughly £350,000 per annum in rent.

So there you have it. Close the Friern Barnet library that has minimal running costs (before library staff are considered) and has a capital value of £400,000 and replace it with a library costing £5.4 million and £350,000 in rental. I know you have to take into consideration the value and savings at North Finchley Library but they are never going to come close to making up for the additional costs of the new Landmark Library.

Sadly the obvious conclusion is that the Landmark Library will simply not get built.

Now anyone with half an ounce of common sense could have seen this coming a mile off. Leaving this feasibility study until after the Friern Barnet library was closed seems to me like a cynical ploy to remove library capacity Was there ever any real intention to build a new library or was this the anticipated outcome all along. Perhaps it is also a reflection of the culture of the flawed One Barnet programme, take something which is meeting a need and ticking over cost effectively and replace it with something new and shiny and, oh dear, a lot more expensive. I don't know how much this feasibility study cost (yet) but it will not have come cheap. Barnet please stop wasting our money and just focus on delivering services that the residents want. Give up on this stupid idea of selling the Friern Barnet Library now and give it back to the community.