Supplier payments for January - have we got a clear picture of agency costs?

The biggest issue in the latest set of supplier payment figures is the inconsistency in the interim and agency staff costs. I have been concerned that since the change over in contracts from Comensura to SCM Matrix we aren't getting reliable cost figures. In December the bills from Matrix were £824,900, much lower than I would have expected. However in January the bill was £1,413,389, almost £600,000 more. We have yet to see the breakdown of the costs and which departments increased their use of agency staff but such large fluctuations seem indicative of wider issues. In fact the January figures are the highest since last August.

I would also point out that there are also significant payments to two other staff agencies for what appears to be two members of staff. In January Barnet paid Gatenby Sanderson £18,731.31 and Hampton's Resourcing £11,363.64 and the total payment to the two agencies since January 2018 is £425,536. As far as I am aware this payment is for just two members of staff and if anyone from Barnet Council would care to correct me, please let me know how many staff are involved. What I would also say is that at these sort of salaries, these staff members should be listed in the senior staff salaries list which Barnet are obliged to publish by law and which you can read here.

In total, the agency costs excluding the two above are so far at £13.49 million with two months to run before the financial year end. I am still not convinced the cost includes all the agency staff recruited to sort out the mess on the refuse service but we have to wait another couple of weeks before we get a scale of the problems there.

The Capita and Re payments this month were just under £2 million this month once credits of £147,063 were included. However I haven't seen any details of the £4.12 million Capita are supposed to be refunding and which should have gone through in January.
The running total for payments to Capita & Re are set out below:

The top ten suppliers chart show that yet again the biggest slug of money is going to the Barnet Group; Conway Aecom have the highways contract and John Graham Construction are building the two new leisure centres at Copthall and Victoria Recreation Ground.

 As always, I will continue to monitor Barnet's spending.

Questions for the Policy & Resources Committee on 20 February

The agenda for the  Policy & Resources Committee on 20 February is jam packed with the papers running to over 700 pages. With enough time I suspect I could have identified 50+ questions but with so little time I managed just 21. The agenda has a number of vital reports. Brexit contingency planning could have massive implication for care staff but I don't see evidence of Barnet actively tackling these issues. The budget is also a massive issue with £20 million of cuts as well as a £5.3 million drawdown from reserves next year. Whether the saving will be achievable is another matter and my big concern is that senior managers are signing up to savings that simply aren't deliverable. It looks like there is an £875,000 overspend on streetscene who are responsible for bin collections. We have not been told the true cost of the huge number of additional agency staff and overtime, but this figure seems to suggest the cost is much higher than people were expecting.
Critically, I a still not convinced we are getting accurate cost figures. The report publishes the cost of agency staff and suggests the total cost to date is £12.05 million. However, I monitor the payments to suppliers which shows that the agency staff cost from the main supplier Matrix (and its predecessor Comensura) is £13.39 million and that doesn't include payments from some other agencies who do not operate through the Matrix contract. I have asked them about this on a number of occasions so this time I have spelled it out for them so they can see clearly where the differences exist.
I have set out my questions below - we will have to wait and see if I get any real answers.

1. London’s construction sector has an ageing workforce that is heavily reliant on migrant labour. EU nationals make up 30 per cent of the 300,000-strong workforce, while just half are UK-born. Of the UK-born workers in the capital, 38,500 (12 per cent) are set to retire in the next 5-10 years. Yet it is estimated that 60,000 more construction workers are needed in London and the South East in 2017 to keep up with demand. Given that Barnet have budgeted to received £54 million in New Homes Bonus (NHB) over the next 5 years what steps have been taken to understand whether that bonus can be delivered if there are fewer construction workers, whether the NHB estimates should be revised downwards and what are the budget implications if the number of new houses are not delivered?
2. The risk register identifies the issues related to adult social care staff recruitment and retention. However, it does not address explicitly/quantify the financial impact on Barnet if, for example wages rates for carers are forced to increase significantly to attract and retain staff. What studies have Barnet carried out or commissioned to specifically quantify the financial impact of an increase in carer pay rates?
3. What other measures have Barnet considered to attract and retain care staff?
4. To what extent has the Barnet Observatory* provided economic and socio economic intelligence and foresight to the Brexit planning and risk register? (*Barnet Observatory was a Capita promise in their original bid specifically to address these types of issues)
5. The report notes at 1.5.18 that the Council’s failure to increase council tax in line with inflation means that we will be  collecting on average £150 a year less from each household by 2024. If Barnet had taken a 1.99% increase each year we would now be collecting approximately £20m more next year which closely mirrors the level of cuts to vital services which are budgeted. What consideration has been given to try to make up some of this shortfall by increasing council tax by more than 2.99% next year and what were the outcomes of any  financial modelling over the next 5 years on that basis, even taking into account the cost of a referendum?
6. Even after budget savings of £19.965 million we still need to draw £5.357 million from reserves. What happens if theme committees are unable to deliver the savings as was the case this year and last year and what cumulative impact will that have for future years in the MTFS?
7. The risk register identifies at STR033 the risk of savings not being delivered and suggests Monthly Budget Monitoring as mitigation. However the Financial Performance and Contracts committee only meets quarterly which means that there may be significant deviations from the budget before Councillors are made aware. Given that this is such a critical area for the Council what consideration has been given to scheduling a Monthly Budget Monitoring sub-committee with a very specific focus and brief to ensure that there is a much closer scrutiny by Councillors and the public of budget performance?
8. Risk STR022 discusses the risks and liabilities associated with Barnet House. Back in 2014 Barnet paid £62,500 to secure an option to purchase the freehold of Barnet House. Did the option lapse, should it have been extended, and to what extent will additional office space be required, other than Colindale, if more Capita services are brought back in house?
9. STR032 Identifies the issues around the changes to the waste collection routes. Given that there has been no transparency on the costs of agency staff and overtime and a significant number of new refuse vehicles have been purchased to try and overcome the problems what confidence can we have that a residual risk score of 12 is appropriate?
10. STR025 identifies the risks associated with contractual disputes due to underperforming commissioned services and has a risk score of just 6. However the recent performance data identifies that both user satisfaction and commissioner satisfaction with commissioned service is poor and declining. How was this score developed and did it consider the current poor user/commissioner satisfaction scores as part of that assessment?
11. PI022 identifies the risks associated with the company that that controls the street lighting management system Harvard Technology going into administration. Given the company went into administration on 10 December and Grant Thornton have been appointed as the administrator, what further updates are available to clarify the potential financial or operational impact and will this have any impact on the current proposal to upgrade to LED lights?
12. OP27 identifies the risks associated with the affordability of the Thameslink project and in particular the risk that Government may claw back grants leaving Barnet liable for the abortive costs. What is the scale of the abortive cost liabilities and when will a final decision be made as to whether this project will be aborted.
13. At page 4 in the report is states that there is an adverse movement due to £0.340m increase in gain share contractual payments and other areas of Managed Budgets. Can you clarify how Capita can be entitled to contractual gain share costs linked to the increase in anticipated Housing Benefit Overpayment recoupment given that Capita have responsibility for administering Benefits and how that is reconciled with the statement that no further gainshare payments would be made following the £4 m payment from Capita agreed at the Urgency Committee?
14. The £875,000 of additional overspend on streetscene is attributed to the delay in implementation and the changes to the collection rounds. How can we be confident that this is an accurate figure, why has it been allowed to grow so large and what is the forecast carry over into next year’s budget?
15. The HB Law contract continues to be overspent and has done since the contract started. What are the risks that it will be overspent again next year and what specific measures have been put in place to ensure it is delivered on budget?
16. Yet again Table 8c does not reconcile with the figures published on the suppliers payments. Set out below is a comparison between the table and the data published on the Barnet website. Which figures should I believe and why are there such significant difference?
    
17.  At 1.74 the report notes a dispute with the builder about the final fit-out and costings has the potential to impact on the completion date and office move. Please can you clarify the cost of this delay and what is the revised date to move staff into Colindale?
18. Why are the Appendices exempt when you have already published details of 146 of the properties in delegated reports. What specifically makes the information unsuitable for publication and who determined that it is not in the public interest to provide details of a massive asset transfer from the Council?
19. TBG Opendoor is forecast to lose £4.247 million over the next 5 years and the business is not forecast to break even until 2034/35. What will be the cumulated losses up to 2034/35 and what risks have been identified that might occur over the next 15 years to influence that break even target date?
20. Appendix B contains a five year business plan summary (excluding TBG Open Door) which shows a forecast profit for the 5 years of £680,000. Last year at this committee the forecast for the same period was a profit of £1,342,000. What has caused the profitability to halve in 12 months and are there any other risks such as those identified in the Brexit Impact Log that could turn TBG into a significant loss making business.
21. I am concerned to read at 1.10 that the £319.5m grant would be partly repayable by the Council, recognising that a business rate ringfence is currently in place around the shopping centre but that the ISC were not content with the proposal to extend the ringfence, and therefore asked for further work to agree an appropriate repayment model. What is the extent of the grant repayment for which Barnet may become liable, when will the negotiations on an appropriate repayment model be concluded and has ministerial support now been secured?

Misleading Supplier Payments list for 2010/11 - an Open Letter to Mr Travers

Dear Mr Travers,

I write to you in your role as the Council’s Chief Financial Officer. As you may know, I take a great deal of interest in how the council spends council taxpayers’ money. As part of my scrutiny of the annual audit process I have made a number of requests for further clarification based on the Supplier Payments list posted on the Council’s website. In the past I have found a number of errors with this list but at least I believed that they were drawn from a list of supplier payments (which is only reasonable to do as they are called Supplier Payments).

As part of my review I found a number of duplicate entries on the list which suggested that payments had been made twice and which significantly alarmed me. However, I now find out that the Supplier Payments list for 2010-11 posted on the council’s website is based on a goods receipting system and not on actual payments. Not all credits were shown on this system and as a result the figures shown are unreliable. For example there are two payments for £258,153.96 listed in the Supplier Payments for August 2010 when only one payment has actually been made according to the SAP system.

I have been told that for the financial year 2011/12 all credits are being shown as well, so this should give a more accurate picture. In addition, the council is working with Logica to get a direct automated report from the SAP system (£23 million spent to date) which will show payments on a cash basis rather than an accruals basis.

I hope you understand that I find this a rather unsatisfactory situation. It is now a year since supplier payments have been listed on the website yet at no time has there been a clear statement that this data was not taken from actual payments and that is may not be reliable. It is also surprising that in that year, a suitable report programme from the SAP system has not yet been finalised.

The supplier payments list has serious significance; not only is it meant to provide transparency for council tax payers but it is picked up by a number of other bodies as a way of assessing how much is being spent with a specific supplier. I am now at a loss as to what to believe about the supplier payments list for last year as it has lost all creditability.

I would reiterate my comments made at the recent Audit Committee, that this is yet more evidence that the shift management emphasis to delivering the One Barnet Outsourcing Programme seems to have taken away the focus of getting the day to day operation of the council running properly.

Yours sincerely

John Dix