Friday, 24 August 2012

Pam Wharfe's latest update on the One Barnet fiasco

From: Law, Lucy On Behalf Of Wharfe, Pam
Sent: 24 August 2012 16:37
DRS Joint Venture proposal – Staff Update

Following my DRS fortnightly email last week I have set out further details on the joint venture below:-

What is the decision making process around the joint venture?

The joint venture has been an option considered by the project Board over the last 2 years and has featured in the options appraisal and business case.  Although initially our preference was for a Strategic Partnership, the JV has developed as a progressively more attractive option following detailed discussions with bidders.  As a result the project Board recommended to Corporate Directors Group that this be formally advanced in discussions with bidders and indeed is currently our preferred option.  Following evaluation the final option, along with the preferred bidder, will be presented as a recommendation to Cabinet in the New Year. Cabinet will then take the final decision on whether to award the contract, the preferred bidder and the joint venture approach.

What does the joint venture approach mean in practice?

A new organisation would be formed by the Council and the successful bidder.  The Council would have a minority interest in this organisation and would appoint a small number of individuals to the senior management team of the new organisation.  This organisation would then contract with the Council to provide the DRS services.

Does this reduce any of my TUPE rights?

No.  In scope staff would TUPE into the joint venture organisation, and this would be on the same conditions as have been previously set out.  The obligations of the joint venture organisation would be backed up by the successful bidder’s parent company.

Who would my employer be?

The joint venture organisation.

Bidders have made reference to potential career opportunities in their organisations, does the joint venture limit these?

No.  The joint venture organisation would operate in many ways like any other organisation in the successful bidder’s group of companies.  There is no reason why the use of a joint venture company would limit the opportunities this could provide to staff.

Why use a joint venture approach for DRS?

As a result of being a part owner of the joint venture organisation and through having representation within the senior management team the Council would have more say in the organisation.  In addition the joint venture would allow us to share more easily in any commercial success the organisation has.  This is important to us as the DRS bidders and ourselves are confident that there are significant commercial opportunities in the delivery of DRS services both within Barnet and outside of the Borough.

What if the joint venture organisation is unsuccessful and becomes insolvent?

The joint venture organisation will have a contract with the Council for the provision of DRS services, and, as with a non joint venture approach this contract will be backed up by a ‘parent company guarantee’ which provides a legally binding obligation on the commercial parent company to fulfil the performance of the DRS contract.  It is likely that were the joint venture organisation were unsuccessful that the commercial parent company would provide further resources to the joint venture company to ensure it continues to function to service the DRS contract.  Such a situation could reduce the value of any investment by the Council in the joint venture company however the Council is only intending to invest a nominal sum (which could just be £1) and it is not obliged to provide any further assistance in the event of failure, unlike the commercial parent company which would be obliged to deliver the DRS contract.

Kind regards,

Pam Wharfe
Interim Director Environment, Planning & Regeneration
London Borough of Barnet
2nd Floor Building 4, North London Business Park, Oakleigh Road South, London N11 1NP
0208 359 7988
 The Barnet Eye must conclude that the people within the Council are rather naive.  The statement "It is likely that were the joint venture organisation were unsuccessful that the commercial parent company would provide further resources to the joint venture company to ensure it continues to function to service the DRS contract." demonstrates the level of this delusion. The reason the joint venture company would become insolvent is because the parent company would see it is not making any money. Why on earth would the shareholders of the parent company sanction throwing good money after bad. That is not how private companies work. 

It is also interesting to see that the council intends to only have a minority stake and not make a financial investment in the company. This is a very important question as the shareholding of the company will demonstrate control and where the dividends from the JV go. It appears that the bidders are keen simply to use the JV as a vehicle to escape from liability and association with a risky venture. There is also the implication that the bidder can further dilute the councils control and shareholding of recapitalisation is required. 

It is interesting that the Council officers seem to believe it is there job to tell the councillors what to do. It also appears that the timetable has changed yet again. 

One wonders what the unsuccessful bidders make of all this. It seems that were excluded and then the ground rules were changed. A genuine joint venture would have shared control and shared investment. This particular scheme and the rushed announcements, made via emails late  on a Friday afternoon stink of panic. 

As it seems that the mantle of opposition is falling to the bloggers, this rather suits us. It gives us time over the weekend, to consider our strategy and response. What seems like a cunning ruse by the Council Officers, does indeed play to all the strengths of bloggers, allowing us to organise at times convenient to us. 

And organise we will. The Officers of Barnet Council do not seem to recognise the fact that the reason that the bloggers of Barnet are so committed is because we are long term residents who love Barnet and the surrounding area. We do not see  it as a convenient place to boost our CV's. We blog because we live here and we have a stake in the Borough. Our friends live here. We see the effects of the Council's stupidity on our friends and families.

This week two of my daughters were sitting GCSE's at local schools. Both got outstanding results. It was also my 50th Birthday. I was born at Edgware General hospital as were two of my children. The third was born at Barnet General. My parents are buried at Hendon Cemetary. My business is in Barnet and I employ ten people. These are the reasons I write this blog. Most of my close friends run their own business. My parents started the family business in 1948 in Bunns Lane and it is still running. I also have a cousin my age who lives in the care of Barnet Council, as she has Downes Syndrome. These are my motivations. I cannot fathom the motivations of the people within the council who get paid by us, the taxpayer and are using our money to divest profits and control from council services, to multi national companies, who have no interest in the Borough beyond making money for shareholders. If anyone believes BT and Capita Symonds are interested in anything other than making as much money as possible from you and I and our taxes, then you really don't understand what private companies are all about. 

Earlier today I posted a blog joking about how the Leader of the Council, Richard Cornelius will be remembered. Sadly, I suspect that it will be as a man who was completely out of his depth and who lead a very inept regime which made some extremely bad decisions. I hope I am wrong.


Mrs Angry said...

No, you are not wrong. The only reason we kick up so much of a fuss is because Barnet is where our families live, and we cannnot stand to see it sold off to private enterprise by an incompetent, cowardly council told what to do by the senior management team it employs to serve the community, but more interested in serving the interests of the profiteering private sector companies circling around our public services. We will not stand by and see this happen without protest.

LBB said...

For Joint Venture read "face saving exercise..."
The bidders have clearly seen that the writing is on the wall and I guess they have intimated as such but the DRS cabal are so desperate for this to go through, this is the best idea they could come up with at this stage.

If this set-up can make a profit as a JV, then it's a very simple process to make it work in-house and just hive off the DRS services as a standalone business unit. This is a process that has worked very succesfully at other local authorities around the country and the vast majority of them have made further profits for the council they are attached to by offering their services elsewhere.

Trouble is, there's absolutely nobody with the "cojones grand├ęs" in the DRS team to put the brakes on, hold their hands up and tell Nasty Nicholas the harsh truth.

(Although I guess this plan might upset his potential future employers, who may not give him the cushy little number he's obviously been promised once he's railroaded this deeply flawed scheme through and can declare it a massive success for the people of Barnet, before handing his notice in five minutes later. Possibly.)