Monday, 20 May 2013

One Barnet, DRS contract award and the Zombie Council

Today sees the award of the One Barnet DRS contract. This is a ten year, multi million pound contract that will effectively mean that 70-80% of council business is in the hands of multi national companies. The council refers to this model as a "commissioning council". It means that the council does virtually nothing apart from become an organisation handing your cash out to large multinational organisations. In house teams, located locally with years of experience are split up and the work exported elsewhere around the country or around the world. The DRS contract will presumably involve large numbers of people living locally losing their jobs.

If all goes well, the council hope to save several million pounds a year. They believe that large multi nationals offer economies of scale and access to the latest technology. They believe that this more than compensates for the need to dividends to shareholders and by achieving these savings means that services can be protected, whilst keeping council tax down.

Opponents of the scheme have questioned the track record of organisations such as Capita in actually delivering these promised efficiencies and savings. There are dozens of cases of failed outsourcing experiments and even more where savings didn't match promises or services failed to live up to the promises. Organisations such as Capita rightly pride themselves on protecting the interests of their own shareholders. They employ the finest lawyers to ensure contracts are as beneficial to them as possible.

What sort of record does Barnet have managing contractors? Sadly it is awful. Local bloggers are aware of many examples of such projects, where the earth has been promises and Barnet taxpayers have ended up being taken to the cleaners. A couple of examples are the Care homes outsourcing with Catalyst, where the council was sued and ended up having to pay out nearly ten million pounds of extra fees, to cover the fact that the contractor wasn't making as much profits as the contract stipulated. Then there was the SAP procurement system. First mooted in 2006, it was meant to cost £6 million. Last estimate was it was four times this at £24 million. Then there are all manner of small contracts, where cash has literally been doled out with no control at all. The best known examples of this are Metpro and RM Countrysides.

The whole concept of one Barnet has been labelled a Billion Pound Gamble. I produced a film with US director Charles Honderick called Barnet - The Billion Pound Gamble. This highlighted the problems. The BBC and ITV covered the premier and over 200 people turned up to watch it at the Phoenix cinema.

None of the concerns raised have ever been adequately addressed. The whole One Barnet process is currently in the appeal court. A judge found that Barnet Council had failed to consult local people properly, but rejected the case on a minor technicality. Whoever the council award the contract to tomorrow, could well find that the court of appeal pull the carpet from under their feet.

The whole outsourcing argument has seen the community on both the left and right question the competence of Barnet Council and the business case on which it is based. Whilst those on the left are concerned with the effects of the new arrangements on vulnerable people, those on the right have been more concerned with the risks to council tax and business rates, if the whole thing collapses and requires a taxpayer funded bale out.

One "worst case" scenario I have seen shows Barnet Council having the highest council tax in London to cover the costs of a catastrophic failure of the project. Perhaps the most interesting thing about this projection was that whilst it was deemed statistically unlikely, the probability of it arising was deemed as likely as Barnet fully meeting or exceeding its savings expectations for the project. This projection was based on the success of Barnet and similar councils ability to implement and achieve savings from outsourcing. In short, if you use Barnet councils past form, there is little chance of them succeeding.

The analysis stated that the council was highly likely to have understated the hidden costs of the project and counted many savings that would have been achieved anyway, as attributable to outsourcing the project. In fact, the report stated that the council was far more likely to achieve real savings and cost cuttings by keeping services in house and using best practice to run them.What was disturbing was the fact that the council never even considered this report, despite the proven track record of the organisation which produced it.

No one can pretend that Barnet Council doesn't have a massive challenge on it's hands as it tries to deal with funding cuts from central government. What is open to discussion is whether embarking on such a risky way to address the issue is really very sensible. What worries me most is the fact that once the services are outsourced and the jobs lost, we will be left with a zombie council, that if outsourcing fails will be left completely stripped of any means to get its act together. No one at Barnet Council has addressed this issue. At the Olympics, when G4S failed, the army rode in. Barnet Council will not have the luxury of such a well equipped saviour

1 comment:

Ahmed Huq said...

I am a Barnet resident. Good Luck to Barnet! From my IT work experience with different councils (where the IT is managed by 3rd companies like Capita or SERCO) in most cases projects go horribly wrong and slow, and implementation takes ages or fails.