Why your council tax is set to soar and your bins won't be collected - Guest Blog by John Dix

By John Dix AKA Mr Reasonable


Over the next three years Barnet is going to experience a serious financial shortfall. By 2020/21 there will be a budget gap of £32.5 million. Those aren't my figures; they are the forecasts in Barnet's Medium Term Financial Strategy (MTFS) which you can see here. To set that £32.5 million shortfall in context, the total revenue raised from council tax is around £160 million so the shortfall is around 20% of the total council tax revenue.

Part of the problem is the cuts from central government. However, Barnet have insisted on a policy of council tax freezes since 2010 which has stored up a massive problem that will now be coming home to roost. The cynic in me thinks that the Conservatives didn't take a council tax rise in April (other than the social care precept) because they thought Labour would win and be forced to increase council tax, labelling them as the tax raising party. Barnet could have increased the council tax element by the 2.99% allowed. Many councils have taken that rise knowing that come 2020/21 there is going to be a meltdown in local authority finances.

This year there will be £9 million of service reductions and next year that rises to £12 million but come 2020/21 who knows what cuts will be made? They will have to be huge. A very bleak outlook.

So that leads me back to the title of this blog. Barnet are making cuts to lots of services. They, or rather Capita who run the finance function in Barnet, are reviewing all of the contracts and services to see where savings can be made. However, one of the largest contracts seems to be exempt from this process and that is Capita. Well that's no surprise; why would Capita look at saving money on its own contract; Turkeys, Christmas and all that?

If you look how much money we have paid Capita since the start of the contract it is a somewhat shocking £335 million.  The CSG contract contains an indexation clause which means it automatically rises each year and because services are contractually specified it is very hard to make savings by reducing the service Capita provide.

If we look at the CSG contract, Barnet say they have made savings on the core contract. The problem is we are paying a fortune for everything else. Set out below is a chart that shows how those savings have been eroded even before you add in the massive payments for special projects, charged at consultancy rates which we are forbidden to know.

According to the Council's figures, the savings to date on the core contract are £17.2 million, which looks good, but then you have to deduct all the elements which Capita claim back from Barnet. The scale of contract variations illustrate the complexity of the contract, the problems of missing out elements and the fact that with such a long contract period (10 years with the option to extend for another 5 years) means that requirements will inevitably change.

The gainshare on reducing the number of people claiming the Single Person Discount and additional council tax income seems strange to me as Capita are already being paid to provide those services. So in effect we are paying for poor service and rewarding them extra for delivering the service we have every right to expect in the first place.

I haven't seen the specific details of what they have generated on the additional income but Capita are allowed to offset all of their costs before claiming a share. As a result, they take 47% of the additional income generated and that doesn't seem fair to me.

On the procurement gainshare I have blogged about this repeatedly. I have challenged with the external auditor the right of Capita to claim gainshare on framework contracts (contracts that are available to public sector organisations) and which could have been accessed by Barnet council staff.
In total Capita are forecast to claim £23.4 million in procurement gainshare and "Agreed Procurement Price Recovery".

There is then additional work. For example, last year Capita claimed £428,267 for additional caseload on revenues and benefits work. Every element of work in the contract has a volume attached to that and if we go over that limit we pay extra. I thought the number of people claiming benefits was going down but apparently not in Barnet.

From my perspective, the payments to Capita at £335 million should be one of the first areas Barnet looks at to save money if there is any chance of meeting the £32.5 million shortfall come 2020/21. But because the outsourcing programme is so high profile there seems a complete reluctance to look at any possible changes. Barnet need to be brave and look at their contract with as much rigor as they are for other vital services, such as Children's Services and Adult Social Care. So to Capita I would say - Physician Heal Thyself .
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This blog was originally printed on John's Mr Reasonable Blog. I have reprinted it at the Barnet Eye as it is absolutely vital that every Barnet Resident is aware of this information and I could not have improved on what John wrote. I suggest that every Barnet resident follow John's blog. 
http://reasonablenewbarnet.blogspot.co.uk/

In 2014, I did a short interview with John about his views of how the Capita Contract would work out. It is well worth listening to what he says at 2.42 into the interview. John has been shown to be on the money. Isn't it about time people started to listen to him?


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