Thursday 19 July 2018

Open Letter to the Barnet Council Policy and Resources Committee

The Barnet Eye has today sent the following open letter to all members of the Barnet Council Policy and Resources committee, ahead of tonights meeting, where the future of Barnet Council's relationship with Capita will be discussed. This communication is being sent to the following Councillors. 

Councillor Richard CorneliusChairmanExpected
Councillor Daniel Thomas BA (Hons)Vice-ChairmanExpected
Councillor Dean Cohen BSc (Hons)Committee MemberExpected
Councillor Anthony Finn BSc (Econ) FCACommittee MemberExpected
Councillor Ross HoustonCommittee MemberExpected
Councillor David LongstaffCommittee MemberExpected
Councillor Kath McGuirkCommittee MemberExpected
Councillor Arjun MittraCommittee MemberExpected
Councillor Alison MooreCommittee MemberExpected
Councillor Sachin RajputCommittee MemberExpected
Councillor Barry RawlingsCommittee MemberExpected
Councillor Peter ZinkinCommittee MemberExpected

It covers three rather different items on the agenda, all of which have huge implications for the Council and Barnet residents. Whilst the three items are seemingly unrelated, they well demonstrate the lack of joined up thinking within Barnet Council

Dear Councillor, 

I am emailing you in relation to your role as a member of the Barnet Council Policy and Resources committee. Having read the papers, there are three issues of major concern to me, that I urgently request you consider prior to the meeting and ensure that any vote you may cast is made in the best interests of Barnet residents.

1. Loan to Saracens
The Summary states the following:
"The report seeks agreement in principle to make a loan of £22.9 million to Saracens at a commercial rate for a period of 30 years to enable the construction of a new West Stand as part of their Allianz Park stadium at Copthall. It outlines the benefits of the project for the council and the wider Barnet community, and summarises the findings of a preliminary due diligence exercise. The report sets out the further due diligence and assurances required in order for the council to satisfy itself that it is prudent to make the loan. It seeks authority for the Deputy Chief Executive to oversee this work and subject to its satisfactory conclusion to enter, in consultation with Members, into a loan agreement with Saracens Ltd."

As a resident, a Council Tax payer, a Business rates payer, a local business owner and a resident of Mill Hill, I am truly alarmed at this proposal. This is not because I do not wish Saracens to build a new stand, which is a proposal I fully support, but because I do not believe that the function of a Council is to act as a bank. As a businessman, I have sought and would expect other businesses to seek loans on a commercial basis from traditional lenders.

I must ask why Saracens have not been able to secure such a loan for their project? Interest rates are competitive and I would have assumed that if there was a secure business case, then such a loan would not be difficult to obtain. This begs the question as to whether the business case is sound? Have Saracens sought finance and been refused elsewhere? Such decisions are based on the risk profile of the proposal. 

The papers give some clue as to why a commercial loan has not been forthcoming. They note:

 Saracens made an operating loss of £2.73m in 2016/17.
 The loss has been declining over recent years, and the club has a clear business plan to move to a profit position. The assumptions in the business plan are reasonable.
 At the time of writing the due diligence report, the club had total net liabilities of £45.1m in the form of intercompany loans. The club has since confirmed that these were restructured as at 30 June 2018 to leave the club in a position of having net positive assets. This will be verified during the next stage of due diligence.
 The security offered is independent of the success of the club but the council should test further its robustness through due diligence, and should consider asking for additional security.

A business which lost £2.73 million in the last accounting period, has net liabilities of £45.1 million, which seems to have magically disappeared due to an unverified restructuring surely is not something which taxpayers money should be used to back. In the event of the "business plan" not turning the business around, Barnet Council will be left with a huge stadium and no club to house. Given the problems with The Olympics stadium in Stratford, is it really wise to take the Barnet taxpayer on such a journey. 

I have no issue at all with all of the good work Saracens are doing in the Borough. This is to be encouraged and to be supported, but I do not believe that the way to support any business is for local authorities to step in and offer commercial loans. I am quite surprised that a Conservative lead administration is following such a course.

If it is now council policy to give generous loans to local businesses that do "good work", as a local the owner of a local business doing such things, I would like to have some clarification of the criteria for applying for such funding. I run Mill Hill Music Complex Studios, We have been based in Mill Hill since 1979 and we see approx 1,400 artists a week using our facilities many of whom are youths and teenagers, who have no other facilities for miles for such creative activities. We currently are seeking to construct a new building to increase our provision, but due to the inordinate amount of time it took the council to approve the planning permission, we have had to put plans on hold, due to the withdrawal of our partners, who found alternative accommodation in Brookmans Park. If the council is actively subsidising such schemes, then I would like some documentation to see what are the criteria for applying for such finance. I would be more than happy to host the committee and give them a tour of our facilities. If there is no such criteria and this is just being done as a one off favour to Saracens, a commercial company, then I worry about the legality of the scheme and whether it is actually discriminatory against businesses such as mine, which do not have the opportunity for taxpayer funded finance in a transparent manner.

2. Members Item on Copthall Diving Club.

I note that Councillor Arjun Mittra has raised a members item on North London Aquatics Diving Club. The papers note:

Diving Pool
I request that P&R Committee receives a report on the situation with the proposed diving pool in Copthall, and what action the Council is taking to support the work of North London Aquatics to establish a diving centre.
As part of this, I would like the below answered:
1. Why hasn’t the GLL contract been published? When will it be? Can we have a copy of it please?
2. Why have North London Aquatics been banned from publicising their charitable activities at Copthall leisure centre?
3. What rationale and legal advice was obtained before advising North London Aquatics that they could not film activities at Copthall leisure centre with Middlesex University due to “Purdah rules?”
4. Will the Council now undertake to do the works to link the diving pool electrical, mechanical and plant work to the rest of the Copthall leisure centre?”

It seems to me beyond comprehension that a council facility is preventing a local diving club, helping young people to become fit, confident and healthy. It has been treated so appallingly. It is truly bizarre that the Council seems to have one set of rules for a commercial sports organisation such as Saracens Ltd, whilst treating a long standing local charity so atrociously. As it seems that there is a magic money tree in Barnet, can I suggest that the same tree that has provided Saracens with a £22 million loan, be tapped to sort out the issues with the diving pool. 

3. Capita restructuring.
Tonight the committee will debate the three options on the table for a restructuring of the Capita contracts. At the time that the contracts were let, myself, other bloggers and a whole host of experts on the subject of outsourcing asked for a "public sector comparator" to be provided so we could ensure we are comparing like with like when discussing savings. As this was not done, we really have no idea of what the true savings are. 

Option three (ending relationship with Capita) marks the "value for money" of this as low. It states

"Low – Capita has delivered significant economies of scale across transactional services, including by delivering them outside of London. The council would not be able to replicate these savings."
It also states that the quality of services would be affected

"Medium/Low – wholesale in-sourcing or reprocurement is likely to divert management and staff time from service improvement. Many staff based outside of London may choose not to relocate to Barnet. Low unemployment locally is likely to make it hard to recruit to consequent vacancies" 

All of these services were previously provided inhouse. Clearly people have found other jobs and whilst there is "low unemployment" locally, there is not zero unemployment. Clearly whatever happens, there will have to be a transitional period and transitional arrangements. If the words "We have performed a public sector comparator and have found that an in house option is not viable" had been written (with accompanying report transparently published), I would have no issue agreeing with these statements. As it is, the report simply looks to have chosen a form of words to try and justify a decision to try and address the worst aspects of the Capita deal, without taking the risk that a proper study would expose some rather embarrassing facts about the way the deal has been put together and the way Capita have managed it.

I was present outside the recent Capita AGM. Shareholders told me that the management of Capita had said that Barnet Council were not capable of managing the contract and this was the root of the problems. If a vendor is saying this about the management of one of their largest clients, what level of assurance can we possibly have that these contracts will ever deliver value for money.

John Dix has comprehensively proven, using information release by Barnet Council, that the One Barnet Capita contracts are not delivering value for money or savings. Despite all of the work John has done, no one from the administration has ever sat down with him and worked through his findings. I urge the committee to arrange a workshop with Mr Dix and get a proper, independent report into how best to manage Barnet before committing the council to any further contracts with Capita. I would support the ending of the arrangements outlined in Option 2, if this was accompanied by a commitment to perform a proper, independent review of the ones remaining with Capita, to assess whether Capita really is the best provider. I would urge that this review be lead by John Dix.

In summary, it is time that Barnet Council started working for the people of the Borough, people such as the volunteers that run North London Aquaatics, rather than large commercial businesses such as  Saracens Ltd and Capita. 

Roger Tichborne

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