Barnet Council Leader states that Capita are staying in Barnet

I was shocked to read that the Leader of Barnet Council has announced that Capita are staying in Barnet, ahead of the discussion of the appalling failures of Capita at the Audit committee on November 22nd. Councillor Richard Cornelius told the Ham and High "But, if Unison and Mr McDonnell really want to ‘kick out Capita’, they will have to win an election, find another specialist outsourcer, and raise taxes to pay them."


This statement makes it crystal clear that despite fraud, contract disputes, poor service and non payment of invoices for poor delivery penalties, as far as Richard Cornelius is concerned, Capita are the only show in town. Mr Cornelius fails to recognise that there is the option of a return to an in house service and is completely ideologically wedded to outsourcing. A Capita spokes person, rather ironocally told the Ham & High “Our partnership with Barnet Council has achieved significant financial benefits and we continue to focus on strengthening our performance where we need to, and delivering quality services across the borough.”. The Barnet Eye can understand why Capita are happy to receive the "significant financial benefits" on their balance sheet. It is interesting, though not surpirsing,  that they gloss over their poor performance.


Anyone reading the article may think that there were one or two cosmetic issues with a generally well performing contract, that was delivering value for money for Barnet Council Taxpayers. As our report into the inquiry at the House of Commons last week detailed, there are numerous catastrophic failures of the contracts. To remind readers of just some of the issues that the Audit Committee will be discussing.







The worst instances are as follows (with my comments in red italics)

• (GT1) Develop a Scheme of Financial Authorisation for Re and review of financial roles and responsibilities. This is scarcely believable. The implication that there is no proper scheme of financial authorisation for payments from Re (The Barnet joint venture with Capita) is staggering. It is no wonder that a huge fraud was allowed to occur. As for the implication that the roles and responsibilities for financial control have not been properly sorted out, this is staggering for one of the largest local authorities in the UK.
• (GT2) The list of budget holder authorisers to be updated on the Integra ledger system.
So the council has not been maintaining the list of people authorised to spend public money. As a Barnet Council taxpayer, I cannot believe such incompetence and failure to adhere to even the most basic standards of control of purchasing has been adhered to. 
• (GT4) Improve controls over access and authorisation rights on Integra and Bankline to ensure that any changes made are appropriate to role 
What this is saying is that there has been no proper control over who can access, who can authorise and who can add users etc, for the Councils payment and banking systems. As a council tax payer I am appalled that it seems that any Tom, Dick or Harriet could make payments and add their friends, with no audit in place. In short, this is an accident waiting to happen. 
• (GT10) Develop a master schedule of CPO payments in progress to enable cross checking against payments requested. 
What this is saying is that the Council have had no system in place to cross check expected vs actual payments. There are two ways  this could have a big impact on the council budget. The first is that without such a list, any checking would be extremely costly and labourious.That is assuming that they actually bothered checking payments. Thus far, we've established that there is no adequate control of payment authorisers, no adequate control of payment systens and no adquate controls of what is getting paid. Of course that's all OK, as you the Barnet taxpayer have given Barnet Council a blank cheque to spend your money. 

• (GT11) Develop a clear process for reclaiming CPO and related costs from developers and matching to payments received. 
Any organisation that is managing money efficiently and with due prudence would clearly have such processes in from day one of any outsourcing scheme such as One Barnet. 
• (GT12) Confirm that fraudulent costs have not been invoiced to developers. 
This is rather worrying. They still need to confirm who has paid invoices related to a major fraud. 
• (GT15) Review the adequacy of controls over BACS E-form payments where the purchase order system is not used. 
So at this point, they have yet to review the adequacy of controls of BACS payments (usually standing orders, direct debits and faster payments). Having spent half a million quid on this Grant Thornton review there are still massive holes in the controls that have not even been reviewed.
• (GT17) Develop a process note for journal processing that emphasises the importance of adequate explanation and documentation. 
This is really quite an interesting comment. I wonder how many iterations of changes this statement was subjected to. This states that Barnet Council and their chosen major partner Capita have no culture of providing proper documentation of what they do. This is a massive problem as this means that in the event of Capita being booted out, there will be no instructions or documentation of what they do. In short there is no proper resilience. The statement shows just how deviously words have been twisted so as to paint a "happy picture".  
• (GT21) Capital Budgets to be recorded on the Integra ledger system to improve the accessibility of information to budget holders. 
For those of you who don't know what Integra is ( I was shocked to hear a Conservative Councillor on the Audit Committee ask that question recently) - "Integra functionality includes all the standard financial modules including GL, AP, AR, cashbook, but also includes the E-Series web management tool. This allows users in the organisation to access the Integra system via a web interface to approve invoices, raise sales orders and review the actuals. " What this statement says is that the council hasn't been using its own financial management tool to monitor Capital budgets. You don't need to be an accountant to know what happens if you do not manage and control your budgets. Is it any surprise that immediately after the council elections, the Tory administration revelaed a £9 million budget overrun. 

• (GT27) Prepare documented financial procedure notes for CPO related transactions, provide training to staff and test compliance. 
And finally here is another one of those very highly tuned comments, that hide a multitude of sins. What this implies is that monitoring of financial complaince was found wanting and staff lacked the training to test whether the systems were compliant. What this means in practice is that a competent accountant could under no circumstances sign off anything for CPO related transactions as trustworthy. In short, there is no assurance that your money has been spent wisely.

It is well worth reading John Dix analysis of the current state of play. Mr Dix concluded that the silence from the Council seems to have indicated that they have made up their mind to tough it out with Capita. Now Cllr Cornelius has publicly stated that this is the case and the only way that the course will change is if Labour win an election. It strikes me that Cllr Cornelius is happy to write a blank cheque for Capita. He states that (in his opinion), the only alternative to Capita is an even more expensive competitor option.

Capita share price

When we lobbied the Capita AGM, we were met by Shareholders who told us that the CEO of Capita had said that the problems were because Barnet were incapable of professionally managing the contracts properly.

What Cllr Cornelius seems to be completely oblivious to is the huge elephant in the room. I refer to the fact that Capita is in financial disarray. Their share price has collapsed and they are mired in bad publicity and are going through restructure after restructure. It is not beyond the realms of possibility that the company will go bust.  The Barnet Eye asked the question at the start of the year, what the contingency plan was. What shocked us was that at the time we asked the question, there wasn't one.

In April, I documented the problems I had establishing this and how Barnet Council did everything possible to obstruct my enquiries. It is clear to me that Councillor Cornelius and his colleagues are crossing their fingers and hoping everything will be fine. That is not effective governance, it is a recipe for disaster.

In June, we spoke to residents and made a short movie about what people were saying about Capita. Sadly the people who matter at the Council simply refuse to listen



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