Barnet Council review of Capita Contract - Decision postponed

It is no exaggeration to say that Barnet Council is in turmoil. Following a massive fraud and a scathing external review, conducted by Auditors Grant Thornton, the Council had conducted a review of the Capita contracts and had agreed to take a vote on the various options on 11th December.

Yesterday, the CEO of Barnet circulated an email highlighting the chaos to Conservative and Labour Councillors.

From:  On Behalf Of Hooton, John
Sent: 12 November 2018 11:29
To: Conservative Cllrs; Labour Cllrs;
Subject: Update on Strategic Contracts Review with Capita

Dear Members

I am writing to you to update you on the latest position on the Strategic Contracts Review with Capita, following the decision by Policy and Resources Committee in July to begin the review. A lot of work has gone into analysing the various services involved in CSG and Re and work has also been ongoing on a business case. Ahead of the review coming back to Policy and Resources Committee in December, I wanted to give you an update on our current position and some likely timescales:

• Three options were presented to Policy and Resources Committee: i) maintain the status quo in relation to the CSG and DRS contracts; ii) reshape the contracts to better align service delivery to the council and Capita’s strengths and priorities, within the context of the existing contractual structure, and iii) bring the partnership to an end, and either bring services back in-house or re-procure them. At that time, the Committee agreed that Option 2 was the preferred option with the information that they had before them at the time, but that all three options should be fully tested, consulted on and considered in a Full Business Case before a final decision was made

• In developing the preliminary proposals, the committee considered three strategic aims. Those aims are: a) to deliver high quality services; b) to secure best value for money for Barnet’s residents; and c) to strengthen the council’s strategic control of services. These aims remain at the core of what we want to achieve from the review

Since the contracts were let, the environment we operate in has changed considerably, and we are looking at service delivery arrangements to ensure they are as effective and efficient as possible, as well as taking account of Capita’s new strategy announced earlier this year. The partnership has delivered a range of benefits since commencing in 2013, however, there are some  services where performance improvement is needed.

• To respond to performance issues in some critical services we are proposing to take a report for the Policy and Resources Committee on 11 December, that recommends a phased approach to considering the delivery arrangements for services. It is intended that the report will recommend that Finance and Accounting (excluding transactional services provided from the Darlington shared service centre) and Strategic HR be transferred back to the council by the end of this financial year (March 2019). The ongoing arrangements for these services will still form part of the wider consultation plan.

The arrangements for remaining services are still to be considered and timescales will be confirmed in due course. However, it is also likely that the report will recommend that Highways and Regeneration be reviewed as one of the earlier phases.

• Finally, the report will set out our proposed approach to consultation to inform the further development of the programme of work. The report will be presented to Policy and Resources Committee on 11 December for consideration and to obtain authority to consult.

I am sure you will continue to have questions throughout the process and invite you to get in touch with any questions, observations or comments.

Kind regards

John

John Hooton
Chief Executive

London Borough of Barnet, North London Business Park, Oakleigh Road South, London N11 1NP

Mr Hooton makes several things clear in his briefing. The first is that the outsourcing of Financial accounting and HR has been a disaster and is being brought back in house as soon as possible. The Barnet Eye believes that this is clearly a very sensible measure as Capita has clearly failed Barnet and the situation is becoming rather embarrassing. Continual delays to vital reports has left the council exposed and at risk of fines for late filing of accounts. The HR function is also instructive, as this at least means the council will have the infrastructure in place for insourcing.

The bad news is that these are tiny cogs in the Barnet Council wheel. The Barnet Eye has discussed the issue, off the record with several Conservative councillors. The picture that has emerged is quite instructive. The newer councillors in the Council, elected in May in marginal seats are highly sceptical of the Capita contracts. Many are still to be convinced that they are delivering value for money. As they are in seats that will be vulnerable at the next election, they have no wish to be associated with a failed project. We understand that there has been a few lively internal discussions.

It is also clear that the hoped for case for continuing the Capita contracts, with clear cut reports has not emerged. As such the Leadership has taken the pragmatic decision to kick the wasps nest down the path and commission some more reports. It reminds me of  a story that my Dad told me about the war. In 1945, there was a general election. He was in the officers bar at the RAF base when the CO walked in. The CO was a dyed in the wool Tory. He picked up the times, noted the headline "Labour to win by a Landslide". He immediately shout to another officer "Pass the Telegraph, lets see if the news is any better in that".

The leadership of the council is now wearing the Capita contract around its neck like an Albatross. I've been reliably informed that they are desperately trying to find parts of the deal that are working well, so that they can ensure that there is a face saving fudge. When I was discussing the matter with a Conservative Councillor, I suggested "why not just bite the bullet now and you've got nearly four years for everyone to forget and make everything work?". He responded that "there are parts which are working and it would be foolish to discard those in a panic mass restructure".

I suspect that the Leadership is hoping that there are enough "good bits" that deliver some sort of savings to justify the whole business. The question is whether Capita will buy into such cherry picking. I've heard that there are aspects of the agreement that are not working for them either. Not least the fact that they know that the Barnet bloggers will not let the matter rest and that they can expect picket lines at AGM's and constant scrutiny. Whilst they are making huge profits, this is worth the hassle, but if all of the bits that make money are stripped out, then is it worth the hassle?

The interesting thing is that everyone I've asked, has been unable or unwilling to name what the good bits are. The usual response is that "it's confidential and I'd get into trouble if I told you". The other mantra is that "there are several areas that did have problems but are substantially improving".

I am intrigued by the note that says that "Highways and Regeneration are reviewed as an early phase". I know a few developers in Barnet who are not massively impressed with the performance of Capita in relation to regeneration projects. As business people, who rely on good advice from the council and efficient processing of planning requests etc, they have felt a real impact on their business. They are also aware that the One Barnet Capita contracts also mean that there is a pre-existing hotbed of antipathy to anything the council try and do. This results in delays, costs and hurdles to jump through. It is slightly ironic to hear business people say that it would be far more straightforward with an in house planning and regeneration team.

John Hooton knows it is an almighty mess. His job is to manage a situation that is unmanageable. He knows that what he needs to do operationally to make the council run properly is kick out as much of Capita as possible, whilst keeping the maximum to spare the blushes of his political masters. A better set of politicians running the council would have ensured that we never got into this mess in the first place. Now we are here, we need some proper leadership. That means taking tough decisions. As Capita are financially vulnerable, there is a huge risk to the operations of Barnet Council. Sadly Mr Hooton has simply bought into a strategy that has kicked the steps necessary to deal with that into the long grass.
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Don't forget to make a date in your diary for The Barnet Eye Xmas party and Community awards at Mill Hill Rugby Club on Fri 14th December at Mill Hill Rugby Club at 8pm. We really hope you can come down and say Hi. Admission is Free.

The False Dots and Republic of Brentford will be performing. Here is a video produced by The False Dots of their Anti Outsourcing Anthem "They Cleared Out Your Desk". A special treat for those of you who love a bit of Ska Music!