Inquiry into Barnet Capita outsourcing at the Houses of Parliament

Last night I gave evidence to an inquiry into the Capita outsourcing in Barnet at The House of Commons. The inquiry is being chaired by respected Guardian journalist Aditya Chakrabortty. The Shadow chancellor, John McDonnell was present as were a selection of journalists from various local and national papers. John McDonnell has been a stalwart supporter of those in Barnet working to bring some sanity to our public services. He has attended many marches, picket lines and other events and even hosted a screening of the film I produced "A Tale of Two Barnets" at the House of Commons in 2012.

The meeting started with an address by Aditya Chakrobortty explaining the purpose and terms of reference of the inquiry, followed by an address by John McDonnell.

I am always amazed by the way the media portrays John McDonnell. I'm not a member of the Labour Party (for the record I stood for the Lib Dems in council elections in May), but I recognise that the portrayal of Mr McDonnell by the press is totally dishonest. I've always found him to be one of the most engaging and interesting of speakers. John McDonnell comes from a working class Irish Catholic background. Like many people from such a background, he has been at the coalface of injustice all of his life. I don't agree with all of what he has to say, but I recognise where he is coming from and why he holds his views. His political life has not been one of working for small, well funded vested interests. He has been fighting for working people. Unlike the previous regime running the Labour Party, John McDonnell does not see his role as Shadow Chancellor as an excellent tickbox on the CV, opening the door to well paid roles in Merchant banks, when the public tire of his electoral career. One area where I am in complete agreement with Mr McDonnell is our view that the outsourcing of Public Services in Barnet (and other local authorities and government areas) has been a complete disaster. Another area I completely agree with is that local authorities need to be properly funded. I also agree with John McDonnell that there is more than enough money in the economy to pay for decent public services. I agree that the problem is that corporations should not be allowed to avoid tax at the expense of the disabled, disadvantaged, children and the elderly. I happen to also agree that we need to invest in our young people and provide proper opportunities, so the best young people from all backgrounds and social sectors get the opportunities they deserve. To me, this should not be controversial, it should be the baseline of a civilised society.

Where do Capita and the Barnet Council outsourcing come into all of this? Barnet Council are currently reviewing a pair of huge contracts which outsource public services to Capita. The review has come about because a huge fraud, perpetrated by a Capita employee, has caused a review of Capita services by auditors Grant Thornton. This exposed a whole raft of fundamental weaknesses in the control and management of the council and its relationship with Capita. In September, we published  a blog detailing these.  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. 

To highlight all of the problems myself and my fellow bloggers have identified with Capita would take a lengthy tome of many volumes. The purpose of the inquiry is to identify the key points, ensuring that the council does not miss the opportunity to end this damaging relationship. Fellow blogger John Dix wrote a whole series of blogs in July detailing just how badly the contract exposing how the Gainshare clauses gives 30% of savings on budgets straight to the Capita Shareholders (rather than using it to fund services for the disabled, elderly etc). 

The enquiry kicked off with myself, John Dix and Theresa Musgrove (Mrs Angry) giving our evidence. John Dix was first up. I don't know how many times I've sat and listened to John Dix tear apart the edifice that is the One Barnet contract. John does numbers better than anyone. It is simply criminal that no one from the administration bothers to listen. John does this sort of thing for his day job, advising large companies on how to improve their financial controls etc. Barnet Council should be the luckiest council in the country, having such an expert willing to work for free on their behalf. Sadly like a park football team managed by a proud Dad of a clunk footed kid (like me), he's left on the bench while the management pick a player (Capita) that simply couldn't hit a barn door from two yards. And Capita are a very clunk footed organisation. Not only have they mismanaged the affairs of Barnet, they have mismanaged their own business. Despite being granted a license to print money by Barnet and other similar organisations, they have managed to get themselves into a position where their shareprice has collapsed and the company has required a complete restructure. 

Next up, I gave my evidence. I started by recalling an exchange five and a half years ago with Councillor Dan Thomas, Deputy Leader of Barnet Council. I asked a series of questions to a committee he was chairing. Unable to answer the questions I was asking he made the statement "In five years time, this will have saved millions. You will have nothing to blog about and be left with egg on your face. Other councils will be queuing up to copy us". This drew a few giggles. As John Dix had laid out the massive nature of the Capita Contract, I mentioned the Metpro contract. This was a scandal exposed by Barnet bloggers. Metpro was a security company, responsible for council properties and also security for vulnerable people. After blogger enquiries, it came out that they were not SIA registered, staff had not been CRB checked, the company was overcharging and adding VAT when not registered for VAT and providing services that were not required. The contract was tiny in respect of the Capita Contracts. I asked at the time how Barnet Council could be expected to manage a contract the size of One Barnet Capita contract when they couldn't manage one a hundred times smaller. The answer has become clear, they can't. I then spoke about the real life face of this. The neglect of Hendon Cemetery is one aspect that is there for all to see. In April, I made a video highlighting the state of the cemetery as part of our local council election campaign.

This cemetery was spotless before Capita took it over. I reminded the inquiry as to how Capita had even told relatives who'd generously donated benches for grieving residents to remove them. I also brought up the Freedom Pass scandal, where these were illegally removed from disabled young people without notice. In short, the situation is quite disgusting. There was general agreement with the points I made.

Next up was Mrs Angry. Back in 2008, when I started writing blogs opposing the One Barnet program (Future Shape as it was then called), the then Tory Council Leader said that bloggers opposing him were simply sad men, stuck in their bedrooms blogging with one hand, whilst they masturbated with the other. Whatever you may think of the Barnet bloggers, Mrs Angry certainly doesn't fit that stereotype! Her evidence was presented in her usually witty manner, reminding us that Capita had even promised the Barnet bloggers a free "pre owned grave" as part of the contract.

Other presentations were given by members of the Barnet Alliance for Public Services (Janet Leifer, Barbara Jacobson amongst others) and Labour Councillors Ross Houston and Kathy Levine amongst others. I've long been a fan of Ross Houston. He is one of the better Labour performers in the Council chamber and he detailed many of the problems Labour had highlighted with the contract. Kathy gave a detailed breakdown of many of these.

The meeting was brought to a close by John Burgess from Unison, who summed up just how damaging the Capita contracts had been to Barnet. The local economy has suffered as jobs have been relocated far and wide, service quality has declined and staff live under the intolerable stress of not knowing what the future holds for them.

After the meeting, the bloggers and a few other attendees relocated to the pub. What never ceased to amaze me is just how many people in Barnet are committed, talented and passionate about our area. We don't all agree on what the solutions are or the strategy, but we all agree that the general principle should be that the people of Barnet should be put before the vested interests of large company shareholders. One of my biggest regrets about the last Council elections was that the Conservatives managed to move the debate away from how they have mismanaged the Council finances and into areas that are completely irrelevant to the business of the Council. Perhaps the thing that disgust me most is that the only Councillors in Barnet that I have heard make anti semetic comments are Tory Councillors, yet both the Lib Dems and Labour were crucified for the actions of a small group of unrepresentative fringe activists (in the case of the Lib Dems not even party members) in other parts of the country. This blog started on the day that the Barnet Tories shafted me with the Barnet Times for speaking out about their administration publishing anti semitic comments on their Youtube channel. It is beyond my comprehension how the likes of  Tory Councillor David Longstaff were never held to account for opposing the Eruv in Barnet, whilst the likes of Adam Langleben, who is Jewish and fought anti semitism tirelessly for decades was hung out to dry by electors due to the actions of a tiny minority in his party who he'd spent his life opposing. I despair that voters do not see the real damage that the Tories and their partners Capita have wrought on the Borough, whilst administering an electoral kicking to the likes of veteran Lib Dem Councillor Jack Cohen merely on the completely bogus pretext that Jack would have allowed Jeremy Corbyn to run Barnet Council. Sooner or later, the electorate of Barnet will have to pay the bills that the Tory regime are running up. Maybe that is the wake up call that is needed to make people deal with reality and not fantastical conspiracies that have no basis in truth.