Council Elections - Barnet Council audit shows £100 million of arrears, overpayment and debt

In May, Barnet will hold council elections. All of the parties will be making statements, promises and claims. The Council have been run by the Conservatives since May 2002. Do they deserve another four years? Can you trust them to run the council properly? Can you believe their promises? I've spent 14 years cataloging the changes they've made. As we approach the election, I'll be bring you key information so that you can make an informed decision. The outcome will have a real impact on your finances, the state of roads, schools, care for the vulnerable, childrens services etc. Today we look at the papers for tonights meeting of the Audit Committee. This is the committee that ensures that the council is run properly. 

I was intrigued to read the audit review papers, which will be discussed at the Council's audit committee tonight. I was shocked to read that the Council Adit has shown approx £100 million in arrears, overpayments of housing benefits and debt on issues such as parking charges (see the council papers Item 7 Appendix A & Item 8 Appendix 2)

I was rather surprised to see that despite these huge amounts of money, the work to identify and resolve issues related to these issues is'still in progress' for many of the items. There is also a suggestion that some council customers are taking advantage of various arrangements. I am not quite sure what this means or how concerned we should be, but these are huge amounts and as Council tax payers we should be concerned. Of course some of this will be collected, as noted in the section on parking.  

I have to wonder why there is such high overpayment of housing benefit? This is taxpayers money and an orgainsation that is paying out over £28 million too much should take a long hard look at itself. It is clear that housing debts will have risen due to lockdown rules, which meant it was far more difficult for the council to enforce non payment judgements.

My biggest concern are the statements that "The Council does not have the data to establish which customers taking advantage of any deferred payment arrangements may be in financial difficulties and historical collection rates may only offer some indication of potential future loss for these customers."

In laymans terms, this means that the risk cannot be properly assessed.  My key concerns below are in red italics. These are from the councils own reports

The report also states that Barnet's auditors cannot complete work within the statuatory deadline. The report states

The 2015 Regulations require that the final approved accounts are published no later than 30th September of the financial year immediately following the end of the financial year to which the statement relates. 

BDO advised Audit Committee in July 2021 that they were not able to commence the audit until September, it was therefore not possible for them to conclude their audit in line with the statutory deadline. 

BDO presented a draft completion report to Committee in December 2021 and this report  provides a further update on the findings and recommendations following further progress on the audit. 

The audit is yet to be completed but BDO anticipate providing an unmodified opinion on the Council’s financial statements subject to the clearance of the outstanding matters detailed in Appendix A.

There are Council elections in May, we are going into them with work still ongoing on the Audit. 

Last week, the Barnet Tories issued the following tweet. Don't you think it would be sensible to have a full picture of the financial state of the Council before making such promises? At the last Council Election, the Tories made similar promises regarding Council Tax. It has risen by 14% in four years. Keeping taxes low is a sensible aspiration. Making promises when you don't know if you have the cash to keep them is dishonest and irresponsible. The evidence is there that there is chaos in the finances and audit.  Every day it seems more likely that whoever wins the elections in May, they wll have a ticking financial bomb to deal with.

Conservative-run Barnet is set to be the only council in North London to freeze council tax, helping residents with the cost of living. pic.twitter.com/WMtlm5Iqki

— Barnet Conservatives (@BarnetTories) February 10, 2022

----- Key extracts from the reports -----

Risk description 

The Council recognises an allowance for the non-collection of receivables (arrears and debt), primarily in respect of council tax, NDR, housing benefit overpayments, housing rents and parking charges. The Council assesses each type of receivable separately in determining how much to allow for noncollection. There is a risk over the valuation of this allowance if incorrect assumptions or source data are used, or an inappropriate methodology is applied.There is an increased risk of customer default over collection of receivables where the losses are measured using either the Incurred Credit Loss model for statutory debt (eg council tax and NDR) or Expected Credit Loss (contract receivables). For some receivables, the Council may have suspended recovery action or offered deferred payment terms, and some customers that may be taking advantage of these arrangements may be in financial difficulty.

Results

Our audit work is still in progress as detailed on the following page, where we also note our review of the appropriateness of the allowance for non-collection for each type of significant receivable.Management has applied historical default rates (incurred losses) using system data to determine the credit losses on both the statutory debt and on trade receivables that fall within the scope of IFRS 9. The Council does not have the data to establish which customers taking advantage of any deferred payment arrangements may be in financial difficulties and historical collection rates may only offer some indication of potential future loss for these customers. However, this is unlikely to result in a material difference in the amount of credit losses recognised as the provision for incurred credit loss for statutory debts such as collection fund and business rate are significantly high.

Council tax arrears (Collection fund £48 million the Council’s share £38 million) 

The Council has recognised an allowance of £24 million for non-collection of its share of the council tax arrears of £38 million. The Council’s share of the arrears has increased by £3 million and the credit loss allowance has been increased by £6 million. The credit loss allowance is estimated using recovery rates achieved for aged arrears in recent years for each year up to 5 years old. For debts over 6 years a flat provision rate of 78% is applied. Our audit work to check that the data used to calculate collection rates for arrears up to 5 years old is correct and the provisioning rates have been correctly applied to aged debt at 31 March 2021 is still in progress. We have also extended our review to cover actual collection rates for debts over 6 years to assess the appropriateness of the flat rate % applied to debts over 6 and that provision falls within an acceptable range. 

NDR arrears (Collection fund £22.5 million the Council’s share £7 million) 

The Council has recognised an allowance of £5.5 million for non-collection of its share of the NDR business rates arrears of £7 million. The Council’s share of the arrears has stayed the same as prior year and the credit loss allowance has been increased by £1 million. Previously the provision has been estimated using historic collection rate information from last three years however this year the provision has been estimated using information from the last 2 years, which has resulted in an overall increase of £9 million. Our audit work to ensure that the provision amount is reasonable is still in progress.

Housing benefits overpayment debt (£28.2 million) 

The Council has recognised an allowance of £26.8 million for non-collection of housing benefit overpayment on total debt of £28.2 million. In the prior yearan allowance of £24 million was raised against arrears of £25 million. The provision is estimated based on historical benefit overpayment recovery data. Our review of the methodology to ensure we are satisfied that this falls within reasonable range for non-collection of debt is still in progress.

Housing rents arrears (£14.6 million) 

The Council has recognised an allowance for non-collection of housing rents arrears of £11.4 million on total debt of £14.6 million. In the prior year a provision of £10.3 million was raised against rent arrears of £13.4 million. The provision is estimated using historic collection data. Our review of the methodology to ensure we are satisfied that this falls within reasonable range for non-collection of debt is still in progress.

Parking arrears (£11 million) 

The Council has recognised an allowance for non-collection of parking arrears of £8.3 million on total debt of £11 million. In the prior year a provision of £7 million was raised against rent arrears of £10.7 million. The provision is estimated using historic collection data. Our review of the methodology to ensure we are satisfied that this falls within reasonable range for non-collection of debt is still in progressSundry receivables (£198 million) Sundry receivables includes £157 million of government debtors that does not need to be included within the expected credit losses model since Government debt is not considered to be at risk. An expected credit loss allowance of £6 million has been provided for against the remaining £41 million of sundry receivables. 

The majority of the receivables are still within current payment terms and our preliminary view is that these debts are not considered to be at risk of non-collection and the credit loss allowance could be overstated as a result. We have requested an analysis of the expected credit loss assessment to ensure that amount raised as the expected shortfall in cash from credit loss is reasonable

Chaos at the Council - Part 2 - The Audit Committee rerun

In July, an extraordinary event occurred at a meeting of Barnet Council's audit committee. The main purpose of this meeting was to sign off the annual council accounts. I've been writing a blog for over nine years and this has happened every year, without too much fuss. External auditors come in, produce a report that says everyting is shipshape (or not), a set of recomendations is laid out and the committee signs it off. Whilst I may disagree with much of what the political agenda of those running the council do, they are democratically elected. With this is in mind, us bloggers tend to pore over the audit report looking for issues to highlight to residents, demonstrating that the political masters at the council are not doing a very good job. It generally isn't that hard with Barnet Council. This year however, it has all been a bit different. Bloggers have generally not had too much reason to challenge the audit report itself. The auditors are competent professionals. This year, it became clear, as soon as we saw the audit report, that it was incomplete. In short, the committe was being asked to sign off a report that wasn't fit for purpose. At the meeting, the auditors themselves reported a catalog of woe, with information not being divulged, council officers and Capita staff not being as helpful as they would expect and incredibly, a report published by OFSTED detailing how Barnet Council's childrens services was failing had not been included in the scope of the report. Amongst all of this chaos, the committee did the only sensible thing. They sent the report back and asked the auditors to try again, as detailed in our 1st August blog.

Next Tuesday, the committee will try again. Rather suspiciously something went wrong on the council website. The report pack, normally made available so people like me can review it and ask difficult questions, did not appear. My fellow blogger, John Dix, AKA Mr Reasonable, was not impressedand tweeted for clarification.

@BarnetCouncil what's going on with Audit meeting next week. First you publish agenda without any reports now you've taken down the agenda?

— Mr Reasonable (@ReasonableNB) September 12, 2017

The reports have now appeared. We have until 10am tomorrow to read them and formulate any questions. So lets start with what the 'rework' found. We have cast a quick eye over the report. Here is a key extract that shows just why a 'rework' was needed.

click for more readable view

It is not trivial, is it? To find that information has come to light that has "reduced net assets and reserves of the Council by £82.348 million and the Group by £89.295 million." is clearly worrying.

We note that the OFSTED report and its damning conclusions are now noted.

Click for a more readable view

One other issue caught my eye. My fellow blogger Mrs Angry may well consider asking the committee a question based on this statement and the information she disclosed in her recent blog

Click for a more readable view

At this point, I must make a pretty worrying admission. In my role as an armchair auditor and a blogger, I feel I am failing you, the reader. As I am sure regular readers are aware, I have a job and business interests. I have limited time for blogging. To write this blog properly, I'd normally have allocated 3-4 elapsed days and perhaps spent 5-6 hours pulling the information together. As public questions must be submitted by 10am tomorrow and I only started looking at this report at 7.30am this morning, I've really not been able to pull together a properly put together blog. It is very much a  "summary blog". I've not had a chance to "do the detail" and "crunch the numbers". In short, by not putting the reports up until Tuesday, the Council has in effect circumvented proper resident scrutiny. 

It may shock you to know that I take blogging about the council and trying to make sure our money is well spent seriously. In light of this, I sent this email to the council and committee chair today.

Dear Ms Lugangira & Councillor Rayner,

I have a request to address the committee for three minutesand three questions for the committee. As I do not wish to “hog” the time, if there are a significant number of questions from the public, please allow other questioners priority, should I have been granted the opportunity to address the committee. If the constitution does not allow such an address, then please treat questions as per other members of the public.

Here is a draft of my address.

“Dear Members of the Audit committee, many thanks for being allowed to address this committee. As I am sure we all agree, this meeting is not being held in ideal circumstances. In light of the importance of the task at hand, I wish to raise a very strong objection to the short amount of time between the posting of the report pack on the Council website (sometime on Tuesday 12^th Sept) and the deadline for questions (10am Friday 15^th). Like many concerned residents, I have a job and business commitments. This has meant that I have been denied a reasonable amount of time to give proper consideration to the substantial amount of detail in the reports. As a local blogger, who has had the value of their work recognised by former local government secretary Eric Pickles, I take my role very seriously. It is impossible to have proper transparency and public accountability if reports are not given due attention before the deadline for questions can be formulated.  I therefore ask this committee to ensure that all public reports are published a minimum of five working days before the question deadline, to allow due time for consideration. Many thanks for this opportunity to address the committee”.

Q1. The revised report details misstatement. Can the committee explain how such misstatements occurred and what efforts will be made to prevent such misstatements in future.

Q2. At the previous meetig, it was observed by the auditors that Capita staff had not been as helpful as they would normally expect. Why has this observation not been formally documented, as clearly this would add to costs for the taxpayer?

Q3. Can the committee provide details of the extra costs incurred to the taxpayer of having to resubmit this report and restage this meeting and suggest who bears respobsibility for incurring these costs

Regards

Roger Tichborne

Barnet Eye Exclusive : One Barnet - Doubts at the top

The One Barnet project is (we are lead to believe) supposed to deliver ocst reductions and generate revenue for Barnet Council. For any project with a contract value of £1 billion, there should be a sound business case and a thorough analysis of alternatives. This is a huge sum of money.

The Barnet Eye has been informed by inside sources that certain items within the business case would not stand up to scrutiny. In short, the figures may have been "sexed up".  This is a very serious charge and one which would be extremely easy to prove or disprove. All the council has to do is to invite the Audit committee to review the business case and challange any unsupported assertions. I been told that a review of source documenation will demonstrate a degree of unsafeness in the information within the business case. The Barnet Eye would like to see an independent external auditor review the business case and report back to the audit committee. For a project of this size, this would surely be a wise piece of due diligence. I cannot see any grounds for such a step being undertaken. The audit must also consider the alternative strategies for cost savings, along with a full risk analysis of all strategies for delivering cost reductions.

I also call on Barnet's political Leadership to urgently set up a whistle blowing procedure, which offers protection for staff who uncover information which their superiors want suppressed. I also urge the CEO, Mr Nick Walkley to address a situation where his staff will speak to the Barnet Eye about their concerns, but not to the Leader of the Council. Mr Walkley may be supremely confident that the One Barnet program has a copper bottomed business case. In this case, why are we not permitted to see ALL of the information?

Barnet Council Audit Committee - 8th December 2011

So off I trundled to the Barnet Council Audit Committee earlier this evening. Due to other commitments, I could only stay for 1 hour. To be honest, I only bothered going to give my fellow bloggers Mr Reasonable and Mrs Angry moral support, as they had asked a few questions. Lord Mustard also attended. I expect this to be the best blogged meeting in the history of Barnet Council and it's audit committee. As I sloped off early, this account will doubtless be the worst and least comprehensive. I also video'd the public questions for posterity and also managed to capture a rather comedic moment (which I will post over the weekend to cheer you all up). So these are my notes from the part of the meeting, where I wasn't videoing and wasn't skiving off (approx 7.30pm - 8pm).

The committee were reviewing the external auditors report from Grant Thornton. It kicked off with one of my favourite Tory Councillors, Brian Schama asking a very good question. I like Schama. he's straightforward, plain talking and sensible. If I had to have a Tory Councillor in Mill Hill, Brian is the one I'd pick. He actually does the job, which is what we all want (isn't it?) and does it in a reasonable and decent manner. I suspect that if his colleagues were all like him, there wouldn't be a famous five bloggers. His question "Now we have a system for vetting contracts, can we be assurred that all new contracts, apart from emergency ones, where there is no time for proper vetting and which there should be an exception procedure for, will be 100% compliant with Barnets rules?" And the answer was? Well it was extremely long, three people answered it and at the end, no one was any the wiser. It was "Yes of course, that is the target, but..."

Hugh Rayner, who is also a reasonably useful committee member drew attention to the fact that the auditors used terms like "Reasonably good, quite satisfactory" a lot. They never said "outstanding or marvellous"  Why was this Hugh asked (he could have asked a few bloggers who were sitting in the audience and we'd have told him for far less than the rate Grant Thornton charge). The auditors replied rather diplomatically "We said this, because this is how auditors describe things". Barnet Council officer Maria Christophou (excuse any misspelling) chipped in "of 19 categories in the report, 16 have been flagged as green and only 3 amber, that speaks volumes" with pride. She seems to think that it is OK that three of the audit criteria being at risk is something to be proud of. If my car had an MOT and they said 16 categories were fine, but the brakes were at risk of failing, the tyres were nearly bald and the subframe was in danger of collapse through corrosion , would you buy the care from me? Sorry Maria, boast about it when 19 categories are green. If three are at risk, then over 15% of the criteria is not working properly and that is a major failure.

Then there was a question about budget performance. Why was this amber? The man from audit stated that this was because they had underspent £49.5 million on the schools infrastructure budget. This is a scandal. Barnet is struggling to find places to accomodate our children and educate them, yet they have £49.5 million sitting in the bank, because they are to incompetent to organise the work. This money hasn't been cut or saved, it just hasn't been spent on allocated projects, because the council is too useless to get its act together. If you are a parent with a child about to apply for a school place, bear this in mind.

A question was asked about One Barnet. The man from Grant Thornton made a stunning revelation, which nobody (apart from me apparently) seemed to pick up on. "There is no such thing as "The One Barnet project" there are just lots of different outsourcing projects lumped together under the name. The One Barnet project is really many projects, each with a different objective and outcome". Various bloggers have commented that One Barnet may have a name change. It seems that Grant Thornton have a better idea, abolish it all together and replace it with lots of Mini Multi Barnets. Lord Palmer said he opposed One Barnet, but it wasn't his job to make the decision. He then said he could run the Council far better than the current administration. Everyone in the room laughed, some ironically, some mockingly and some (like me) because for all his faults, he's probably right. Then again Kermit the frog could probably run it better than the current administration.

Geof Cook  asked a question was asked as to why only contracts greater than £25K were on SAP, and why the contract register was on an excel spreadsheet, wouldn't it be better if all contracts were on SAP, so there wasn't duplicate entries. The man from Grant Thornton said  "I'm always in favour of efficiency". Cook asked if having two systems, meant twice the errors. Head of Audit, MaryEllen Salter replied, that you'd get the same rate of errors if you only had one system. I flet like saying that you'd have twice as long to check it though, so more chance of getting it right, but we the public merely watch like goldfish.

The last question I heard was from Geoff Cook. He asked about the parking fiasco and the 7% drop in revenues. Lord Palmer pointed out that the audit report only went up until September, before the fiasco was implemented. Geof Cook suggested it would be good if the audit committee could get involved before things went completely tits up. Lord Palmer suggested this was actually quite a good idea and that maybe they could have more meetings. A certain council officer rolled her eyes and had the look of someone who'd rather be eaten by crocodiles.

And that my friends, is the point at which I bade everyone a fond goodbye.

When I got home, I received an email from a friend who stayed. It was entitled "Whitewash" and simply had the text "What can you say".

Indeed. We have video'd the meeting. Strangely, its only when I watch this again that I realise the full terrible truth of what Barnet Council really is like. watch this space

Joint Statement from Barnet Bloggers about RM Countryside (Barnet Council Supplier)

Move over MetPro: here comes another Barnet Council procurement scandal, and this one is even bigger.

 

 

Barnet bloggers earlier this year exposed the scandalous use by Barnet Council of MetPro, an unlicensed security company which was paid a total of more than a million pounds worth of residents’ money despite the absence of any tender process, contract, or properly regulated payment system.

 

MetPro proved to be just one among hundreds of similar irregular arrangements sanctioned by the Tory authority, which is currently negotiating the outsourcing of £1billion worth of our council services to the private sector under the One Barnet programme.

 

During the months of the outsourcing tender process, in blatant defiance of the government’s stated policy commitment to transparency and greater accountability by local authorities, Barnet has consistently resisted, delayed or obstructed Freedom of Information requests by bloggers in relation to matters of public interest, including the much criticised procurement of contracts with service providers. We think we know why that might be.

 

At this coming Thursday’s audit meeting, 8 December, we are submitting questions to the committee about another case investigated by local bloggers involving the council’s long term use of another private company, RM Countryside, which has been paid more than £2 million pounds of local tax payers’ money with an apparent lack of compliance with the proper processes of tendering, contractual arrangements and the regulations set out in the Constitution.

 

We are questioning the efficacy of the internal and external audit procedures which are supposed to regulate the commercial activity of the London Borough of Barnet.

 

The integrity of the One Barnet outsourcing programme is clearly fatally compromised by the failure of the authority to regulate its own procurement, contractual and payment processes and we call therefore for an immediate halt to be made in this programme, and for an urgent, independent inquiry to  be held into the disastrous lack of control of the authority’s commercial activities. MetPro was a warning: a warning which has been ignored. Now is the time to stop, investigate and hold the authority to account to the residents and tax payers of Barnet.

Signed:

Derek Dishman

John Dix

Vicki Morris

Theresa Musgrove

Roger Tichborne

Barneteye TV - Metpro Scandal - Audit Committee public questions - episode 1

Here is epsiode one of our series on the Audit committee report into the Barnet Metpro Scanda. In this we hear that the council has lost control of the procurement process. We hear the Barnet Eye ask whether any processes were or are in place to ensure the council employs best pratice and learns the lessons from mistakes. We get no answer

Barnet Council Metpro scandal - A Tory backbencher speaks

One of the more friendly and sensible Barnet Tory backbench councillors spoke to me over the weekend about Metpro. They asked not to be named in the blog, but were happy to have their views repeated. They agreed that Metpro was probably one of the biggest cock ups since the Tories took over in 2002. I asked whether they thought an independent public inquiry would be more appropriate than the current audit committee investigation "We had an independent investigation into the Underhill sale. It achieved nothing and cost nearly a million pounds. We didn't want a repeat of that". I asked if councillors should have got a proper grip on the situation "Councillors don't decide who we give contracts to or how they are administered". But Metpro didn't have a contract, I pointed out. "That's why we've got the audit committee checking it out". I asked what he expected the audit committee to find "It is pretty clear that we need better controls in place and we need to ensure that companies are properly accredited. To be honest, you don't need an independent investigator to tell you that, it's stating the obvious". I asked if the way the whole scandal has blow up has made Barnet CEO Nick Walkleys position untenable "He can't afford anything else like this to come up, being fair to Nick he's in a difficult position right now". I asked if he was referring to having to work with the Leader in absense Lynne Hillan "You really don't expect me to answer that question do you". And that was where we left it.

It is quite clear that Metpro is a major watershed. I am calling on Barnet Council to call a moratorium on the Future Shape program until the audit committee report is produced. If the council has inadequate processes in place for administering contractors, this needs to be fixed and to be shown to be fixed before any further contracts are outsourced. We can't afford any more Metpro scandals. From what I was told, the more sensible Conservative Councillors agree with this proposition. I think they are starting to wake up to the fact that they are sleepwalking towards a disaster.

Barnet Council : Metpro Scandal - Time to let them know what we think

Today I emailed the head of audit at Barnet Council and the CEO. I want to know what the terms of reference are and I want to address the committee investigating it. As well as ensuring they know what the people of Barnet think the issues are, I also want them to know that an internal investigation is not appropriate and why.

I urge everyone who is unhappy with Barnet Council's handling of this scandal to do the same. Here's what I had to say :-
-------------------------------------------------------------------------------------------------------------

From: Roger Tichborne

To: Maryellen.Salter@Barnet.gov.uk

Cc: Nick.Walkley@barnet.gov.uk

Sent: Tuesday, April 19, 2011 7:44 PM

Subject: Metpro Rapid Response inquiry

Dear Ms Salter,

 

As I believe you are head of corporate audit for Barnet Council, please can you email me as a matter of urgency detailing the terms of reference regarding the inquiry into Metpro Rapid Response Ltd and its relationship with Barnet Council. There are many issues raised by this internal inquiry and this is a matter of wide public interest. As a resident and Council Tax Payer, I am asking for the opportunity to address the inquiry personally.

 

Regards

Roger Tichborne