Category Archives: Capita contract

What 8 years of Tories cost the Vale of White Horse

A couple of years back, Vale’s external auditors said council’s Tory administration had let too many senior staff go, in fact to the point that council was no longer able to run the business effectively. So the last three years have seen an expensive structural reorganisation taking place.

About three years ago, I read a newspaper article about how angry and shocked local people were in another authority when they learned their Local Plan has cost them over £3mil. I thought ours had probably exceeded that, so I asked our Head of Service. At that point they didn’t track the cost of Local Plan work separately (!?). But they said all their policy budget was essentially for Local Plan work. So there have been eight years of Local Plan work, at £1mil per year, and we still have no complete local plan. That should be in the news. That’s how the Tories have managed the planning policy budget.

In 2018, we learned that the estimated £9mil savings to be realised from the 5 Councils Partnership (5CP) outsourcing scheme was lost. The financial outcome at that time was described by the council’s Chief Exec as ‘break even, at best‘ (my emphasis). This decision to outsource was a huge, risky decision, made in secret, without ever coming past Vale Scrutiny Committee or Vale Full Council. I heard the former Deputy Leader of Vale say on radio during the 2019 elections debate, that it HAD come to council. That isn’t true. Obviously the contracts weren’t thought through or evaluated enough. There were errors in the calculations of current costs of service. Some critical services weren’t even IN the contracts (such as wifi in the council offices, a basic provision). There was not enough time allowed nor people involved to ensure it was a good deal for the taxpayers. £9mil in forecast savings, gone. Unsurprisingly, Council’s external auditors found problems with council’s value for money assessment. Council is still spending money to improve the contacts and services that are part of this 5CP. Many services have already been brought back in house. There are seven more years to run in this contract.

Council has three main income streams: business rates, new homes bonus, and council tax. Government frequently modifies the business rates scheme and new homes bonus schemes, and ministers have said they expect local councils to maximise their income from council tax. For years, Tories decided, against officer advice, to freeze council taxes. They are proud of this past; they still brag about it. But now we are in a bad state; the medium term financial plan shows council will run out of money in about 4 years time, unless something happens to fix the problem. The cost of these Tory decisions to freeze council taxes is estimated by our accountants to be > £10mil over the medium term. This failure to responsibly incrementally raise council taxes has led to an over reliance on new home bonus, which was always a fragile scheme. This year the new homes bonus has been wound up, leaving us in a perilous financial situation.

It all started in 2011, when Tories announced their free 2 hr parking scheme, a clever bribe for votes, which actually worked to get them into power for the first time in years. Who wouldn’t vote for free parking in their market towns? Tories assured everyone it would increase footfall and the spend in town centres. The cost to our taxpayers is £200,000 per year, and it’s ongoing. So, £1,600,000 of taxpayer money, income that could have been used for frontline services,  has been lost due free 2 hour parking for car drivers over the 8 years. When asked for evidence to support their benefit claim of increased footfall, no evidence was provided, since none is available. Tories produced zero evidence of any benefit for that spend. In fact evidence around the nation shows that city centres actually suffer when free limited parking is provided. People come and instead of lingering for lunch (etc), pop in and get out before their free parking time expires.

Most recently, the Tories gave about £250,000 to the Abingdon Flood Scheme, which has since been cancelled as forecasted costs rose beyond what was viable. It was public money down the drain.

It’s obvious the Tories never had enough people in place to do the work required. That has cost the council both financially and in terms of reputation.

So the Tories lost control in the recent election. We, the Liberal Democrats, were elected instead. We have made it our highest priority to get the council’s finances under control.

Five councils partnership will “..break even, at best”

At full council on 18th July 2018, the Leader of the council, Cllr Roger Cox, reported that the outsourcing arrangements his administration entered into in order to save £9 million over the  life of the contract, will now “break even at best”. 

See his full statement on the Vale website, here:  http://www.whitehorsedc.gov.uk/news/2018/2018-07/council-leaders-statement

That wording, “break even at best” means most likely it will actually cost our council money over the long term. Let me emphasise that. The outsourcing scheme brought in by the Tory administration in 2016 will not save us any money at all, and in fact will likely cost us money over the 9 years of the contract. 

He led off with this, as if it were the MAIN THING:

“I am pleased to say that the insourcing of services from VINCI and the establishment of a direct relationship with Indigo for our Parking Service delivery has gone exceptionally well.”

What he might have said was that the costs of the Vinci contract exceeded the baseline costs from when we did it ourselves, so we brought those services back in house. The cost of that isn’t yet known, but in my opinion is bound to be high; we’ll learn of the details in the financial reporting due in September.

He followed with this:

“I am pleased that Capita have committed to work with us to achieve this and that they support the benefits of the positive and truthful approach our officers have taken…” 

I interpret this as a sad attempt to find something positive in this situation: “Well, at least they’re willing to work with us and officers are telling the truth…” A low bar, in my opinion.

This is the MAIN THING, as far as I’m concerned (my emphasis):

“I have specifically sought out assurance from the Chief Executive and our Section 151 Officer regarding the original decision-making process and the information that was made available to members, staff and residents at that time. Based on this, I am satisfied that the original decisions taken by members were appropriate based on the information made available to them at that time. I think all councillors will agree that we are fortunate that our current officers call a spade a spade and have committed themselves to resolving the challenges we face and that we are better informed regarding the detail of the 5Cs contract now than at any other time. However, based on the information that was available to us at the time, I do not believe members made a decision that was illogical, inappropriate or unreasonable.“

By his reference to ‘current officers’, he seems to be saying he holds previous officers accountable for not providing sufficient information to make an informed decision. OK, if Cabinet had known better, they would have done better. Fair enough.

But not GOOD enough.

In fact, poor decisions taken by this Tory administration were highlighted by external auditors Ernst & Young in their 2017 report to Council, when they said, “…Councils had not put in place proper arrangements to allow them to make informed decisions…” . Cllr Cox refers to the auditors’ findings in his report (in the link above, see the penultimate paragraph).

A useful learning point would be to assess what led to this situation, where Cabinet didn’t have the information they needed. Did Cabinet ever ask officers for a report on the reasons why NOT to do this outsourcing contract? I see nothing that tells me they did. What practices can be put into place to be sure Council doesn’t make this same mistake again?

Since the time when this outsourcing decision was taken in 2016, all the key decision makers have stepped down – both councils’ Leaders and the then Chief Executive and main strategic director for this work.

I am disappointed there wasn’t even the smallest whiff of apology in the council leader’s words or his tone. This project has gone so wrong, caused suffering to staff, and cost us a lot of money. He could have said “Sorry”.

 

 

 

 

 

I asked the Leader about risk of Capita collapse

On the 25th Jan 2018 Scrutiny hosted an Ask the Leader session, where Cllr Matthew Barber took on all comers. I had a question for him about Capita.

“In the aftermath of the Carillion collapse, I’ve been looking into the wider issue of outsourcing public services as a decision and the associated risks. Whenever a decision is made to outsource public services to an external provider, we outsource the work but not the responsibility. It is still Vale that must meet payroll, manage HR issues, keep the IT systems working, replace batteries in officers’ mobile telephones, and repair or replace
wobbly tables in our offices. I see places where performance is falling short, yet the KPIs are still green.

“When Cabinet decided to outsource this work, who at Vale took on the responsibility of managing the contracts with the outsourcing companies to ensure we were still delivering our services? What issues have arisen in contract management and what’s been the cost of that? For example, how much have we had to spend on retained officers’ work in keeping the Capita KPIs green? And now that we see what happens when a company goes bust, what sort of contingency plans have council developed us to protect us in the event of a Capita collapse?”

Cllr Barber replied that the council had outsourced many contracts most of which were working well. However, it was sensible to have plans in place in the event of the potential collapse of any of these contracts. A joint client team operated across the Five Councils’ Partnership and the client relationship director had delegated authority to act for each of the partner councils in managing the performance of the contractors. Most of the operational problems with the Capita contract had occurred in the transformation activities in HR and IT rather than in services operating on a “business as usual” basis. There were rectification plans (within the provisions of the contract and at no cost to the council) in those areas where the required service standards had not been achieved.

That didn’t answer my questions, did it?

Since that time, of course, Capita shares have collapsed, several areas of their performance have been poor, and in May 2018 Cllr Barber stepped down as Leader of the Council to pursue other opportunities.