Friday, 25 July 2014

So how much is this Capita contract costing us in Barnet?

As you may know, I like to exercise my right to inspect the accounts and in particular to review invoices. This year my focus was on Capita invoices given that in 2013/14 they amounted to £62,743,081.83. Yes you have read it correctly £62.75 million and that isn't even for a full year.

At the very outset of the 2013 financial year Capita billed Barnet £340k to pick up the pieces when 2e2 went into administration and to maintain the IT systems through till 15 June 2013. A not insubstantial sum but definitely embarrassing given that Barnet had paid 2e2 their fees in advance so this was paying a second time for the same work.

On 27 June Capita invoiced Barnet for £14.74 million for "Interim measures to provide critical services". According to the annotation on the invoice this also included elements of capital. Now bear in mind this payment was made 6 weeks before the main contract was signed. Interestingly when I asked where the contract for this interim support existed I was pointed to the main contract where it had been neatly written in. So to me this looks like the main contract was signed in Augiust to include a contract for an interim service that had already taken place. Very curious and swiftly followed up with a further invoice for "Interim measures to provide critical services" for another £125k for the period 17-28 June or an extra £10k a day.

We then had a tranche of invoices on 6th August (the very same day the contract with Capita was signed) for capital investment - remember the capital investment that previous councillors said Barnet did not have and could not fund. Those invoices amounted to £10.478 million for various IT systems.

At the end of August and the first couple of days of September Capita invoiced Barnet £11.7 million for "Periodic Service Payments". From what I can understand these are the payments for actually delivering the service and relate specifically to the NSCSO (CSG) contract.

On the 30th September Capita under its "Re" contract (DRS) invoiced Barnet £5.18 million for the contract that started on 1st October.

From then on to the end of the year there are a number of payments including two periodic payments for the CSG contract each of £6.89 million and a further Re contract payment of  £3.4 million.

What intrigued me were a couple of comparatively small invoices,one on 27 November and one on 9th december for a total of £417,007. What this payment relates to is a clause in the contract called "Gainshare" where Capita get a cut of any savings made. Although the contract is redacted it is apparent from the numbers on the invoices that Capita receive 40% of any savings made.

I felt deeply uncomfortable about these savings and have been trying to understand how such savings could be made so quickly. Following a great deal of correspondence with the council and having several subtly different version of how the savings are justified I have been  told that these savings are the estimate of savings to be made over the next year, that Capita invoice Barnet upfront and then at the end of the year if the savings are not as great as Capita forecast then Capita have to return some of the money.  Frankly I was staggered that the council should be sharing out quite so much of the savings of our money and paying out forecast savings as much as a year before they are realised.

Personally  I cannot believe that any commercial organisation would countenance such a one-sided deal but this is Barnet Council we are talking about. Transparency on these savings is absolutely zero. I have asked repeatedly for evidence and it has been promised as recently as Tuesday but it still has not materialised. Indeed one of the largest elements of this saving relates to an area which I believe is virtually impossible to audit which should make everyone very uncomfortable.

So what you may say. It's £417k out of a massive budget. However this week Barnet signed off approval for contracts worth £594 million to be procured. Most of these are existing contract so will Capita be entitled to 40% of the savings on all those contracts? Let us say that they realise 10% savings possibly by squeezing residential and nursing homes who will in turn squeeze staff wages in exactly  the same way that Your Choice Barnet have cut the wages of staff by 9.5%.

 If that were the case would Capita be entitled to £23.76 million of "Gainshare" which they will bill upfront?
Do any of the councillors who signed the contract know? Was the matter raised by councillors on Tuesday evening when the approved the procurement exercise? There was no debate on the subject and Dan Thomas did not allow any scrutiny from Cllr Paul Edwards who wanted to asked questions.

Barnet have signed up to a contract which increasing appears immensely complex and entirely one sided with not one councillor bothering to query why so much money has been paid to Capita in such a short period of time.
At the Audit Committee this week one of the independent committee members said quite firmly " I am not prepared to sign off accounts I have not read". What a shame Conservative councillors did not take the same approach before they signed off this massive Capita contract.

1 comment:

  1. THank you for taking the time to shine a light on such a murky area