1) Budget challenge = need for One Barnet Programme

Barnet Council’s ‘Barnet First’ magazine for September 2012 identifies that £72.5m is required to be saved from the baseline budget over the four year period 2011-12 to 2014-15.  The Council’s budget book identifies £43m of savings to be delivered in the three year period 2012-13 and 2014-15.  This means that the Council has already delivered £29.5m worth of savings or 40% of the required target in a single year.

The target savings to be achieved through the DRS outsourcing are £2.6m per annum (or just £5.2m across the savings period detailed above 2013-15).

The target savings to be achieved through the NSCSO (back office + customer services) project is £4.1m per annum (or £8.2m across 2013-15).

The Barnet Alliance for Public Services argue:

>> Alternative ways to save – The value of the two contracts is more than £1bn for a 10-year period.  This is a £100m budget per annum, meaning that across the two contracts the annual saving is just 6.7% upon the existing budget.

>> Alternatives to fixed contract – The question is whether it is worth tying the Council into the restrictions of a contract for 10 years for these required levels of savings? What alternatives have been fully explored? (none fully)

2) Growing pressures on services = need for One Barnet Programme

The Council has developed the ‘Graph of Doom’ which demonstrates that “were Government Grant allocations to remain flat” (i.e. no increase on the current figure despite inflation) then the growing need for adult social care and children’s services will consume the entire Council Budget by 2030.

The Treasury has confirmed that it expects the next Spending Review to agree to another 3-year period of further cuts to public services (i.e. including the grant provided to local authorities and other directly-funded services).  The Council is arguing this is a long-term trend in government funding (grant) for local councils, which will continue far into the future.

The Barnet Alliance for Public Services argue:

>> Graph overstates the pressures – Although this graph identifies a genuine growing pressure on statutory services, it is unrealistic to consider government funding to not increase at all over an 18 year period, and therefore the graph could be argued to be somewhat meaningless…

>> Funding is a national issue – This is a national problem, not just a local one; therefore the Council shouldn’t necessarily treat everything as needing to be resolved at the local level and particularly over such a long period of time.

3) National Funding Allocations = Local Budget = Need for local action

The Council cannot particularly influence the budget decisions of government and therefore we need to come up with innovative local responses to meet the funding and service challenges of the future.  The One Barnet Programme is that response.

The Council needs to become better and more focused on the commissioning of service outcomes instead of getting stuck in the detail of how to deliver.  The Council also needs to take a less risk-adverse approach to service delivery in order to save money through effectively managing risk.

The Barnet Alliance for Public Services argue:

>> Poor record of contract management – There is no question about the need to commission services more effectively be that through in-house or outsourced delivery.  There is also a strong desire to see existing contracts managed effectively, to date the Council has a very poor record for contract management and risk transfer.

>> Not demonstrating Council is managing risk – The Council has traditionally taken a prudential and conservative approach to spending and service delivery, so the change to greater risk taking (outsourcing services + flexibility in contracting) should require a coherent risk-management strategy that ensures the outcomes deliver best value:

i) In-house comparison of how savings could also be achieved

ii) An active contract management approach by the Council

iii) Plan B for if the outsourced venture collapses / fails to deliver

>> Misrepresenting future finances – One example is that the government has re-localised business rates to incentivise councils to support local growth, but the Council’s budget book dismisses this change as providing an uncertain funding source.  This means that it has:

assumed no increase in government income;

assumed increased pressure on services;

– taken an optimistic view that outsourcing can deliver added savings;

– taken a conservative view of local economic development.

i.e. It takes optimistic and pessimistic views depending on whether it suits the ideology.  It also indicates that it does not have much faith or investment in local communities and businesses delivering local economic growth.

4) Outsourcing will not affect service delivery

In the modern world the focus for Councils should be the delivery of outcomes and not the means.  It should undertake assessment of local needs and then commission the delivery of local services (this is what currently happens, it’s just that the same people do both jobs at present).

The argument is also that the Council can write the perfect contract that will secure agreement from providers to deliver improved services for less money, despite the fact that government and local policies and issues will change over that period.  The contract will be both sufficiently flexible to allow for any required or desired changes in policy / service delivery requirements and also tight enough to ensure the provider delivers an improved quality of service.

The Barnet Alliance for Public Services argue:

>> Challenge to deliver on the contract – Many examples from elsewhere have demonstrated that if the contract is enforced too well, that the contractor comes back to say it is undeliverable / renegotiates terms / cuts its losses.  If the contract is too open then the quality of services is often diminished or big issues / service delivery failures come to light over time.  The Council has not provided examples of where the type of services being contracted have successfully been outsourced elsewhere in a comparable way.

Certainly, one could reasonably argue that contracts are designed to give certainty to a contractor; it is therefore unlikely that the Council can develop a sufficiently flexible and precise contract that strikes the perfect balance.

>> High-risk strategy – This means it is a high risk strategy, and the most significant risks (contract / service failure) are not being properly addressed through appropriate risk-mitigation (such as the three techniques listed under section 3 above).  Service / contract failure will mean:

i) Increased Council Tax (the cost of service or contract failure would be capitalised and paid off over 10-20 years)

ii) Reduced Quality of Services (the most likely impact would be agreement to a change / reduction in public services)

iii) Increased Fees and Charges (an alternative but likely to be used approach would be to increase any fees/charges that are outside of government control.

 >> Lack of contract management – the proposed‘thin-client’ model means that the contractor will be left to manage and report on their own performance. Without sufficient retained resource and capacity to actively monitor the quality and nature of services provided there is a risk that issues are not picked up sufficiently early until they become a significant service delivery failure.  G4S, the bank collapses and LIBOR misreporting are all good examples of how a self-reporting approach does not operate well in practice.

5) Outsourcing services will not affect residents / local democracy

By focusing the Council’s senior staff on ‘commissioning’, it will improve overall outcomes and mean that delivery of important outcomes are not bogged down with everyday matters (e.g. dog poo issues, housing queries, neighbour complaints… etc. that come from Councillors and residents)

The contract will ensure that Freedom of Information requests and responding to residents concerns continue to be addressed in much the same way as presently takes place.  Councillors will continue to be able to raise issues on behalf of local residents.

The Barnet Alliance for Public Services argue:

>> Councillor support for residents – There is strong concern that the move to commercially delivered services will mean that the way Councillors are currently able to support residents to resolve local issues in service delivery (the means) will be severely curtailed as the Council withdraws and fixes the contract, allowing the provider to determine how services are provided.

In particular the resolution of specific local issues may in future come with a cost (i.e. contract change) where none is currently charged; such contract change limitations are a risk to democracy or cost control.

>> Local democracy (changes in direction) – The signing of a 10-year contract fixes the Council’s ability to determine how and what services are delivered unless it is willing to pay a lot more money to change the nature of services provided.  This means that alternative Councillors and Councils elected in the future but during the lifetime of these contracts will be fixed unless they are willing to pay for contract changes or substantial penalties for contract curtailment.  This necessarily reduces the ability for residents to influence local services.

>> Local democracy (reduced transparency) – Experience from other areas with similar contracts shows that the contractors have often hid behind FOI ‘commercial confidentiality’ and related opt-out mechanisms to reduce both the cost of responding to local requests for information and to cover up embarrassment.

>> Local jobs / employment – TheCouncil is currently the largest employer in the area, and therefore it is safe to assume that many of the staff due to be affected by the contracts are local residents.  At present only the DRS contract involves a commitment to retain services within Barnet after 2015.  This means that the circa 750 staff involved in the NSCSO contract are anticipated to be moved elsewhere in the Country as services from the winning bidder are transferred to areas of the Country where it is cheaper to employ staff.  (Every public sector job in Barnet supports circa 4 local private sector jobs, meaning that approximately 3750 jobs are being put at risk).

>> Staff terms – The offer to protect staff terms and conditions for one year means that the terms and conditions of existing staff are being made open to change and this will impact on existing residents + their local spending power.

More importantly, all new staff (many of whom will be local residents) are likely to be brought into post on cheaper contract terms (i.e. without a local government pension, less annual leave, less rights to sick / maternity leave…etc  and probably a lower level of pay).

6) Outsourcing services does not require public consultation

Resident perception surveys have identified that the public do not mind who provides their services and therefore it is ok to undertake the outsourcing process without a proactive borough wide consultation or local referendum.

The complaints made and issues raised by Bloggers and the Barnet Alliance for Public Services do not represent the views of the majority of residents.  Therefore public debate about the One Barnet Programme through committee meetings and residents forums will not be allowed to highjack the agenda.

The Barnet Alliance for Public Services argue:

>> Avoiding public debate Thecensure of challenges by the Barnet Alliance for Public Services and the avoidance of any form of consultation that would provide an open and transparent conversation with local residents, has meant a severe lack of engagement and empowerment of local citizens.

>> Shrouded in secrecy – The process of competitive dialogue has meant that the entire contracting process has been kept behind closed doors and is subject to a level of commercial sensitivity that means the major plans for future changes in service delivery will become fixed through a commercial contract before becoming subject to any public discussion or scrutiny.

Overall

The critical issues to raise with Councillors / Officers are:

i) Both the cost of procuring the programme and risk of future added costs

ii) Increased risk of service failure and lack of effective risk management

iii) Impact on local democracy from reduced Councillor / resident ability to challenge and affect change to local services.

iv) Inability to set standards / influence local employee terms and conditions.

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