Saturday, 15 September 2012

A glowing report, Part Two: We have dealt with it as we wish to ...

Mrs Angry doing what she does best, upsetting the auditors

Part Two:

Up to the table went Mrs Angry.

Chair Lord Palmer promised Mrs Angry that he would not make any disparaging remarks about her (a welcome assurance, after the events of Tuesday's Full Council, where Mrs A was in the public gallery and the subject of insulting comments by the odious Brian Coleman). Mrs Angry was duly grateful.

Her first question was about Barnet Council's obstructive use of redactions on all the account documents that she and fellow bloggers had wanted to see at the time of the annual inspection, and she wanted the committee to know that the reply she had received from the Chief Finance officer, Andrew Travers had arrived only that very morning.

This reply has yet again expanded the range of excuses used by Barnet to justify its defiance of the need for transparency, and the blatant overuse of redaction. The latest claim, to have sought legal opinion on access, is one of those clever retrospective Barnet replies without specific reference to date, thus easily including actions taken after the incident, such as the approval of the auditor on references allegedly covered by data protection issues.

What was important to note, Mrs Angry suggested, was that Grant Thornton's claim to have concluded their correspondence with her and Mr Reasonable was certainly not true, in her case.

Mindful of the limited time for questions, and assuming that her second question may well not make it to the table, she decided to make reference to her second question here too, so as to make sure the matter was on record.

The second question covered two issues: the first being a rather sensitive but very serious subject: the management of risk posed by the failure of the council to address the potential conflict of interests of senior officers involved in the privatisation of council services.

"I would like to remind the Chair of the issue of conflicts of interest created by the movement of senior officers of the council to and from the authority and private sector companies supplying or tendering for contracts from the authority, with particular reference to officers engaged in One Barnet outsourcing. I have previously raised the very serious issue of the failure of the council to address the risks presented by such activity, raising my concern both at the audit committee and to the external auditor in person.

Over a period of more than a year,in fact, I have received assurances that these risks will be addressed. I simply do not believe that any effective measures have been introduced, or any retrospective investigation into potential conflicts of interest which may have occurred and compromised the integrity of the dialogues. Furthermore, I understand that another senior officer employed by the council in relation to a recently awarded contract is now alleged to be working as a consultant for that same company within a short while of leaving the council. Without implying any wrongdoing on the part of individuals, it would seem the council is still failing properly to manage the mitigation of this very real risk, and the perception of risk.

I have again asked the auditor to investigate this matter and he has merely responded by stating he would 'look into my point' over the next year. I have replied, on August 31st, that such a lack of urgency is inadequate. I have not, at the time of writing, 11th September, received any reply."

And here we were, two weeks later, with still no response, and Mr Paul Hughes telling Mrs Angry that there would be none, and what did the Chair make of that?

Oh dear. Mr Paul Hughes did not look very pleased.

Lord Palmer suggested to Mr Paul Hughes that he might like to respond to that particular point later on. Hughes moved close to his microphone.

'I'd be delighted ', he growled, in a tone which, to Mrs Angry, expressed not so much a sense of boundless delight, more a feeling of deep resentment, a mood which seemed to darken noticeably as the meeting progressed, and more questions on issues of external audit and the One Barnet programme emerged.


When Mrs Angry did, unexpectedly, have time to ask her second supplementary question, she asked the obvious one: how can the council assert that 'it has taken reasonable steps' to ensure that conflicts of interest do not arise - assurances on this matter were given over a year ago and yet still allegations are emerging that another senior officer involved in the procurement of a contract has now gone immediately to work for the very company that won the contract. If the council really had put in place procedures adequate for the management of the conflict of interest, and the perception of conflict of interest, surely such an event could not have taken place?

There was no real response. And if you are not shocked by the total apathy of the council, the councillors, internal audit and most importantly the external auditors when presented with an issue like this, you bloody well should be.

Now was the opportunity for councillors to ask their own questions. There were, unusually for a Barnet council committee, some remarkably good and challenging questions on issues from both Labour and Tory members, issues which the Tory leadership most certainly does not want to be raised.

It was almost, reflected Mrs Angry, as if they had been particularly well briefed for this meeting. If only all committees were chaired by an opposition member, and comprised of councillors who were so carefully prepared for the matters under discussion, and ready to take part in a genuine debate, rather than rubber stamp the decisions of the Cabinet and senior management team.

Tory Mark Shooter, Vice Chair, and a one time challenger for the Tory leadership, asked about contract management and procurement, and whether the One Barnet contracts will have the requisite mechanisms and processes in place to manage the risk of contract failure?

Tory Hugh Rayner also wanted to know about any contracts which may fail.

Hello, thought Mrs Angry: someone has woken up, and there is a smell of coffee. At last, the sort of questions that should be asked, but have not been.

Hugh made a very interesting observation. If contracts do fail, he said, with absolute seriousness, the bloggers will know before we do. Would it possible to ensure that they, the councillors, are informed when contracts are about to fail?

Mrs Angry laughed to herself.

Don't worry, Hugh: We'll tip you the wink.

Labour's Arjun Mittra also referred to the bloggers, and pointed out that the council's actions were making scrutiny by the public so much harder than it should be. As, ahem, Mrs Angry has mentioned, he said, when residents take the trouble to try to exert their rights to scrutinise, as in the case of the accounts inspection - well, look what happens. He pointed out that complaints about such matters are not dealt with: there is a systematic problem.

Head of Internal Audit, Maryellen Salter, who used to work for Grant Thornton, is a very able officer, but has a certain deadpan verbal delivery which facilitates a smooth and not always entirely satisfactory official response from the council to any difficult questions. She gave a seamless answer made up of the required One Barnet incantations: transparency, systems in place, avenues, bla bla bla, redactions made based on legal advice. Mrs Angry sighed.

The Chair had his own opinion on this matter. His personal view was that it was disappointing that so many things can be blacked out. Legal advice? In his experience lawyers are always ultra careful: really, we are not that vulnerable, and we must have as little redacted as possible.

Mark Shooter asked then if the committee could look at the rules of redaction.

Mr Lustig, the Director of Corporate Governance spoke next. Lustig, who has been at Barnet since the beginning of recorded history, and knows everything about everything, is the lynchpin of the council, but an enigmatic character, sitting impassively throughout meetings, carefully calculating the navigation of difficult developments with his baleful eye.

During the Full Council meeting earlier this week, Mrs Angry took the opportunity to tease him over the new guidelines from Eric Pickles requiring councils to provide the same access and facilities to bloggers as those given to the mainstream press. In Barnet, it should be said, this don't amount to much: a jug of water and one tiny table, with a grubby piece of paper saying PRESS.

As the councillors feasted greedily on the magnificent buffet which is always provided for them at these meetings, Mrs Angry leaned over the glass barrier that protects the council chamber from any rotten fruit throwing from the public, and reminded Mr Lustig that she was, after all, Eric's favourite blogger, and expressed her wish at future meetings to be provided with tea and biscuits. Chocolate biscuits. The Director of Corporate Governance thought very carefully for a long time. I do not think, Mrs Angry, he replied, reflectively, from behind the glass barrier, That, in a time of austerity, the authority could run to chocolate biscuits.

Plenty of insults, but no respect, and no biscuits. Not even broken biscuits, or crumbs from the rich man's table.

Lusitg commented now at some length on the subject of exempt categories, two main areas, personal information, commercially sensitive information, the council had to take a view, etc etc. Significantly it was not, noted Mrs Angry with interest, a particularly robust defence of the need for redactions on the level being pursued by the council. Besides, as she whispered to her neighbour Rabbi Newman, these pretexts are being used and abused to withhold information for political reasons, which is something that is not being addressed by anyone, unsurprisingly.

Lord Palmer repeated his opinion that it is best to disclose the maximum amount of material.

Tory member Hugh Rayner asked another interesting question: who does the redactions and are they properly aware of council policy?

Mrs Angry laughed.

Lustig told him that such matters were dealt with through legal services, oh, and the Chief Finance Officer and his 'representatives' ...

Mrs Angry laughed again.

... and that redactions will of course be kept to the absolute minimum.

Mrs Angry was still laughing.

On to the report from Grant Thornton.


This was introduced by the Chair commenting wrily that it was indeed 'a glowing report', although some might think the council did not deserve it ... yes, Mrs Angry laughing again.

Some mention was made of the external auditors' fee for this marvellous endorsement of its outstanding record of competency in all things financial. Mr Paul Hughes glared at Mrs Angry and reported that his fee had been reduced this year by 10%.

Oh: Value for Money, replied Mrs Angry, approvingly, nodding. See - we're all in this together. Hard times.

As to public challenge matters, he continued, in rather a tetchy tone ... the public has rights, but we are guided by statute and the Audit Commission (yes, apparently: who would have guessed?)

Matters raised by electors, he explained, may be categorised in two ways, as questions, or objections.

Objections are formal matters, and must be answered fully

Questions are matters for which the need to respond is discretionary.

Sadly, Mrs Angry's matters of concern, which one might be considered to be serious matters of public interest, have fallen into the discretionary category. And this is why, despite the fact that she has raised an urgent and very serious issue in regard to examples of potential conflicts of interest which continue to occur in the course of a procurement process involving £1 billion worth of council services, the external auditors can simply say, so what, f*ck off, and shut up.

Or, as the man from Grant Thornton puts it:

"We have dealt with it as we wish to".

Mrs Angry has no reason to believe that that statement is not true.

How can it be acceptable that senior officers of the council have come from and gone to companies involved in contractual negotiations with the authority with such ease? Should there not be a requirement on officers not to take up employment with such companies for a specified period? Why, as proved by FOI requests last year, so many declarations of interest left unsigned, or signed so late in the timeline of the competitive dialogue?

If we cannot have faith in the ability of the council to safeguard our investment, our money, our services, from the very real possibility of fraud, or corruption, at such a time, we might be expected that an independent body paid to oversee these processes would take effective action on our behalf to ensure that everything is being done to defend us from such risks, or the perception of such risks.

If you are a resident of Broken Barnet, you may reasonably feel, as Mrs Angry does, that the refusal of an external auditor to investigate the continuing failure of your authority to manage the risk of conflicts of interest regarding senior officers of the council during a billion pound programme of privatisation is nothing short of scandalous.

The two outsourcing contracts are getting very close to being signed: if there is inadequate provision within the procurement process for the management of risk of conflicts of interest, clearly this is an urgent matter and must be addressed immediately, before the conclusion of the tender process.

When the external auditor refuses to discuss this matter or act with any urgency, residents might reasonably assume that such a decision by the supposedly independent body is taken in order to favour the best interests of the authority, rather than those of the taxpayers and electors of this borough.

During the meeting there was a good deal of praise and backslapping for the internal audit team for producing their report on the previous financial year by the end of May. It appears to Mrs Angry that this report, and indeed the report for next year could well be written now, and the accounts approved by the external auditors. As someone who has followed the audit trail of the audit teams, internal and external, over the last two years, it seems clear that what is reviewed and concluded is always to the benefit of the authority, with surely over generous tolerance shown to what would seem to be fundamentally serious failings, such as in the staggeringly awful mismanagement of procurement.

The external audit process, which should be the ultimate protection for the safety of taxpayers' money, is toothless, pointless, shamelessly inadequate. Will the new system due to be introduced on the abolishment of the Audit Commission be any better? No.

Eric Pickles' localism plans are completely skewered by one fatal flaw: instead of empowering the residents of a community with more control over local government, it will be the councillors and senior officers who will acquire more power. There will be no mechanism, other than an election once every four years, for residents and taxpayers to influence the policies and actions of their local council.

He has also taken away some of the processes by which residents could hold their elected members to account. Councillors like Brian Coleman are no longer restrained by the processes of the Standards regime, which has been replaced by an effectively impotent new disciplinary system.

And in regard to financial scrutiny: Eric wants armchair auditors to inspect the accounts and monitor the administration of their local authoritities, but there is nowhere for them to go when they find irregularities or serious issues of public concern. If the present external audit system is inadequate, as we see here in Barnet, what hopes are there of the future independence of private audit arrangements? There is a tiny pool of large audit companies, and this has created a virtual monopoly within this market, just as in the wider world of privatisation, outsourcing companies like Capita, Serco and BT carve everything up between them.

Without a truly independent watchdog or commission entrusted with scrutiny of the auditors: we will see the fatal compromise of integrity within local government, a market free for all, and we, the ordinary citizens, will beleft standing defenceless in the middle, with nowhere to go, and no one to listen.

Even if you're not living in Broken Barnet now - you will be soon.

6 comments:

baarnett said...

"Hugh made a very interesting observation. If contracts do fail, he said, with absolute seriousness, the bloggers will know before we do"

- and this from a councillor, who the public elects, pays an allowance to, and puts in charge of a c£1-billion annual budget.

And, at the risk of being smartypants, you mean "Systemic", not "Systematic", Mrs A, which may be a model of washing machine.

Mrs Angry said...

yes, alright, I would probably use systemic, but that was not the word used by Cllr Mittra, and I am trying to report what people said, not what they should have said, Mr Cleverclogs ...

baarnett said...

I hadn't realized it was a quote. Sorry.

Mrs Angry said...

s'ok. I'll go back to making it all up then, as my attempt at gritty realism is going horribly wrong.

Arjun Mittra said...

My apologies for saying Systemic rather than systematic. I doubt the meaning was confused though.

Mrs Angry said...

in fact I think there is room for both words, systemic being descriptive of the final outcome, and systematic descriptive of something more ruthless and progressive ... yes, think I might start creating Mrs Angry's guide to grammar, in the context of the realpolitik of One Barnet ...