Breaking: Dismore replies to the auditor & Who watches the watchmen?

Update, Sunday 5.30pm

Just received this release from Andrew Dismore, as I was about to publish my own post, below:

Dear Mr Hughes,

Thank you for your letter of 30^th June.

You do not wish to conduct a public interest inquiry because you say, in summary

1. The council is taking action

2. It might undermine confidence in the council

3. The council is implementing the recommendations

4. The council is doing further investigations, and

5. The issue is already in the public domain

The obvious response in relation to points 1, 3 and 4, is that we have heard this from Barnet many times before but nothing seems to improve, as I expand below.

As far as point 2 is concerned, nothing could further undermine public confidence in Barnet’s administration, which is now at rock bottom as any objective resident would confirm and as evidenced by the Council’s own satisfaction surveying.

As far as point 5 is concerned, some of the issue of contract letting and compliance may be in the public domain, but only as specific horror stories individually come to light. The Metpro fiasco is just the latest. My request for the public interest inquiry was not just in the context of Metpro, but more generally into Barnet’s contract letting and monitoring processes and checks.

Only this week, the Hendon Times has carried on its front page yet another example, this time in the contracting (or lack of it) for care services, where failings at the social care centre with whom the Council failed to follow proper procedures and checks and to agree a formal contract actually led to the death of a resident with learning difficulties.

Barnet are serial offenders presiding over a catalogue of procurement disasters. “Taking action” involves actually cutting nine posts in the Corporate Procurement Team. How will cutting posts help deliver an "effective and responsive" procurement service when the council are about to embark on complex privatisations? I suspect this decision has more to do with saving money than sorting out the service.

See:
http://committeepapers.barnet.gov.uk/democracy/meetings/meetingdetail.asp?meetingid=6747

Moreover, the council met only half (51.5%) of their service improvement targets last year ( for the second year in a row, although this has been a running theme for five or six years despite the picture they would have you believe of a high performing council).

Targets missed include two targets under “effective contract management”:

· % of contracts held by the Council that have been reviewed – target missed by 26.6%,

· % of contracts deemed to require renegotiation that have commenced renegotiation –target missed by 57.8%).

This suggests that while the MetPro scandal hit the press and caught the public imagination, there

appear to be more deep seated problems with procurement and contracts that throw real doubt about the council's capacity to take on the highly risky "easyCouncil" service outsourcing.

In the circumstances, I would invite you to reconsider your decision.Yours sincerely

Andrew Dismore

and as I was saying:

Who watches the Watchmen?

Lisa Simpson: I mean ... if you're the police, who will police the police?

Homer Simpson: I dunno ... the coastguard?


As we heard on Friday, Grant Thornton, the external auditor of the London Borough of Barnet, has refused a request from former MP Andrew Dismore for an inquiry into the implications of the MetPro report.

Speaking for GT, auditor and talented comedian Paul Hughes, unfazed by his four hour gig at the MetPro Audit Committee Meeting, is reported as replying cheerily that he believes any further inquiry is unnecessary, and would, ha ha, good one - 'undermine public confidence in a public body'.

You might be forgiven for thinking that there is a potential conflict of interest raised here: the decision not to investigate how Barnet got itself into such an unholy financial mess being made by the same company responsible for overseeing Barnet's accounts during the period when it was, well - getting itself into this unholy financial mess.

After all, what are the borough's auditors paid for, if not to notice that, as stated by Lord Palmer's report:

'The Council has failed to comply with its CPR and Financial Regulations, exposing the Council to significant reputational and financial risks.

Internal Audit cannot give assurance that this non-compliance is an isolated incident, due to a lack of an accurate and complete centrally held contracts register and effective monitoring arrangements.'

or to conclude that we are, as Maryellen Salter, head of internal audit stated: 'not a good place to be in'?

Palmer himself commented at the MetPro audit meeting that his report made: 'devastating reading ... horrendous ...'

I think it is fair to say that confidence in the financial competence of the London Borough of Broken Barnet is, in fact, already well and truly undermined, Mr Hughes.

The findings of the report presented a damning indictment of the financial management of this local authority, a catalogue of breaches of regulation and failure of procedures on an almost unimaginable scale: a staggeringly awful state of affairs for a local authority with a billion pound budget, and one determined on recklessly throwing as many council services as possible in the lap of profit hungry private contractors.

Unbelievably, the day following the MetPro meeting was chosen by the council as the ideal opportunity to rush out a tender notice for £750 million pounds worth of business.

Well. The Audit Commission has been paying visits to this blog all week, so Mrs Angry decided to repay the compliment, and visit their website, and found herself looking looking through their published reports. Oh hold on: the London Borough of Barnet Annual Audit Letter 2009/2010 ... at least, I think it's Barnet, although it doesn't sound much like the borough we are so familiar with ... let's have a read through, shall we?

Key Messages

Value for money conclusion:

point 1.12 -

We concluded that, for 2009/10, the Council made proper arrangements to secure economy, efficiency and effectiveness in its use of resources for the year ending 31 March 2010.

point 1.13 -

Our work highlighted that managing finances continues to be a strength area for the Council and there has been improvements (sic) in areas of the Council's activity particularly around commissioning and procurement ...

point 2.10 - Financial Systems

We undertake sufficient work on key financial controls for the purpose of designing our programme of work for the financial statements audit. Our evaluation of the Council's key financial control systems did not identify any control issues that presented a material risk to the accuracy of the financial statements.

point 3.6 -

As part of the One Barnet programme the Council should develop sound contract monitoring arrangements with third party providers.

What this shows us, of course, is that clearly commissioning, procurement and contract monitoring had all been areas addressed by the audit, yet what we now know, from Lord Palmer's report, to have been a widespread and very serious failure to enforce basic regulations regarding all of these acitivities was not identified.

Barnet's financial control systems were approved - commissioning and procurement are actually said to have shown improvement, and the lack of 'sound' contract monitoring arrangements - although specifically here for future One Barnet business - was apparently shrugged off, as being of little consequence.

This report is dated 18th November, 2010, and we are told: 'This Letter was discussed and agreed with the Deputy Chief Executive Finance and his team and presented to the Audit Committee on 7 December 2010.'

The Deputy Chief Executive Finance? Yes, you know: the man with the Midas touch: Andrew Travers.

Oh, by the way, at the end of the letter, you will find a table explaining the substantial fee structure that Grant Thornton demands for its services.

Mrs Angry has thought about the substantial fee that has been paid to Grant Thornton, and is puzzled. She does not understand why she, as a tax payer, has paid so much money to a firm of auditors to check that all is well in the financial governance of her local authority, and yet their report was so uncritical of what the Chief Executive himself agreed at the MetPro meeting was an unacceptable state of affairs? We now know that 72% of internal reports are rated as of limited or no assurance: but how has such a situation been allowed to evolve unnoticed?

It may be that the audit process is itself flawed and incapable of delivering an adequate standard of scrutiny. Of course, Mrs Angry is just a lay person, and an empty headed woman, and what does she know about audits, and accounts, and adding up, and things not adding up but smelling rather peculiar? Well, quite a lot actually, after the last few months.

And from where she is sitting, Mr Pickles, in the comfort of her armchair, this auditor is forming her own conclusion in regard to the 'value for money' of privately contracted audits.

In fact, what she would suggest is to stop pretending that you can rely on your army of armchair auditors to volunteer their limited powers of scrutiny, and stop making out that the substitution of privately contracted audits can justify the abolition of the Audit Commission - why not keep the Audit Commission going, but give it real independence and stronger powers of investigation? This would reassure residents that the local authorities to whom you say you wish to devolve so much more responsibility were accountable to proper external scrutiny, and safeguard our financial investment in local funding.

Unfortunately, this would require something the coalition government pays lip service to, but doesn't really want - a real committment to the ideals of transparency and accountability in local government, democracy in action.

It's localism, Eric: but not as you know it.