Sunday 15 December 2013

From Crapita to Scrapita? Service Birmingham: a warning for Barnet

During the tender process for the two One Barnet contracts, our Tory councillors were urged over and over again by those of us who opposed the deal to look at the pattern of failure of the many comparable large scale programmes of council service privatisation.

Did they listen? 



Too lazy, too eager to swallow the salestalk of senior management, private consultants and bidders, and too stupid to understand the difference between the wild fantasies of interested parties, and an objective assessment of the best interests of the residents and taxpayers of this borough.

After the deals with Capita were approved, of course, some of our Tory councillors have dared to complain that they were given no real opportunity to see the details of the contracts they were asked to approve. Quite why they chose to remain silent at the time and agree the contracts anyway is a question for their consciences - if they have any. 

It is also apparent that very few, if any, Tory members understood that the so-called upfront capital investment by Capita was in fact nothing of the sort, but would be paid by Barnet itself, to the tune of £16.1 million, adding to a total of around £30 million or so, including a staggering £10 million to private consultants, already paid at the very beginning of the arrangement, long before any of the aspirational savings have emerged. 

The fact that we stand to gain only £165 million in savings from this deal over a ten year period, while Capita coins it in to an unlimited degree, at our expense, underlines the madness of the profligate spending thrown at the implementation of the deals. It should be remembered that even the council admits an in-house solution would have been only £70 million more than the Capita deal - negligable when the hidden costs of outsourcing are taken into consideration.

And worse still, the revelation that Capita is not, after all, coming up with the investment capital renders asunder at one stroke the entire premise of the outsourcing programme, essential, we were told, because an in-house solution would require ... upfront capital investment ...

Attempting to compare the deal Barnet agreed so easily with Capita to other arrangements is a very interesting exercise. This is made slightly easier now that we have been allowed to see a redacted version of the contracts, an unusual move that we understand is as a direct result of the intense scrutiny from the local bloggers and allied opposition to the outsourcing. Other contracts agreed with Capita remain shrouded in mystery, even as - or perhaps because - they are failing to meet expectations.

Take Birmingham, for example.

Since 2006, Capita and Birmingham City Council have run a joint venture, 'Service Birmingham', to provide such functions as IT and HR services.The £1 billion contract was originally agreed by a Tory/Libdem administration, and has been extended to run - in theory - until 2021.

The history of this joint venture should serve as a dire warning for the Barnet-Capita version, the ridiculously named 'Re' JV whose conception was engineered not by any act of political policy but by the meddling of senior management officers, in cahoots with the private consultants who have been leeching off Barnet taxpayers for the last year or so.

In 2012, the cracks in Service Birmingham were becoming glaringly obvious. First of all came the revelation that Capita was proposing to offshore some of these jobs to India, and even planned to require Birmingham employees to train the overseas workers who would be taking their jobs - not surprisingly there was an outcry that saw an end to such proposals but over the last year it has become clear that the venture itself is a financial disaster for the authority.

By this time last year, there was a growing tide of concern amongst Labour councillors about the standard of services being provided by Capita, including the call centre - as noted here in Birmingham blog 'The Chamberlain Files': 

An independent study by 'Best Practice Group' noted a dangerous state of relations between the venture partners:

There is an inherent risk that unless a core focus for both parties is re-established, the commercial trust between Birmingham City Council and Service Birmingham will continue to deteriorate.”

Last year Mr Reasonable wrote a detailed post based on this report:

warning of the lessons Barnet's Tory councillors needed to take from it.  Mrs Angry will leave ot to readers to guess whether or not they would have done so.

By October of this year, The Chamberlain blog was reporting the further decline in satisfaction with the service provided, and something rather more serious: a disastrous return in investment from the contract at a time when  Birmingham City Council is desperately short of funding and facing a shortfall that will have real impact on vital services, as reported here this week in the Guardian

Despite the terrible outlook and the prospect of apocalyptic cuts in budget, Birmingham allowed itself to be billed £1.2 million just for a new library website - and has just agreed to throw another half a million quid into Capita's lap to fund a 'major research project into the future of schools' - see here.

As the Chamberlain blog explained in October,  the full story behind the poor performance was simply staggering: in six years, Capita had made a cool £1 billion from the contract:

Labour councillor John Clancy obtained this information from information at Companies House: he was obliged to resort to this source of information, of course, because, in admirably confident defiance of the stated principles of transparency, endorsed only a couple of weeks ago at the Parliamentary Accounts Committee by the heads of outsourcing companies, including Capita's Paul Pindar,  the terms of the contract itself are secret. Were secret.

Other revelations include the interesting fact that Capita is making a whopping £58,000 a day in profit from its contract with Birmingham.

Councillor Clancy made an unsuccessful challenge for the leadership of Birmingham council,in which he promised to end the contract with Capita. Current leader Sir Albert Bore claimed this was impossible due to the legal implications and cost. 

  Sir Albert Bore, leader of Birmingham Council - pic Guardian

It has now been suggested, however, that within the previously undisclosed agreements that comprise the Service Birmingham contract there is provision for termination within a period of around two months, and that the savings gained would make any financial penality well worthwhile. The latest post from The Chamberlain Blog suggest that news of the contractual mess now reaching the public domain, thanks largely to coverage in such social media outlets, is encouraging the council's leadership to review its position of support for Service Birmingham:

Clancy wants business either to be returned in-house or given to local companies, and has stated:

"After this year the city council will have paid Capita about £1.1 billion which is a ludicrous amount of money at a time when we are being told Birmingham city council can’t afford to run essential services.

This is a Rolls Royce contract which is beyond our means. While the rest of us have been struggling, this contract has thrived to the benefit of Capita. We can’t pay £11million per month out for this service. This should have been the first cut we made.

In times of austerity and massive service cutbacks, we are still paying out net invoices of £126milion a year to Service Birmingham. We have to bite the bullet and cancel the contract now.

Get the work done by local businesses. We should have done it long ago. Any costs of exit rolled into a new contract could still save hundreds of millions of pounds in the future.

Sir Albert Bore's response to criticism of the cost of the Capita contract is to try to negotiate a reduction of £20 million in the course of the budget for 2014/15, but as suggested out by Professor David Bailey, in this piece in the Birmingham Post, this move is totally inadequate:

Prof David Bailey from the Aston Business School, a long standing critic of the Service Birmingham deal and Post columnist, accused the leadership of deliberately fudging details of the contract to make it look like a £20 million cut from a £50 million contract when in fact it is from a £120 million deal.

He called for the contracts to be published online to clear up the costs and exactly what is covered.

He said: “You can’t have an open and frank conversation with the taxpaying citizens of Birmingham about the future finances of the city if you aren’t actually open over key facts like the real overall cost of Capita Service Birmingham.

“Simply publish the Capita Service Birmingham Contract in full so everyone can make their own mind up about it before commenting on the rest of the City Council’s budget proposals. Barnet has done it. Why can’t Birmingham?”

Yes indeed, Barnet has done it. To an extent. Which is why, having been scrutinised not by councillors, but by local bloggers and residents, we have some idea of how we residents of Capitaville, turkeys so lovingly fattened for this year's Crapita Christmas, have ended up: trussed and roasted, and lying careved on a plate ready for the insatiable appetite of Mr Paul Pindar and his invited guests, the gleeful shareholders of Capita Plc.

Barnet's own Joint Venture has only just been agreed. The contract for this is published, but redacted to the point of absurdity - although the agreement to provide discounted pre-used graves for bloggers in the proposed new easycrem Crapita crematorium is hidden away in one of the clauses on view.

Compared to other contracts, of course, Capita's deal with Barnet promises very little: some modest savings, entirely aspirational, sustained or improved standards of service - how standards should be properly assessed will of course be argued over until the end of the contract, should there be any criticism levelled at Crapita. Unlike other deals, it was not felt necessary to make any promises about creating new jobs, of course. Barnet's Tory councillors would never have thought that was a deal breaking requirement. 

And the capital investment, promoted as the whole premise of the privatisation? 

We already know the answer to that.


The larger contract NSCSO deal has faced only one contract monitoring committee so far, an event which descended into farce when it became apparent that the head of Capita in Barnet could not properly account for the more than £30 million taxpayers had already paid to his company at the very beginning of the partnership.

The way in which such contracts are assessed are by KPIs and an agreed system of targets, which includes satisfaction levels by service users. How very interesting it will be to see how stringently either side of the partnership will apply this particular test. How, in fact, do you monitor customer satisfaction? By counting the number of dissatisfied customers? Sounds reasonable, does it not? What if there are none, Mrs Angry? Or at least ... no data to prove that there are any ...

One of the main causes of criticism of the Birmingham  arrangement was the standard of service offered by the Capita call centre - a clear indicator of efficiency, and perhaps the most obvious one as it acts as the central access point to the council for most users.

Here in Barnet, already it is clear to anyone who has had the misfortune to contact the new Capita call centre that this is in no way adequate to the function it is purported to perform. In October, at the infamous contract monitoring meeting a Capita representative admitted that according to his own statistical analysis, calls were being 'lost in the wires' and 'agents' - people in Blackburn answering the phone on Barnet's behalf - 'not being utilised 100% ...'

Mystery shopping by Mrs Angry has led her to suspect that the reason one may find that the council's number is apparently 'not recognised' is because this avoids the unpleasant statistical data that would accummulate should calls not be answered in the agreed time, and therefore f*ck up one particular KPI. 

Once through to an operator, any question is almost always met with an immediate move to put the caller through to an automated system, from which, like a descent into corporate hell,  you may enter, but never return. And any question the Capita operator cannot answer, ie almost all of them, is fielded to another department, which quite often turns out to be the wrong one.

A recent attempt to report a crashed car left outside the Angry household after a recent accident serves as a suitable metaphor for the process of evading scrutiny by our new contractors. Or indeed for the whole process of privatisation of public services.

The call centre was put through wrongly to parking, then to another contractor NSL, who were supposed to forward this to yet another contractor, Redcorn. Weeks passed, nothing happened. NSL returned no calls. A passing traveller scrap merchant nicked the car. Are you working for the council, asked Mrs A? Ah well now, missus, said the man, with a wink: only very indirectly, if you get my drift ... Fair enough, so. Take the bloody thing, and good riddance. But  Mrs Angry rang the call centre again, to complain that whoever was being paid by the council to deal with such matters was not fulfilling their contracted duties, and taxpayers were being ripped off by this failure to monitor service performance. 

Put through to parking. Not allowed to speak to anyone: make a complaint. You can only do this online. What if you have no access to the net? Hard luck. You do not exist, and your opinions are of no value. 

Weeks after the complaint: no response. 

Call the call centre again, and complain about the complaints process. You can't. Put through to parking. Nothing to do with us. Call the call centre again. Can I make a complaint about the way you handle complaints? No. Can I speak to your line manager? No. 

So: no audit trail, no statistics, no problem. See: this is how to run a contract, in Capitaville. Hats off, Mr Pindar. Kerrching.

Still, fortunately, the dark forces who act as a wholesale supplier of apt metaphors to the Barnet blogosphere have been kind and provided another crashed car outside the Angry household, to serve as a KPI for the call centre targets. 

And this time the scrap merchant may be cheated of his prize, due to Mrs Angry's desire to reuse the Crapita to Scrapita car crash pun, and associated play on words. Stay tuned.


Anonymous said...

This might amuse you:

and the many correspondents this week who made the remark that, given Crapita's problems with the English interpreting service contract, perhaps they were the employers of the fake interpreter for the deaf at the Mandela memorial service!

John Brace said...

I may not live in Barnet, but I have my own tale of crashing cars to relate to your readers.

There I was dozing off to sleep one night at about midnight and I hear a crash outside. I go outside to find a car has crashed into my parked neighbour's car (who was in Italy at the time). Their car has then been pushed forwards into ours which has moved forward a few feet from the impact.

As it was the middle of the night a solitary police officer turned up. The young driver of the car claimed he had a heart condition that caused the crash so an ambulance was called. Although obviously the police officer had to breathalyse him too.

The neighbour's car (and the car that crashed into it) were both write offs. Both were towed away within a couple of hours.

Quite what makes us so efficient here on the Wirral at dealing with clapped out cars I'm not sure, but the fact they were both (at night) blocking a main road may have had something to do with it.