Barnet Council – another contentious public sector outsourcing

The Cornwall Council joint venture – with BT left as the only bidder in the frame – has moved into a quieter period as the full council is now considering the next steps. So the focus of UK local authority outsourcing excitement has switched somewhat to the north London borough of Barnet now.

The Tory-led Barnet council has proposed the “One Barnet” scheme – a massive outsourcing, whereby virtually all services would be moved into two large outsourcing contracts, worth over £100 million a year. And many of the same concerns as in Cornwall are evident here, even if you’re reasonably positive about outsourcing generally, when it’s done properly (as I am).

But here, as in Cornwall, there are questions about the wisdom of bundling up disparate services into a large contract (or two large contracts in Barnet’s case) with a prime contractor, who themselves cannot possibly possess all the required expertise, and will therefore be dependent on sub-contracting.

There are also issues around whether some of the proposed services really are so “core” and strategic for the Council that they should never be outsourced – just as any smart private firm will identify an irreducible core of activities over which they will always retain control. A council outsourcing planning and regulatory functions, as Barnet proposes, seems to be getting dangerously close to threatening that core.

Then we have local concerns about jobs disappearing from the area as the providers rely on call centres using “cheap labour” from UK locations where that is available – but those people clearly won’t necessarily understand the local Barnet issues.

I’d also have a big worry around whether Barnet can and will retain the intelligent client capability to manage two mega-outsourcing contracts run by profit-focused private firms.

But perhaps the most worrying issue for me is the length of the proposed contract – 10 years minimum. Who knows where we’ll all be in 10 years time? We’ve seen other council outsourcing contracts terminated recently because they weren’t flexible enough to meet changing needs – how can Barnet make sure this doesn’t happen?And there seems something fundamentally wrong from a democratic standpoint when the local electorate can throw out their councillors every four years, but they won’t be able to throw out the service provider for ten!

Anyway, and unlike Cornwall, the Barnet Council leader survived a vote of confidence last week (just). But just to add a bit of spice, a senior Tory councillor, Brian Coleman, has gone on the attack, describing the scheme as “flawed”. However, he is personally in trouble, having been recently charged with assaulting a lady who was filming him parking illegally in a loading bay...!

Finally, if you want to know more, here’s a very clever bit of communication or propaganda, depending on your views. But it is very well done, whatever you think of the issue.

 

Voices (6)

  1. Bex:

    Love the ‘Casino’ video Peter, obviously for artistic integrity the cartoonist deliberately missed out “off” from the headstone?
    Perhaps Panorama need to put on repeat their “Reading, Writing and Rip-offs” or maybe Anne Robinson’s ” Rogue Traders” until the message/lesson sinks in. If it looks too good to be true etc etc

  2. Mr Reasonable (@ReasonableNB):

    I have absolutely no ideological opposition to outsourcing. However, as you quite rightly identify, the big issue in Barnet is the scale and complexity of what they are bundling up into two contracts and which may end up being run by just one company, Capita. One firm of consultants have been paid £4.2 million so far to help implement the outsourcing contracts and given that they billed £447,000 in fees in September alone, it looks like their overall bill will hit £6 million before the contracts are let. What also worries me is the naivety the Councillors have demonstrated throughout the process. For example, Councillors say that the outsourcing companies will make a massive investment in IT so I asked what was the contractor’s Return on Capital Employed and whether they had included this within their fee calculations. They looked at me as if I was talking Martian! They do not seem to grasp that if a contractor makes a capital investment they will have specific ROCE targets to meet and that will, somewhere along the way, be charged back to the council. I genuinely think some Councillors believed the outsourcers would give them millions of pounds of kit for nothing. In other outsourcing contracts I have found that, if capital is available, it is often cheaper for them to fund investment rather than the contractor and it also allows for a much shorter more flexible contract. I have also asked about governance and conflicts of interest but again that seems to be a minor issue for councillors. Sadly One Barnet is an entirely political decision made by people who simply don’t understand what they are signing up to.

    1. Peter Smith:

      Thanks Mr Reasonable – I’ve read some of your blogs with interest as well!
      The lack of understanding of commercial reality is a common feature I’m afraid in many of our elected representatives at all levels. What also really worries me in local authority land is the lack of any “institutional learning” across the sector – that applies to both good practice, where outsourcing has worked well, and less good. So it is as if Somerset, Milton Keynes, Essex, etc etc never happened once it gets to Cornwall or Barnet!

      1. Mr Reasonable (@ReasonableNB):

        In Barnet Councillors have been made aware of the problems at other councils, but they keep saying “that’s why we are paying for expensive consultants so we are going to be alright”. It’s a bit like they have their fingers in their ears and are shouting “La la la la” very loudly so they won’t hear the bad news. Terrifying.

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