18 October 2011

Could Barnet be like Bournemouth ?

A story follows from the Bournemouth Echo

BOURNEMOUTH council is being accused of “massaging the figures” to mask the fact that it is on the verge of entering into a financially disastrous outsourcing deal.

Labour leader Cllr Ben Grower claims the council could end up paying a private company more to deliver its services than it currently costs in-house.

He has also said that proper scrutiny of the outsourcing deal is virtually impossible because of the council’s refusal to disclose all the relevant information.

His comments come as Bournemouth council prepares to decide whether or not to enter into a 10-year partnership with private firm Mouchel to deliver their ICT, facilities management, revenues and benefits services.

Officers claim the deal would represent an annual saving of 5.9 per cent and would create new jobs in the town.

But Cllr Grower said: “The tender is more expensive than what we’re paying at the moment. They are massaging the figures to make it seem as if it’s better but it’s not. It’s just creative accounting.”

One of his requests has been to see a copy of a report by PriceWaterhouseCooper (PWC). Cllr Grower said he was initially told there was no such report, before being told there was but no-one read it and it was sent back to PWC. He was then surprised to see the PWC report referred to in the final business case.

He has also asked for a copy of the original Section 151 officer’s report. Judith Martin, the officer whose job it was to ensure the council acted legally, was made redundant in a recent council shake-up. She was believed to have been critical of the outsourcing plans.

Pam Donnellan said members had all the financial information available to them ahead of the scrutiny meeting on Monday, November 8.

She said it was “over-simplistic” to concentrate just on the savings related to the four services that form the first phase of the partnership and insisted there was the potential for a 40 per cent budget reduction over the next decade.

“Add to this the guarantee of 350 new jobs in the town, again underpinned by financial guarantees, and it is the officers’ view that this represents a financial win for the council, economic growth for the town and better services for local people,” she said.

“Any comments made by the previous Section 151 officer relate to the former business case, which has now been updated. At that stage there was not a final Section 151 report and any initial views are now superceded by the version provided by the Deputy 151.” 

Let us hope that Mr Parker attends the meeting as a member of the public. He could always ask questions if the constution allows them. Barnet's parlous scrutiny system and their love of complex obfusating reports would seem to be mirrored in Bournemouth. Perhaps one of the courses at the Sandbanks Hotel in nearby Poole is about muddying the waters?

A SENIOR Bournemouth council officer was suspended and allegedly escorted from the town hall after speaking out against the council’s controversial outsourcing deal with Mouchel.

Chief accountant Stephen Parker emailed all councillors before a crucial meeting on Wednesday to warn them of his concerns about the risks of expanding its links with the company.

He told members he had been unable to communicate his concerns as part of the report and accompanying papers going before cabinet.

And added: “I have been placed in a very difficult position – I have a professional duty to ensure my concerns are considered prior to a formal council decision.”

But his actions were frowned upon by council chiefs who immediately suspended him on full pay and were said to have escorted him from the building.

Many of his colleagues were so outraged by the move that they followed him out of the building, giving him a round of applause as he left.

In his email, which has been seen by the Daily Echo, Mr Parker told councillors: “The cabinet report does not provide an adequate assessment of risks or deliver an independent and robust evaluation of the two options considered.”

He said the council had failed to consider options that would have provided “a more balanced financial and risk-assessed contract” and said he was writing to councillors “with a degree of disappointment”.

Despite his concerns, cabinet gave the green light to transferring human resources and finance to Mouchel – meaning the company will run six council departments.

Mouchel has been embroiled in more controversy this week with the resignation of its chief executive after a £4 million accounting error, which sent its share price tumbling.

Yesterday it announced the appointment of a new boss, Grant Rumbles.

A spokesman for Bournemouth council said: “The council’s chief accountant has been suspended on full pay while the council undertakes an investigation.”

And Richard Saunders, Service Director for HR and Organisational Development, said: “We will not comment on any ongoing investigation. It would be inappropriate to do so.”

The suspension has been criticised by independent councillor Anne Rey who said: “What has happened to free speech? This course of action is a total disgrace. He was doing his job and this is what he gets. I am ashamed to be part of Bournemouth council.”

Lib Dem councillor Roger West said: “This follows a pattern of trying to stifle debate if anyone attempts to challenge either our leader or deputy leader.”

He added: “Obviously the sensible thing to do would be to scrutinise fully both the proposal and whether it is prudent.” 
‘Financial prudence’ role

As well as his role as the organisation’s chief accountant, Stephen Parker is also Bournemouth council’s deputy Section 151 officer, under Mike Forrester.

The roles of a 151 officer include “ensuring lawfulness and financial prudence of decision making” and “to give financial information”.

Mr Forrester is overseeing a transformation programme at the council and is employed on a contracted basis, with his company Valfor being paid around £100,000 a year for the work he carries out.

He was named as corporate lead on the report considered by cabinet members on Wednesday before they approved the transfer of more business to Mouchel.

I do hope that Mouchel are not in the running for any contracts at Barnet. If they are then councillors need to study very closely the possibility of them being unable to fulfill their contracts in the future and the costs of changing horses mid-stream.

BOURNEMOUTH Borough Council’s outsourcing partner has been hit by fresh controversy after its CEO was forced to quit in the wake of a £4million accounting error.

Richard Cuthbert resigned after the mistake forced a profit warning that triggered a share sell-off, wiping a third off Mouchel’s value.

The firm said that a one-off gain it had previously announced would be £4.3million lower than expected because of the error, impacting on profits the group is set to announce in just a few weeks.

An opposition councillor and union representative have warned the council over any further deals with the firm, while the authority’s deputy leader has insisted it is ‘business as usual’ in Bournemouth.

Cllr John Beesley told the Daily Echo: “The contract with Mouchel is one that prepares for every eventuality and if something happens with Mouchel, for example they’re taken over, we’re very clear about the continuity of service provision. We’re very clear about our contractual arrangements with Mouchel and others and the council has a range of options it can go through."

“Whatever position Mouchel PLC is in and its relationship with its bankers, shareholders and institutions is not of direct concern for Bournemouth council."

“As far as we’re concerned our relationship with Mouchel is business as usual. Certainly there will be concerns and speculation but in business and in local government there always is.”

The council signed a £150million deal with Mouchel last November to take over the running of four of its departments. In May this year, council leader Cllr Peter Charon said it would look to outsource more work to the firm as it tried to save more cash.

One opposition councillor, Lib Dem Cllr Roger West, said Bournemouth residents were ‘boosting the coffers of a failing company’.

“Although Mouchel were assessed by our risk management team when the contract was first agreed – even though at that time there were concerns about its long term future – it seems to me now that this risk has dramatically changed and we would be foolish to continue to get more involved with them without another risk assessment,” he said.

Dave Higgins, Bournemouth Unison branch secretary, said the council would be ill advised to look at moving over its finance and HR departments when Mouchel was in a ‘weak position’.

“The concern is they’re looking to do it at a time when their share price has plummeted, their chief executive has resigned and they’re ripe for takeover."

“They’re in a very weak position,” he said.

Mr Higgins said the council should ‘at least wait until the dust has settled’ before considering further deals.

Mouchel was subject to various takeover bids earlier this year, with one bidder, Interserve, tabling a bid of 130p per share. In the wake of the resignation on Thursday, prices dropped as low as 15.5p

Maybe outsourcing isn't the panacea for all ills that councillors think it is, well at least let themselves ride along on the One Barnet wave without thinking much at all.

Yours frugally

Mr Mustard

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