Showing posts with label JV. Show all posts
Showing posts with label JV. Show all posts

11 February 2013

Who was better informed after the meeting?




The report that follows is by a clear thinking, intelligent and dynamic resident of Totteridge ward. Barbara Horn Jacobson, who is a member of the Barnet Alliance for Public Services. Thank you for giving up your time Barbara.

Meeting of the Hampstead Garden Suburb Residents’ Association

The advertisement for Hampstead Garden Suburb Residents’ Association open meeting on 5 February reads  ‘OneBarnet’,  ‘Deputy Leader to speak: outsourcing explained’ , ‘An opportunity to learn what is being outsourced and why recycling is being brought in-house’,  ‘Cllr Daniel Thomas, a Suburb resident and Barnet deputy leader, will speak’ ; we might have added ‘at long last’.  For more than two years Cllr Thomas has been one of the two Cabinet members leading the One Barnet Programme ("OBP"), pushing it ahead without consulting or informing the residents, and refusing to listen to the more than 8,000 who have been informed by BAPS and have signed the petition for a referendum.

Elsewhere it was said that the meeting would be ‘factual, not political’. Another aspiration not achieved. At the meeting Cllr Thomas declared that he is a politician and wants to be re-elected, so perhaps it was with the election of 2014 in mind that he accepted the invitation to appear before this small gathering of his neighbours (about 40 residents of the Suburb and 10 residents from other parts of the borough) in the hope and expectation that they would approve of his version of the OBP. It was not to be. (the number of days to the next local elections is in the sidebar to the left. You can count Harper & Thomas down & out)

not a picture of confidence, bricks behind, bricking it in front
Cllr Thomas started confidently, extolling the excellence of Barnet’s public services – the third most efficient in London’, with one of the ‘most low-cost back-office’ operations – yet stating the need to save money because of the cuts in central government funding. That might have been deemed to be factual, but the explanation of ‘transforming the council’, of a ‘new relationship with citizens’, that Barnet was moving to a commissioning model, and the way in which the savings would be made – privatisation – was purely political.

He explained that the next wave of outsourcing, the DRS, would be a joint venture (JV), that it was a ‘new concept to put these services out’, and would give the council more control – not, presumably, more control than full ownership, only more control than complete privatisation. The JV would also provide scope for the council to make money, as other councils would come to Barnet to do their planning work (have you seen the planning yearbook for 2013 and the low performance percentages of Barnet Council - 29% of planning permission for minor developments granted within 8 weeks whereas Bexley managed 72% and Brent 80% - why would another local authority give up a well performing department in favour of such poor performance?). Current staff were not trained to be commercial, so are being replaced with people who are. He admitted that work on the JV was and would remain on hold until after the judicial review of the NSCSO contract. (This on-off JV question is very confusing. Cornelius said councillors would decide, the council website says JV is just an option We are currently reviewing, in discussion with sponsoring members, the option of a joint venture. Thomas says it will be a JV. What the heck is going on, is there a power struggle, anyone thought to ask residents?).

He repeated the well-rehearsed lines: how much adult and children’s services cost, how much the Capita contract would save, what a small proportion of the budget the NSCSO is, that risks were mitigated by a parent-company guarantee, that the contracts would be monitored and could be bench marked if necessary, that without these measures council tax would have to be increased by 38 per cent – again failing to say ‘over ten years’. He said bringing recycling back in-house was proof that the Cabinet was not ideologically driven. But, contradicting himself again, he said that the One Barnet Programme was a [central] government pilot. He and Cllr Andrew Harper, in attendance as the HGS ward councillor, seemed surprised to be met with nothing but scepticism and opposition. (do councillors live in a bubble?)

The newly informed residents questioned the validity of the monitoring system, the risks of and lack of competition inherent in a 10-year contract, the probability of failure, the way the ‘customer services’ would work, whether procurement was being outsourced (the councillor had neglected to itemise the services, just referring to them as ‘back office’), whether councillors should have lower allowances or were needed at all. These residents told the councillors that monitoring and KPIs allowed companies to ‘game the system’ – that is, assess their own performance as compliant even when it was not – and that no private supplier of public services had delivered the savings it promised. They countered Cllr Thomas’s claim that NSL was delivering on budget, and told him about the 60% parking-ticket-appeal success rate, which he and Cllr Harper said they would have to look into. The residents were not impressed by Cllr Thomas’s explanation that private companies made savings over what he had said were the very efficient Barnet services by paying their staff less and giving them fewer benefits but offering them better career opportunities. They exposed the inconsistency in his saying Capita had up-to-date software and systems for running Barnet affairs but somehow need to invest £13 million of Barnet money in IT, which Capita would then own. They did not accept that financial penalties for failures and the possibilities of renegotiating aspects of the contract after four years were sufficient safeguards, pointing out that the council would be tied up in legal arguments by Capita to counter any penalties.  They suggested it would have been better just to hire top managers from the private sector to run council services more efficiently than to contract out. Cllr Thomas’s explanations of why the council couldn’t run the public services as well as a private company sounded like he just thought the job was too difficult for him. (Mr Mustard has come to the conclusion that councillors can't be bothered to sort out management who are not up to the job and councillors think that contracting everything out will be easy and their problems will disappear. Different problems will take their place. All we see instead is that staff problems are harder to resolve because they are someone else's staff and so you can't discipline them. A case in point is the NSL traffic warden who told Helen Michael of Cafe Buzz that she was only fit to clean the toilets and that complaint should have been dealt with the minute he came off shift, in fact he should have been called back to base the moment the complaint was made. He is still patrolling North Finchley as Mr Mustard has seen him. At the least he should be exiled to Edgware (Mr Mustard has nothing against Edgware - he just wants the warden a long way away from Cafe Buzz)).

Cllr Harper said monitoring would also result from feedback by individual residents. He was asked how much impact those individual’s voices would have when the Cabinet ignored a petition signed by more than 8000 residents. Cllr Thomas trotted out his ‘that’s only 2 per cent’ of residents line, and the dismissive ‘people will sign opposing petitions’; does a politician really think he’s scoring points by suggesting that his electorate are so stupid? We countered that the 8,000 was not a result of canvassing the entire borough, that BAPS was trying to get only 7,000 signatures. We could have added, 8000 is a lot more than the 11 Cabinet members solely responsible for the OBP.

Cllr Harper’s other contribution was to say that the Tories had frozen council tax, a comment that was almost jeered. (Mr Mustard does not want his council tax frozen at the expense of people who have needs that society should meet)

Harper: remind me how many beans make five? Thomas: I'll have to get back to you on that one.
In reply to a question about Capita’s appearance on the Barnet website, Cllr Thomas said that Capita had started working with the council after the decision in December to award the contract. There was no opportunity to ask whether the parties should have waited until signing the contract before this work began. (We have seen Capita appear on the website already).

The foregoing is, of course, a summary, not a verbatim account (except where quotation marks are used), so comments are not attributed to individuals. There were no voices supporting Cllr Thomas’s presentation. While there’s no knowing what the silent minority thought,  on their way out, the residents were offered the Barnet Spring March leaflet, and I think only one declined it.

It is interesting that the Cllrs Thomas and Harper did not initiate this event, and that elsewhere in the borough Tory councillors have not appeared before their constituents to explain the OBP. After this showing, they will probably be even more reluctant to do so.

(Picture credits: @barnet_rebel - why not follow him/her on twitter)

Yours frugally

Mr Mustard

23 August 2012

3 shades of grey (budget cutbacks you know)

JV or not to JV

Sorry no sexual innuendo in this posting but plenty of intrigue.

JV =  Joint Venture (have they all been on the spliffs?)

Shade 1 : Pam Wharfe - interim Assistant Director of something or other


we have decided to form a Joint Venture organisation
The Joint Venture approach does not change the approach to TUPE of staff
We shall provide further information on the Joint Venture in the next week
and re "new commercial opportunities" in the JV
They are under negotiation as part of the competitive dialogue process and therefore I cannot give examples as they are obviously commercially sensitive matters.
Pam Wharfe Interim Director EPR
Shade 2 : Cllr Richard Cornelius, the council "leader" (officially but actually?)

No decision has been made. No case for a jv has been made beyond the suggestion that there might be such a case.
The decisions will be made by elected members in due course
Shade 3 : Cllr Daniel Thomas, chair of Cabinet Resources Committee (he should have a handle on the numbers then?)
full marks to Dan O'Brien of the Barnet Press
The other 47 shades of grey (and Barnet are normally so black and white) will doubtless arrive over the next few days.

Yours frugally

Mr Mustard

20 August 2012

An earlier Barnet Joint Venture?

Which Councillor would you vaporise first Mrs Angry?

Dear reader

As you will have seen from the joint blogger letter to the "leader" of Barnet Council, Richard Cornelius, the long in the gestation One Barnet programme, about which Mr Mustard has read dozens of interminable reports, was basically the out-sourcing of £1bn worth of vital services over a 10 year period (+ a possible 5 year extension). Suddenly last week, Pam Wharfe, the interim Director of something or other and with possibly the least firm future employment prospects, was passed the poisoned chalice of slipping out to staff in an internal email the startling news that the out-sourcing was now going to become a Joint Venture. Stone the crows, something has gone seriously wrong in the process somewhere if after over a year of every report saying that out-sourcing is definitely the way to go. The Mars Rover shown above, called Curiosity (how apt for this One Barnet change of mind, which is a curiosity) took over 8 months to reach its destination. If Barnet Council had been in charge they would have re-routed to Venus after 6 months of travel.

Now we need to think about a Joint Venture. Has Barnet Council been in one before? In effect yes as Barnet Homes, the arms length management company, or ALMO, entered into one in the recent past and although called an arms length company the arms are not that far from the body of the council as Barnet Homes is housed in Barnet House a council building (the old Ever Ready building at Whetstone) and as the funding is from Barnet Council for the specific purpose of looking after council house stock there is zero prospect of a JV being entered into without the council knowing about it and endorsing the decision on the quiet.

So back in 2005 the company called the London Area Procurement Network Ltd (LAPN) was formed and it changed its name in June 09 to Cyntra Ltd (what a vague name). The owners of the company are listed in the attached link and you can see that it contains our local ALMO, Barnet Homes Ltd. That link also tells you that the purpose of the company was that it could, by joint buying, save 13% on the procurement cost of building works for its members. The Directors were from each of the participating local authority housing members so our very own Tracey Lees was a Director.

Savings are very elusive beasts and a saving of 13% on building works can be demonstrated if comparing to a very inefficient company or one that doesn't really want the work. Mr Mustard is completely unconvinced by the figure of 13% as an ALMO that manages 15,000 homes already has enough work to give out to obtain good quotes so maybe the negotiating skills of the buyers at Barnet Homes just weren't good enough or maybe the possible savings were over-stated. For every building job the material cost is about the same whoever you buy through and the labour cost should not vary much because there are recognised daily rates for each trade. The saving can only come from better administration or doing a job a radically different way and if the job is fitting double glazing or a new kitchen or bathroom there really is not going to be much difference in method between 5 different firms.

How was Cyntra doing finance wise? You would think that with a £1bn sloshing about (ooh look the same sum as quoted for One Barnet) that Cyntra could easily make a turn on that but no, its finances were pretty sick from the start

Thank you to Duedil


The blue line is turnover. Most of the 06/07 turnover was probably the annual fees paid by members which were about £40,000 p.a. at the start and these reduced to a maximum £25,000 as extra members were signed up.

Net assets (the orange line) remained stubbornly in the negative. It is harder to increase profitability than turnover.

One of the changes was to move to a paid board of Directors. This meant saying goodbye to Lesley Meeks who had served on behalf of a different authority from October 08 to May 09. This will be the same Lesley Meeks who is now the Assistant Director of Commercial Assurance (Town Hall Tax Dodgers branch) at Barnet Council. Mr Mustard is sure that if he had been on the recruiting board he would have looked more closely at her history and had some testing questions for her at interview although as Craig Cooper claimed to have poached her from Westminster Council, Mr Mustard supposes that her interview, if there even was one, was not that probing and probably just consisted of a phone call, something not at all like this one "when can you start, yes that is fine, part time at first and then full, OK, off payroll, no problem, £772 a day, a bargain. Bye, see you soon, Craigie xx"

Here are the minutes from a Barnet Homes board meeting in May 09 when the changes to Cyntra were taking place:

Proposed changes to London Area Procurement Network (LAPN) Board Structure.

The report outlined proposed changes to the governance arrangements for LAPN to make it more businesslike and robust and for which the Board’s approval (as one of the Beneficial Owners of LAPN) was sought. It also advised the board of a proposal to review BH’s continued
involvement over the longer term.

TL (Tracey Lees) explained that all other ALMO Beneficial Owners had approved the changes (so you lot had better do so) and Barnet Homes was the last such meeting to take place. TL further advised that the formal arrangements of the new structure would be decided at the last LAPN Board meeting on 17th March 2009.

AS (Angela Spooner) asked if there would be any costs to Barnet Homes as a result . MW (Mike Wiffen) advised that the proposed introduction of board remuneration would be £50k a year but it was not clear how this would translate into fees although this was expected to be self financing in the future (the future never comes). MW outlined the benefits that BH had gained from membership to date and the further benefits that may result from the distribution of surpluses to the beneficial owners who remained in LAPN (a cracker Mike, surpluses, would that be why Barnet Homes are now filing a claim as a creditor in the Liquidation, i.e. you lost money).

EM (Eric Misewe) asked what kind of business LAPN were thinking of developing. MW confirmed that this would mainly be based on construction services for Registered Social Landlords and ALMOs.

JM (John Macfarlane) commented that this had come about the wrong way round since the LAPN Board meeting is on 17th March and the review would not complete until 2009/10.

MW (Mike Wiffen) said that as a founder member of LAPN, Barnet Homes has had the most benefit with considerable efficiencies achieved. He also informed the board of the significant benefits in remaining with LAPN. (Could you explain these at the next board meeting please Mike. Are they public? Mr Mustard might come along to watch you explain this one away).

The Board considered the recommendations and approved the proposed changes to the LAPN Board Structure.

The Board noted a review of LAPN and the outcomes from the review will be reported at the next Business and Resources Sub Group.

AS had the right idea to look at costs. The whole progress of Cyntra had evidently not been well enough thought through or closely enough managed because there were 7 or 8 owners at the beginning and later on there were other junior partners added which took the membership up to 30, imagine trying to manage anything with even only 8 owners, they were never all going to agree. The founding partners were all local authority based and their funding is secure and profitability is not something that they have had to grapple with.

Cyntra came before the Board again in September 2010.

Barnet Homes Board Meeting Re Cyntra Sept 10
There is lots to be gleaned from this set of minutes.

A loan extension is agreed before the review of Cyntra has taken place. It is now self evident that calling in the loan would have been a better choice.

Para 1.1 is the sort of thing Richard Cornelius is saying about One Barnet savings. "It was felt" that goods "could" be bought more efficiently. Hardly a ringing endorsement.

Para 3.4 shows the problem of getting things done the way that you want in a JV with 6 out of 9 members needing to agree something and then it goes ahead whether you like it or not. Barnet Council may only have 1 or 2 partners in its JV but they will have to agree. If they are 50/50 partners in profit share then some interesting and difficult discussions will inevitably have to take place in the future.

Para 4.1 Barnet Homes have lost at least £35,000 in Cyntra.

The Teckal exemption workaround is a bit like investing in a pyramid scheme because of the tax advantage. The fact that you are going to lose all of your money should not be over-looked but of course in Barnet Homes and Barnet Council they lose someone else's money when they take bad decisions, ours.

There is hell to pay with Cyntra Ltd going into liquidation, as you can read here. Creditors, amount to £1,600,000 and the ALMOs have been happy to dump Cyntra Ltd into liquidation and leave creditors to see what can be recovered off the carcass and the answer will be not a lot. Fees for the liquidator will be paid first and employee claims are higher than unsecured creditors. Now there is a moral question here. If the joint venture company had simply been eight councils acting together without the umbrella of a Limited company and they decided that the time was past for their informal joint buying group and stopped using it they would have had to pay all of the creditors including the  £173,000 of VAT.

One of the dangers of being a Town Hall Tax Dodger is illustrated in this case. If you are not an employee paying PAYE then you do not get preferential status for your pay as it isn't pay. In this case Hann Barton Ltd are listed as owed £10,500 presumably for the services of Robert Hann, a non-exec Director, Sallet Consulting Ltd are owed £11,340 which presumably is for the services of Paul Orrett, the Chief Information Officer at Cyntra (sounds very much like an employee post) and those are just the two cases that can be easily identified. There will be more. There is no reason why the ALMOs will have checked if Town Hall Tax Dodging was going on in the companies they own because they are at it themselves.

So now that we hear that the DRS out-sourcing is going to be a Joint Venture company just like Cyntra.

Lessons for Barnet Council before they go ahead with another JV are that there is a loss of control and there can be a loss of investment. Internal audit will not be as strong as in the council (and theirs needs beefing up as it is) and there are costs. Cyntra's cost of sales + administration costs came to £3.3m in their 2010 accounts. The extra layer of management in a JV will need to be replicated by a client side at the council to keep an eye on them and whether you call it a thin client or not it will cost money. There will be delay in implementing any service changes that the council wants to implement. If it all goes wrong I don't think that when c.£275million over 10 years is at issue and there are maybe £10m or £20m of losses and unsecured creditors that a council will be able to simply dump a JV company in which it holds a 50%+ stake and not expect to be sued to the ultimate as a shadow director or whatever other way the creditor can find to get their money back. With his credit consultant hat on Mr Mustard would advise any company offering its services to an ALMO or a JV to get a parent company guarantee from the council itself before agreeing to supply anything.

It is early doors yet but if the council think that politically they can present the same partner, BT or Capita, in a JV rather than as a provider of outsourced services and that this will suddenly become acceptable to the luddites, whingers and complainers (Mr Mustard is not any of those) and to the Barnet Bloggers, then they are as is so often the case sadly mistaken.

Yours frugally

Mr Mustard

Commercially sensitive - yawn

so not a secret

As a quick follow up to today's joint blogger statement here is an exchange of emails in which Mr Mustard tried to find out what these fantastic new commercial opportunities were that had caused a huge out-sourcing project to suddenly change track and become a Joint Venture opportunity.
 
 
From: Mr Musatrd

To: Wharfe, Pam
Sent: Sat 18 Aug 2012
Subject: my ref #1358 - DRS Dialogue Update

Dear Ms Wharfe

I note the sudden change in direction of the DRS outsourcing to a JV.

I am particularly interested in these words of yours "has great potential to generate new commercial opportunities, both in Barnet and further afield."

Please enlighten me.

What are the potential new commercial opportunities?

Yours sincerely

Mr Mustard



Dear Mr Mustard,They are under negotiation as part of the competitive dialogue process and therefore I cannot give examples as they are obviously commercially sensitive matters.
Pam Wharfe Interim Director EPR


to foi@barnet.gov.uk


Dear Sir or Madam
 
Please provide the information requested i.e. a list of the new commercial opportunities
 
Yours sincerely

If the information gets refused under FOI, and one would think that the public interest lies in knowing what our council are getting up to behind closed doors, the request will be sent to the Information Commissioner to decide upon. Mark your diary for about March 2013!

Yours frugally

Mr Mustard