Audit findings reported to this week's Audit Committee (19 Sep) reveal that Barnet Council has not invoiced Regional Enterprise Ltd – the LB Barnet / Capita joint venture company established to deliver development and regulatory services – for under performance of contracted income for the past two years. The total sum LB Barnet maintain is owed is £4.599 million.
The auditors’ report says:
“We noted that the Council had accrued for income from Regional Enterprises for under performance of contracted income for the past two years totalling £4.599 million, although neither the previous year or the current year penalties have been invoiced.
It is unclear whether Regional Enterprises has accrued from the contract penalties as expenditure. It is also unclear whether any deficit or liability arising in Regional Enterprises for contract performance penalties would fall proportionally to each joint venturer (i.e.also the Council) or solely on the joint venture partner. Management stated that it believes these amounts are recoverable due to contract under performance on income recovery targets, that this falls entirely on Regional Enterprises and it has sufficient resources to make good on these penalties.
In the absence of any supporting correspondence from Regional Enterprises that it acknowledges this liability and failure to submit invoices for under-performance penalties for the past two years, we are seeking a specific management representation to confirm that this amount is recoverable.”
The meeting heard that the Council had not yet sent invoices for the fines but were in discussion with Capita. The Capita Partnership Manager, Mark Dally, told the committee that the Council and Capita were close to an agreement.
East Finchley Councillor and Audit Committee member, Arjun Mittra said:
"Nobody explained why it has taken two years to sort this out, so it’s another thing to add to the long list of Barnet Council’s bungles.
“The Council should not let Capita wriggle out of paying the full amount owed, but, whatever the outcome, the fact remains that Re Ltd has underperformed and that is bad for Barnet and its council tax-payers."
A copy of the Auditors Completion Report can be found here (see p21):