Labour has demanded assurances from Barnet Council that difficulties at its major contractor Capita will not damage public services.
Capita yesterday announced losses of more than £500 million and cost cuts and restructuring to save the company from collapse.
In a letter to Barnet Chief Executive John Hooton, Labour Group leader Barry Rawlings asks if Capita has confirmed that recent undertakings to rectify service failures in finance and IT at Barnet will be honoured.
Cllr Rawlings also asks if Barnet will be compensated for poorly executed construction work at the council’s new £12m Oakleigh waste and recycling bulk transfer depot, which opened last August.
The depot has been unable to operate at capacity since urgent repairs started in early April, causing delays and disruption to domestic bin collections in the middle of the council elections. Construction procurement and contract management for the depot was managed by Capita.
In the four years from 2013 to 2017, Barnet council tax payers were charged £278m by Capita under the two major contracts it has with the council. Last week former Conservative councillor Sury Khatri told the council’s Audit Committee: ‘This contract represents poor value for money and the residents are being fleeced.’ Cllr Khatri called on residents to vote Labour in the 3 May council elections.
Text of letter from Cllr Barry Rawlings, Leader of the Barnet Labour Group:
To: John Hooton, Chief Executive, Barnet Council
23 April 2018
I am writing to you following the statement today about Capita's reported £513 million annual loss which has generated more concern and speculation about Capita's future.
While Capita's share price closed up today, this is one day's reaction from the markets to a statement that confirmed the previous profit warning - the underlying issues still remain.
I understand Capita’s aim is to stabilise the business through their new transformation and re-structuring plan, however today's statement highlights £175 million of cost savings that they need to find.
Would you confirm whether these cost savings will have an impact on the delivery of Capita-run services in Barnet?
In addition, there are ongoing performance issues with a number of services Capita run for Barnet Council including the pensions service, finance and IT.
While Capita focuses on restructuring has the Council been reassured that efforts to improve these services will not be affected?
Last week it came to light that poorly executed works at the new Oakleigh Depot, which were project managed by Capita, have resulted in weeks of missed bin collections across the Borough. Will Barnet Council be compensated for this?
Back in January I called for the Council to review their contingency plans for all outsourced contracts. For Barnet's Capita contracts the contingency plans rest on contractual guarantees, but many residents will take little comfort from that.
The fact remains that mass privatisation of council services results in a loss of control while the council retains ultimate accountability. And the public sector never manages to completely transfer risk to private contractors. When things do go wrong the statutory duty to provide the services rests with the public sector. Labour councillors warned the current administration about this before the Capita contracts were signed.
We are where we are now, but in the meantime I look forward to receiving your response on the questions set out in this email.
Cllr Barry Rawlings
Leader of the Barnet Labour Group and the Opposition