The scam of privatisation has been exposed in a new fraud investigation into a north London council.
The latest investigation brings to light how corruption was allowed to fester within the outsourcing operations of Barnet council.
The Tory-run borough has outsourced huge swathes of its council-run services to private companies.
Fresh evidence points to ruined lives, attacks on workers, corruption and worse public services.
The local authority commissioned accounting firm Grant Thornton to produce a report, which was released last week.
It says that “Fundamental weaknesses” in the structures of the “partnership” between council and outsourcing giant Capita allowed a member of staff to steal millions.
Trishul Shah worked as a capital investment manager and made 62 fraudulent payments straight into personal bank accounts. The total amounted to £2,063,972.
The outsourcing project has been so disastrous, the council is now consulting residents about whether to take some or all services back in house.
The latest investigation focuses on two contracts tendered to Capita in 2013.
The company won the contract—worth £424 million—to deliver back office services and development and regulatory services over a ten-year period.
This means everything from management of council land, IT services, planning applications and cemeteries is controlled by the firm.
The Grant Thornton report is a damning assessment of how these projects have been managed.
It points to how there was a “lack of effective review of controls over financial ledgers” which meant there was “significant financial control weaknesses” and “poor accounting controls”.
It backs up what anti-privatisation campaigners have been arguing for years.
Outsourcing means that services are stripped from public control and put into the hands of unaccountable and unelected companies.
Barnet Unison Branch chair Helen Davies spoke to Socialist Worker in a personal capacity, and describes the programme of privatisation as “politically driven”.
Family services—children’s social work—was rated inadequate by Ofsted.
And Helen said that Ofsted’s report said there was “poor leadership at the top level, and it cited the commissioning council as a key reason for that poor leadership.
“What happened was people were so focused on outsourcing everything and that political agenda, they weren’t bothered about the day to day running of services.
“That led to services trying to manage as best they could on their own.”
The “One Barnet” programme of outsourcing has cost £23.66 million. Outsourcing doesn’t save money—it just puts it straight in the pockets of company bosses.
Barnet Council’s budget has been battered by this model—the cost of commissioning in Barnet has increased a staggering 356 percent since 2014.
It’s a political decision by council management to team up with the outsourcing bosses to take services out of public hands into the claws of the rich. All council services should be brought back immediately into public ownership.
‘Absolute chaos—it’s just jaw-droppingly astonishing’
Council workers have been at the forefront of fighting privatisation plans—and they’ve borne the brunt of the attacks. Helen Davies said the legacy of Barnet’s reckless drive to outsourcing had led to “absolute chaos—its just jaw-droppingly astonishing”.
Workers who were transferred over from the council have retained their terms and conditions. But new starters are on lower pay, have inferior sick pay arrangements and they don’t have access to the local government pension scheme.
And these outsourced workers aren’t graded on local government pay scales—so they are forced to negotiate individually for a pay rise, instead of collectively fighting for it.
Working conditions have deteriorated too, with the maze of different companies meaning it can be a difficult to access help when problems arise.
“We had a serious incident in one of our main buildings—a resident set themselves on fire”, Helen explains.
“There was confusion about evacuation processes, and then it took two weeks for the council to acknowledge one of the fire alarms didn’t go off.”
“Health and safety is done by one wing of Capita, but facilities team who look after the buildings, that’s done by another wing.
“Then, you’ve got contractors who do the engineering of the fire alarms, and then you’ve got the strategic health and safety team from the council”, she said.
It’s one small example of how deregulation and privatisation risk lives in the pursuit of profit.
Professor Dexter Whitfield published with Barnet Unison the “One Barnet=Failure” report, released in April. It looks at the “flawed commissioning model”.
It argues that “the main objective” of the tendering process was to “outsource irrespective of the performance of the in-house service”.
Whitfield argues that outsourcing was driven from the top by “neoliberal management” with not enough concern shown for how the changes would affect workers and residents.
“The council refused to recognise all the risks inherent” in Capita’s involvement, he says, and this led to “sweeping assumptions” about the type of services private companies could provide.
What is Capita?
Capita is an IT and software company, in both the public and private sector.
Central government and local authority services are heavily reliant on the company—it received £3.484 billion of public money in 2017 alone. But its future was plunged into doubt in January when it was forced to issue a profit warning.
This came just two weeks after fellow outsourcing giant Carillion folded, plunging thousands into unemployment and pensions uncertainty.
If Capita collapsed it would plunge vital services into chaos.
Failing the NHS
Capita is already linked to high-profile public sector failures, including a contract with NHS England.
It was signed up in 2015 to run a seven-year £700 million contract to supply a wide range of IT services to GP surgeries.
But it had serious problems from the outset.
Some 162,000 items of clinical correspondence weren’t delivered, there were delays to appointments and 87 women were told incorrectly they were no longer part of the cervical screening programme.
A National Audit Office report published in May said the firm’s failures could have “put patients at risk of serious harm.”