By Thomas Foster
Downloading PDF. Please wait... Issue 2904

Oracle—the tech company that fleeces local councils

Tech company feeding off public budgets to fuel their profits.
Issue 2904
Oracle headquarters in California (Picture: Davidlohr Bueso on Flickr)

Oracle headquarters in California (Picture: Davidlohr Bueso on Flickr)

 
British councils are full of parasites—companies feeding off public budgets to fuel their profits.
 
The harshest slashing of council budgets began under Margaret Thatcher and has been continued by every government since.
 
Councils then turn to outsourcing companies in a desperate effort to cut costs.
 
Prime offenders are tech companies, such as Oracle—the fourth largest software company in the world.
 
One commodity it sells is digital systems that aim to manage different local services.
 
The Tory-led West Sussex County council decided to swap its digital system from SAP to Oracle in 2019 with an expected cost of £2.6 million.
 
Now, the council expects the total cost of implementing the Oracle IT system to be £40 million—15 times larger than original estimates—while also forcing through cuts.
 
This is millions of pounds that could be spent on building new schools, supporting children with additional needs or improving housing stock.
 
And the implementation of Oracle is expected to be finished and working by 2026, according to a Performance and Finance Scrutiny Committee report.
 
The disastrous new IT system is the same one that Labour-led Birmingham City Council is struggling with.
 
Originally budgeted at £19 million, Birmingham council has spent over £130 million on implementing the Oracle IT system.
 
And Birmingham council is now forcing through a huge round of cuts.
 
Oracle—and other seedy profiteers like it—sells licences of complex but generic digital systems to local councils, so the software must then be adopted to fit the council’s needs.
 
And so other private companies are brought in on expensive contracts to help adapt the software and deliver the new digital system, as councils themselves don’t have in-house expertise to do so.
 
By 2022, West Sussex County council had already spent £14 million trying to set up its new Oracle system.
 
And in summer 2023, the council admitted that there had been “various delays and difficulties” with adapting the Oracle software.
 
So in the summer 2023, West Sussex County council terminated its contract with the systems integrator company it had hired.
 
The council then decided to review the future of the Oracle system, to see whether it should continue with the project.
 
And last month, the review concluded to continue with the project, with an additional £26 million to cover further costs—and so the council has begun to look for a new systems integrator company.
 
Despite this commitment, West Sussex County council’s February budget is pushing stealth cuts—under the disguise of “efficiency savings”—and a council tax increase that adds nearly £100 to bills.
 
The wording of the West Sussex County council budget is deliberately obscure, as it tries to hide the reality that there are massive cuts to social care. 
 
What this means is vulnerable children’s needs will go unmet and elderly residents will miss out on care packages.
 
Companies like Oracle sell sweet tales of streamlined processes and efficient databases. But the reality doesn’t match.
 
Instead, taxpayers’ money lines the pockets of the bosses of these companies and councils are left with soaring costs at a time of already overstretched budgets from Tory cuts.
 

Pattern of consistent failures that mean cuts      
A catalogue of failures shows that private providers are failing on a local level.
 
The pattern always appears the same—a private company offers a service that ends up being more expensive and less efficient.
 
According to research by Unison union, £4.6 billion is spent by central and local governments on purchasing exercises required to award private contracts.
 
And ordinary people are forced to pay £217 billion in “user charges” for services and facilities outsourced to private companies.
 
Council officials underestimated the cost of implementing Oracle at Vale of Glamorgan council, south Wales by millions of pounds.
 
The council already had a version of the Oracle system in place for years, but the company advised the council to update it. 
 
This updating went over budget by £3.7 million, costing a total of £5.2 million, and was delayed a year, according to a report released last month by the council’s scrutiny committee.
 
The same happened in Cornwall, southwest England, where the council’s implementation of Oracle went £7.2 million over budget, according to an internal report. 
 
The report said that “the costs of implementing and operating Oracle Cloud were understated and the benefits overstated”.
 
On top of this, Cornwall council spent £2 million on Oracle licences that it didn’t even use. 
 
This money could have provided housing for the more than 800 families living in emergency accommodation in Cornwall.
 
And when Swansea council in southwest Wales installed Oracle, it was supposed to cost £4.8 million and be finished by 2020. Instead, it cost £12.3 million and was finished by April 2023.
 
The directing of public money to private pockets is also a pattern found in councils’ installing of Oracle IT systems across the country.
 
Council officials admitted that the original estimates were “unrealistic” and with already stretched resources, the council had a “limited capacity” to properly implement the update.
 
One councillor said, “There was no understanding at that stage of how much things would cost because there was no real understanding of what was required to complete the implementation of a brand-new cloud-based Oracle System.”
 
Wherever the council is, the story is the same. The Oracle IT system is not fit for purpose.
 

Larry Ellison— Oracle executive 
Oracle’s co-founder and now executive chair is Larry Ellison, who has amassed a fortune of at least  £123 billion, according to Forbes wealth website. He is the fifth wealthiest person in the world.
 
Just a tiny percent of Oracle’s profits in Britain could solve many of the financial problems faced by councils and deal with the overspends on the IT systems.
 
Ellison founded Oracle with two others—Bob Miner and Ed Oates—in 1977.
 
He is involved in the US Republican party, having gone for multiple dinners with Donald Trump in recent years.
 
He became a significant political power broker during the Trump administration.
 
He hosted a fundraiser for Trump in 2020 at his estate in California. 
 
He has contributed millions to Republican candidates and committees, including Republican senator Lindsey Graham—a close ally of Trump’s.
 
He also joined the November 2020 call that focused on strategies for contesting the legitimacy of the 2020 election after Trump lost. 
 
The call included Trump’s attorney, Fox News host Sean Hannity, Republican senator Lindsey Graham and an attorney for True the Vote—an organisation that promoted claims of voter fraud.
 

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