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We still need to see the whole Capita Service Birmingham contract

Professor David Bailey calls for greater access and scrutiny of the Capita Service Birmingham contract

Coun Waseem Zaffar has accused Sir Albert Bore of leaving unanswered questions over Service Birmingham

Somewhat overshadowed by the recent leadership turmoil at Birmingham City Council was the call last week by Waseem Zaffar, chair of the council’s cross-party Corporate Resources Scrutiny committee, for Albert Bore to answer the question of why the SB contract had not been put fully into the public domain. He was right to do so.

Coun Zaffar raised a range of issues that he felt Bore had not given sufficient answers on but it's the Capita question that interested me most.

Specifically, Coun Zaffar wanted to know why the Capita Service Birmingham (SB) had not been made fully open and public.

In so doing, he referenced a 2014 House of Commons Public Accounts Committee report and commitment by Capita to that committee that their contracts with public bodies should be made public and be transparent.

At the Birmingham City Council Corporate Resources Scrutiny committee in September, Bore seemed unaware of the House of Commnons Public Accounts Committee report and the commitments to openness made by the big outsourcing firms (including Capita).

Bore may now be gone (a week really is a long time in politics) but his successor needs to be aware of the need for proper accountability and transparency in outsourcing, something that has been sadly lacking in Birmingham - especially in the case of the massive Capita SB contract.

This is critical as it relates precisely to the Kerslake report's damning criticism of the lack of long term financial planning at Birmingham City Council and the subsequent bringing in of Deloitte to undertake a 'zero-based budgeting' assessment, as I'll explain below.

First, back to the Commons' Public Accounts Committee (PAC). Last year, the then chairman of the Public Accounts Committee, Margaret Hodge, noted that "when the Government hires private firms to provide public services, it should publish the contracts in full, so that the public can properly understand the underlying costs, savings and profits".

The PAC stressed that it was vital the public were able to follow the taxpayers' pound to ensure value for money and called for three basic transparency measures:

1. The extension of Freedom of Information to public contracts with private providers

2. Access rights for the National Audit Office

3. A requirement for contractors to open their books up to scrutiny by officials

The PAC's report notes that the big four Government contractors (G4S, Atos, Serco and Capita) "all told us they were prepared to accept these measures".

They accepted that open-book contracts should be the norm.

They also accepted the National Audit Office should have access to all the relevant information associated with contracts with the public sector. And they were content that Freedom of Information provisions should apply to public sector contracts with their companies.

Interestingly, the report noted that "since the contractors confirmed that they would agree to these changes it appears that the barriers lie instead with government itself".

In response to the committee's work, the Cabinet Office stated that in principle "information in full" should be made available.

The same barriers appear to lie with local government, at least in Birmingham's case, which needs to put the Capita SB contract fully into the public domain.

Whilst a campaign and petition forced a reluctant council to put a version of the (old) contract online early last year, key financial details were redacted by the council.

Yet, there is a key public interest argument in knowing what the cancellation fees are for the Capita SB contract.

This is something that Albert Bore and Ian Ward have refused to divulge for the last 18 months, hiding behind an increasingly tenuous veil of "commercial confidentiality".

This is now critical. After several years of fruitless service reviews by Bore in the face of the "end of local government as we know it", Birmingham City Council was lately (and rightly) forced into undertaking a proper zero-based budgeting exercise by the Kerslake Improvement Panel, which is being undertaken by Deloitte.

But with the Capita SB contract absorbing over ten per cent of all of Birmingham's controllable spend, that process itself risks being flawed unless Capita SB is itself brought into the mix.

But that in turn isn't possible without knowing what the cancellation fees are for the contract.

If the cancellation fees are low then then contract can be cancelled and IT and billing should go into the Deloitte process, meaning that potentially big savings can be made.

If the cancellation fees are high, that clearly isn't possible.

If they are – as I estimate - in the £20 million to £30 million range, there may still be a chance of market testing the Capita SB contract, as the council was forced to do with waste collection by the Kerslake report.

Bidders would have to absorb the cancellation fee. This could still save council significant sums over the life of the contract.

So Coun Zaffir was dead right to press Bore on this. Bore and Ward have refused to open up the Capita SB contract to proper public scrutiny and that in turn raises a question over the zero-based budgeting exercise now being undertaken.

In a post-Bore world, the next leader of Birmingham City Council needs to put the Capita SB contract fully into the public domain. Only then can the council properly look at all areas of its spending, including on IT.

It's time for the council to open up.

Professor David Bailey works at the Aston Business School

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