This is the first in a series of new blogs on Capita Service Birmingham.
One wonders who is more relieved after veteran leader Albert Bore and deputy Ian Ward saw off the John Clancy/Barry Henley leadership challenge recently – Bore/Ward, or Capita?
I say this as Capita have managed to run rings round Birmingham City Council for years, and in so doing screw huge amounts of money out of the Council – and you and me.
A key plank of the upstart Clancy/Henley challenge was to scrap or cap Capita Service Birmingham. It’s something I’ve been calling for in my blogs and columns here at the Post since 2012.
And Henley should know – as Chair of Service Birmingham he has fought virtually a one-man campaign to get the costs of the contract down, and is single-handedly reported to have cut annual costs from an appalling £126m in 2012 to nearer an estimated £105m.
I say ‘estimated’ as we don’t have the actual figure for 2013 Capita Service Birmingham costs as the Council itself bizarrely doesn’t make them public in an accessible way – we have to wait for the Service Birmingham 2013 accounts which will appear later this year. And we had to drag the £126m a year figure out of Bore/Ward after months of sustained pressure.
But even Henley admits that over £100m a year is still way too much, and he wants to slash costs further - by another £20m a year or so. So Capita must be breathing a huge sigh of relief as they continue to count the money stack up (and for a guide on how quickly this really does stack up, click here toys.paradisecircus.com/realtime/ )
Indeed, with the leadership election out of the way, Capita can continue to do what they do best; raking in the money.
The latest wheeze, according to sources deep inside Service Birmingham (which I have not been able to get confirmed by anyone on or at the council), is to offer to renegotiate a cut in the cost of the annual contract in return for the removal of ‘cancellation at will’ clauses in the hugely complex contract.
We only recently found out about the ‘at will’ clauses earlier this year. That came after a public backlash on Capita during the Council’s budget consultations, with Bore/Ward eventually caving in to public pressure via an on-line petition signed by hundreds, with the duo eventually forced to put a heavily redacted Capita Service Birmingham contract on line.
The ‘published’ contract was so-blanked out by lawyers that it was largely illegible but there were still some nuggets of information that keen-eyed readers could glean – notably the cancellation clauses. Thankfully I had my new varifocals on in time to read the bits in between the vast expanse of blanked-out stuff.
But now Capita allegedly want these removed in return for agreeing to cut the huge cost of the contract.
Of course, I welcome a vastly overdue effort by Bore and Ward to try to get costs down (something Henley had been getting on with doing). Indeed, I have repeatedly made the point that Bore/Ward could and should have done it two years ago when they took on the leadership of the council. They could have saved the Council over a hundred million pounds since if they had. Sadly they didn’t.
However, the idea of now – belatedly - renegotiating the contract so as to remove the cancellation clauses in exchange for a price cut is frankly bonkers, for a number of reasons.
Firstly it would give the council virtually no power to terminate unless cause could be found, and would leave the council exposed to the details of a hugely complicated contract that Capita have exploited to reap huge profits.
That doesn’t give our elected leaders much scope to hold Service Birmingham to account, in my opinion. We need to cut the Capita Service Birmingham costs. Full stop. The Council and the people of Birmingham shouldn’t be offering to give up the right to cancel in return.
Secondly, Capita have proved adept at running rings around the council’s past efforts at re-negotiating the contract. Take the ‘fourth variation’ for example, where the ‘core’ contract was cut down and redefined, but what then turned out to extras anyway had to be paid for. The end bill went up, not down. What had been anticipated at the outset of the whole deal to cost £55m ballooned to over £120m a year.
So I have little faith in the Council actually delivering a £20m price cut in return for giving up its right to cancel with 60 days’ notice when Capita have consistently out-maneuvered the Council. Rather, Capita should be ‘incentivised’ to cut costs first, and in response the contract won’t then be cancelled. Sticks not carrots are needed here.
So the question is this: Are Birmingham City Council and Capita looking to ditch the ‘Cancellation at Will’ clauses in return for a supposed reduction in the price?