West Sussex Labour councillors condemn Tory council’s financial management as audit uncovers privatised services’ contract failures

West Sussex Labour councillors have expressed their shock and disapproval after the council’s own internal auditors delivered a devastating verdict on the performance of key contracts awarded to private companies by the Tory-controlled county council.

Shortcomings were exposed in a report discussed at Monday’s meeting of the council’s Regulation, Audit and Accounts Committee (RAAC).

Internal audit could only provide a “limited level of assurance regarding the economic, efficient and effective use of resources” to councillors.  Labour councillors believe these shortcomings are a direct result of the Tory council’s ideological obsession with cuts to services and outsourcing. 

The RAAC report has shown that, without effective safeguards in place, the council is vulnerable to awarding contracts to private sector providers that can out-manoeuvre the council and ultimately provide poorer quality and poor value services to taxpayers. With staff resources depleted and demoralised by cuts, even the best professionals have struggled to cope with the increased workload caused by delivering the council’s political priorities. 

The report describes how the council has no capacity or expertise to efficiently commission services from third party providers.  The use of expensive consultants is poorly managed – by its own admission, the council cannot say how much it actually spends on consultants each year.

Internal audit’s criticisms are a catalogue of failure in several service areas and functions such as risk management, the use of consultants, commissioning, business resilience and others.  Conclusions reached by internal auditors included:

 

  • “….there was a complete breakdown in processes with no visibility as to how risk was considered or actively managed”
  • “…there is no focal point to facilitate effective purchasing and management of consultancy services….consultants’ performance and the value for money achieved are not recorded so decisions on future use are uninformed….the annual spend on consultancy cannot be reported accurately”
  • “…lack of functional leadership of commissioning in the council….the capacity of appropriately trained staff to lead commissioning projects is unclear….inadequate arrangements are in place to capture good practice and share learning”
  • “The Corporate Business Recovery Plan, Business Resilience Policy and some Business Service Plans are out of date”

Particular criticism was reserved for the council’s outsourced Highways Maintenance Contract with Balfour Beatty:

“…the level of contract monitoring did not appear to be commensurate with the size of the contract…..rates paid to subcontractors appear to be higher than those quoted in pricing schedules….clear evidence that either processes were not followed or that newly evolved processes had not been documented….previous recommendations do not appear to have been addressed, even though assurance was sought from highways management that this was the case.”

Following questioning at the meeting by Labour, officers admitted they were unable to quantify how much extra money may have been overpaid on the highways contract over and above the original agreement, since it was outsourced, and that they lacked evidence without putting in resources to investigate further.

Tory Cabinet Member for Finance Michael Brown (Con, Fernhurst) also conceded at the meeting that much of the £2 million of annual savings anticipated when the Highways contract was originally signed in 2011 may not now be achieved by the council.

Based on the RAAC report evidence, Labour councillors believe this contract sounds far from good value for tax payers.

The report goes on to criticise failures in other council services such as Payroll, now managed by the council’s main outsource ‘partner’ Capita:

  • “…a large number of overpayments had been identified as a result of a poor leaver process.”
  • “…the overpayment mechanism was ineffective leading to a large number not being recovered promptly.”
  • “…starter files were incomplete, with documents either missing or not being to the standard necessary to give full assurance over the recruitment process.”

Though the council has agreed a range of remedial actions to address many of these weaknesses, the report itself confirms that the position has deteriorated steadily over the past three years.

This raises the question why has the council waited for so long to address these issues, while losing the experienced and competent staff they needed to retain to help manage these contracts, as cuts bite deeply into the staffing budget?

Speaking at the RAAC meeting, committee member Labour County Councillor Michael Jones said:

“In all the time I have been on the county council, I have never seen as bad a report as this on the council’s internal performance.  This highlights the significant shortcomings in commissioning at this council.  

“It calls into question the ability of the council to provide services efficiently through its obsession with the blunt tool of outsourcing, especially to profit-driven companies such as Capita.  But the blame is not solely on the council: how have outsource companies been allowed to win contracts, then over-promise and under-deliver to such an unacceptable extent?”

After the meeting, Cllr Jones added:

“The examples in the report paint a picture of a dysfunctional council unable to manage its own corporate affairs.  It certainly does not inspire confidence that other outsourced services are giving taxpayers good value for money. 

“This is especially alarming when the Leader of the Council has been lobbying central government for more power and autonomy for local government in the South East.  If WSCC cannot even manage its own affairs at present, how on earth will they cope with the greater freedoms and responsibilities more devolved local government will bring?

“This report -; and council tax payers -; should demand a fundamental rethink of the council’s approach to service provision and a high level investigation into the performance of its outsourced ‘partners’.”

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