Civil servants set up food bank for their office cleaners

An emergency food bank has been set up in the Whitehall offices of a government department after cleaners and other support staff became the victims of a payroll blunder by one of Britain’s biggest outsourcing companies.

An email was sent to workers at Greg Clark’s business, energy and industrial strategy department on Thursday asking them to donate food at four drop-off points set up in the ministry.

The email, seen by The Sunday Times, said the request followed problems with the department’s new facility services contractor, ISS World.

The problems meant that “every single payday since they took over the contract on March 1, our staff have not been paid, paid incorrect amounts, unexplained deductions, etc.

“This has resulted in cleaners unable to travel to work as they have no money for bus fares, a member unable to give their wife transport money to take their sick son to the GP, forcing her to walk for 1.5 hours and others facing eviction proceedings. The situation has become unbearable for them.”

The email, which was written by a trade union official, added: “We have called for crisis talks with [department] senior management, after repeated assurances have been reneged on . . . Please donate whatever you can urgently.”

Reacting to the appearance of a food bank at the department, Mark Serwotka, the general secretary of the Public and Commercial Services Union, said: “It is absolutely shocking that our members are being forced to use food banks because of ISS’s mismanagement of the contract. This underlines why all contracted-out services in . . . government departments must be brought back in-house as a matter of urgency.”

The department said last night it was in “daily contact” with ISS, and promised that “any additional costs incurred by staff due to the error” would be reimbursed. It said it was contacting every contractor to “ensure any further errors not yet identified are resolved within the same day”.

ISS World did not respond to requests for comment.

Source: Sunday Times, paywall

Chilling report on NHS sustainability – it isn’t sustainable

Owl says: anyone who cares about the NHS should read EVERY PAGE of this 58-page report, which is written in clear and accessible language.

Every page signals a death-knell for the NHS sooner rather than later.

It is hard to pick out anything – every page tells a story of (deliberate?) mismanagement, underfunding and chaotic accounting.

For example:

“Key findings

The funding settlement for the NHS long-term plan

8 The long-term funding settlement does not cover key areas of health spending. The 3.4% average uplift in funding applies to the budget for NHS England and not to the Department’s entire budget. The Department’s budget covers other important areas of health spending such as most capital investment for buildings and equipment, prevention initiatives run by Public Health England and local authorities, and funding for doctors’ and nurses’ training. Spending in these areas could affect the NHS’s ability to deliver the priorities of the long-term plan, especially if funding for these areas reduces. The government will consider proposals in these areas as part of its 2019 Spending Review. In addition, without a long-term funding settlement for social care, local NHS bodies are concerned that it will be very difficult to make the NHS sustainable (paragraphs 2.27 and 2.28).

9 There is a risk that the NHS will be unable to use the extra funding optimally because of staff shortages. Difficulties in recruiting NHS staff presents a real risk that some of the extra £20.5 billion funding will either not be used optimally (more expensive agency staff will need to be used to deliver additional services) or will go unspent as even if commissioners have the resources to commission additional activity, health care providers may not have the staff to deliver it (paragraphs 1.19 and 2.29).

10 From what we have seen so far, the NHS long-term plan sets out a prudent approach to achieving the priorities and tests set by the government, but a number of risks remain. The long-term plan describes how the NHS aims to achieve the range of priorities and five financial tests, set by the government in return for the long-term funding settlement, which NHS England believes are stretching but feasible. As with all long-term plans, it provides a helpful indicator of the direction of travel, but significant internal and external risks remain to making the plan happen. These risks include: growing pressures on services; staffing shortages; funding for social care and public health; and the strength of the economy. Our reports have highlighted how previous funding boosts appear to have mostly been spent on dealing with current pressures rather than making the changes that are needed to put the NHS on a sustainable footing (paragraphs 2.24 to 2.26).

Financial and operational performance of NHS bodies

11 In 2017-18, NHS commissioners and trusts reported a combined deficit of £21 million. This was made up of:

The combined deficit of £21 million does not include adjustments needed to report against the Department’s budget for day-to-day resources and administration costs.

12 It is not clear that funding is reaching the right parts of the system.
The overspends by trusts and CCGs were broadly offset by the underspend by NHS England. In 2017-18, NHS England’s underspend included: £962 million from non-recurrent central programme costs, including efficiencies from vacancies;

a £280 million contribution to the risk reserve and £223 million from centrally commissioned services, mostly specialised services (paragraphs 1.4 and 1.8).

13 Most of the combined trust deficit is accounted for by a small number of trusts, while the number of CCGs in deficit increased in 2017-18. The net trust deficit hides wide variation in performance between trusts, with 100 out of 232 trusts in deficit. In 2017-18, 69% of the total trust deficit was accounted for by 10 trusts. NHS Improvement has committed to returning the trust sector to balance in 2020-21, but it is difficult to see how this will be achieved for the worst-performing trusts under current arrangements. Although support provided to trusts in NHS Improvement’s financial special measures programme has been successful in improving the position of some trusts (by £49 million in 2017-18), the financial performance of the 10 worst-performing trusts deteriorated significantly in 2017-18. Between 2016-17 and 2017-18, the number of CCGs reporting overspends against their planned position increased from 57 to 75. The NHS long-term plan sets out the national bodies’ aim that no NHS organisation is reporting a deficit by 2023-24 (paragraphs 1.6 and 1.11).

14 There are indications that the underlying financial health in some trusts
is getting worse. In 2017-18, trusts reported that their combined underlying deficit was £4.3 billion, or £1.85 billion if the Provider Sustainability Fund (which replaced the Sustainability and Transformation Fund in 2018-19) is allocated to trusts in future years. There is no historical data on the underlying deficit that takes account of one-off savings, emergency extra cash and other short-term fixes that boost the financial position of the NHS, so it is not clear whether this position is getting better or worse. However, indicators such as cash support and one-off efficiency savings suggest the position has not improved. For example, in 2017-18, the Department gave £3.2 billion in loans to support trusts in difficulty, up from £2.8 billion in 2016-17. In 2017-18, 26% of trusts’ savings were one-off. Trusts will need to make additional savings in 2018-19 to replace these one-off savings (paragraphs 1.13, 1.14, 2.13, 2.17 and 2.18).”

https://www.nao.org.uk/wp-content/uploads/2019/01/NHS-financial-sustainability_.pdf

EDDC HQ contractor’s shares plunge to 6p – in 2014 they were worth 700p!

Perhaps using local companies would have been less risky!

“The crisis surrounding outsourcing firm Interserve intensified on Monday as its shares lost more than 75% of their value, crashing to just 6p, as the government contractor battles to negotiate its second rescue deal this year.

The heavily indebted group, which has thousands of government contracts such as cleaning hospitals and serving school meals, said the rescue plan would mean substantial losses for shareholders as the banks that have lent Interserve more than £600m take control of the company. It hopes to wrap up a deal early next year.

Interserve’s shares plunged to 6p in early trading, giving it a market value of less than £9m. At its peak in 2014, the shares were worth more than 700p….”

https://www.theguardian.com/business/2018/dec/10/interserve-shares-rescue-plan-carillion

Privatisation – another big company seeks rescue – the one building EDDC HQ!

Owl says: Has the message still not got through? Privatise, give your directors MASSIVE salaries and bonuses, look after your shareholders. Then, when it all goes belly-up either (a) get the government (ie us) to bail you out or (b) let your government clients (ie us) go to the wall!

“Interserve: Major government contractor ‘seeks second rescue deal’

One of the UK’s largest providers of public services is seeking a rescue deal as it struggles with £500m of debt, according to the Financial Times.
Interserve, which works in prisons, schools, hospitals and on the roads, said it might look for new investment or sell off part of the business.
Workers at the Foreign Office and the NHS are among Interserve’s tens of thousands of UK employees.

The government said it supported the company’s long-term recovery plan.
The Financial Times reported that the company was looking for a deal to refinance its debt which would mean lenders taking a significant loss while public shareholders would be “virtually wiped out”.

Its share price dropped to a 30-year low last month.

Despite lucrative contracts in the Middle East and its wide range of work in the UK, the company has continued to lose money since March, when it agreed an earlier rescue deal.

Its troubles have been blamed on cancellations and delays in its construction contracts as well as struggling waste-to-energy projects in Derby and Glasgow.

Interserve claims its prospects are improving, and says it will increase profits this year.

What does Interserve do?

From its origins in dredging and construction, the company has diversified into wide range of services, such as health care and catering, for clients in government and industry.

At King George Hospital in east London, for instance, Interserve has a £35 million contract for for cleaning, security, meals, waste management and maintenance.

Its infrastructure projects include improving the M5 Junction 6 near Bristol, refurbishing the Rotherham Interchange bus station in Yorkshire, and upgrading sewers and water pipes for Northumbrian Water.

But Interserve is also the largest provider of probation services in England and Wales, supervising about 40,000 “medium-low risk offenders” for the Ministry of Justice.

In a statement, Interserve said: “The fundamentals of the business are strong and the board is focused on ensuring Interserve has the right financial structure to support its future success.”

The company said its options included bringing “new capital into the business and progressing the disposal of non-core businesses “.

Interserve’s difficulties follow the collapse of Carillion in January 2018, which put thousands of jobs at risk and cost taxpayers £148m.

Government reassures over Interserve

Following that, the government launched a pilot of “living wills” for contractors, so that critical services can be taken over in the event of a crisis. Interserve is one of five suppliers taking part.

A Cabinet Office spokesperson said: “We monitor the financial health of all of our strategic suppliers, including Interserve, and have regular discussions with the company’s management. The company successfully raised new debt facilities earlier this year, and we fully support them in their long term recovery plan.”

https://www.bbc.co.uk/news/uk-46494465

Outsourcing: Carillion and potential crimes affecting councils

“The collapse of the construction giant Carillion has hit the headlines again as auditing failures among the Big Four accountants have come to light. For many, the real impacts (and horrors) of the collapse are only now emerging.

Oxfordshire county council has spent £1.7 million on an audit of the council’s ten-year services contract with the company. It reveals shocking levels of oversight — missing building certificates, fire safety issues, unmet planning conditions — and the scale of the damage done, in health and safety and in financial terms, is breath-taking, especially when you consider the council spent a total of £123 million with Carillion on 602 municipal projects.

We are still to find out exactly what happened behind the scenes, and the results of the Financial Conduct Authority’s (FCA) criminal investigation is hotly anticipated.

The news of the collapse in January was reported alongside photos of the directors’ properties, and details their extravagant pay deals. In June this year the FCA said it was “looking into” allegations of insider trading. Perhaps this was a result of a complaint made in February, by people who say they have been the victims of the directors’ crimes. Increasingly the police are failing to investigate financial crimes, through sheer lack of resources. Will the FCA be able to do any better?

The long story short goes like this: Carillion’s directors had a stack of duties and obligations because they ran a PLC. The huge pay deals are supposed to be there for a reason. One of their many obligations was to keep the market informed of the company’s financial situation. Dishonestly failing to do that is a crime called “misleading statements”. Making misleading statements is related to the crime of insider trading. The point of both crimes is the same: to keep the markets fair. The victims, or at least the people making a complaint against Carillion, are the bosses of a firm called Kiltearn Partners. Kiltearn is an institutional investor: a business which invests large sums in stocks and shares on behalf of lots of smaller investors, such as people putting money into a pension.

In January 2017 Kiltearn owned 10 per cent of Carillion’s shares on behalf of their clients. In March that year Carillion published its 2016 accounts, and everything was painted in rosy colours. Kiltearn staff had no reason to think they should be selling its shares in Carillion. Not until a couple of months later anyway. Because on July 10, 2017, Carillion told the market about a massive problem — there was an £845 million hole in its cash flow. It said it needed to make provision for this, and basically wrote it off. Unsurprisingly the share price tumbled, and Kiltearn was left with the feeling it had been had. Bosses called for an investigation into whether Carillion’s management knew, or should have known, about the cash flow issue — with this statement Kiltearn was reporting a crime.

If there turns out to be solid evidence that the Carillion directors have committed market crimes, it looks likely to follow there will also be evidence that they have committed fraud. It could even be a first prominent outing for “fraud by failing to disclose information”, a section of the Fraud Act 2006.

It will be interesting to see if the FCA has the skill and determination — and ultimately the evidence — to bring the directors to book. In the meantime, it is likely we will continue to see other victims of Carillion’s collapse emerge.”

The author is a barrister at 23 Essex Street

Source: The Times