“Former Carillion boss takes reins of UK’s HS2 project”

Owl says: The breath-taking brazenness of it is so shocking.

“Former Carillion boss Mark Davies has been appointed as the managing director for the HS2 joint venture between Balfour Beatty and VINCI.

The project is one of the world’s largest construction projects with billions of pounds-worth of contracts put up for the first phase between West Midlands and London.

Davies joined Carillion in 2008 and rose to managing director of its UK Infrastructure business until the firm went bust in January 2018.

The liquidation cost hundreds of jobs and was the most drastic procedure in UK insolvency law, with liabilities of almost £7 billion.

MPs claimed the demise was down to “recklessness, hubris & greed”, with directors focusing on bonus pay-outs to senior executives even as the firm teetered on the brink of collapse.

But that hasn’t stopped Davies heading up contracts for Lot N1 and N2 of the HS2 project, between the Long Itchington Wood Green tunnel to Delta Junction / Birmingham Spur and from the Delta Junction to the West Coast Main Line tie-in.

Combined, these two contracts are worth approximately £2.5 billion.

The joint venture is also currently bidding for further railways systems packages and Old Oak Common station, together valued at £3.8 billion.”


“These [Tory] councils smashed themselves to bits. Who will pick up the pieces?”

“The people running an arm of the British state confessed last week that they can no longer do their job. That is not how the collapse of Northamptonshire county council has been presented, but it is what’s happened. From now on it will provide only the legal minimum of services. From children in care to bin collection, all are in line for “radical reductions”. Normal service will not be resumed for years, if ever.

Nor is Northants alone. East Sussex says it will follow suit. Soon will come a third. Then a fourth. Make no mistake, this is a hinge point in British politics.

The obituaries for local government are already being written, and come in two flavours. For ministers, the calamity is local bungling; critics snort that town halls have been pulverised by the cuts imposed by David Cameron and Theresa May. Neither argument is wholly inaccurate, yet both miss the truth. What is happening in Corby and other well-to-do authorities is the collapse of an entire ideology.

Call it pulverism, the idea that councils should use financial crises not merely to make savings but to smash up and reshape the public sector. Tried out here and there for decades, in the past few years pulverism has gone nationwide. Aiding and abetting and cheering it on have been the biggest beasts in Conservatism. Under this regime, financial mismanagement isn’t opposed to austerity – but feeds upon it, as local officials hand over taxpayer cash to “project managers” on eye-watering day rates and any passing huckster in pinstripes. It leads to town halls being looted by multinationals for millions, even while adults with learning disabilities are turfed out of their homes to save pennies. If this sounds familiar that’s because what is playing out in local government is an extreme version of the story still unfolding in Whitehall. And one of the best places to see it is on the northern outskirts of the capital.

The London borough of Barnet is the alpha and omega of pulverism. It was a role model for Northamptonshire, and the two are eerily similar. Both true blue Tory; both preaching the need for sound finances while raiding their contingency funds and refusing to raise council taxes; both happy to chuck millions at consultants and build themselves swanky headquarters. And, crucially, both adamant that their council’s future lies in smashing itself up and handing out the shards to big companies to provide the bulk of public services.

Budget crisis takes Northamptonshire council into uncharted territory
Barnet’s plan was to slash direct employees from 3,200 to just 332, while Northamptonshire wanted to outsource 95% of its staff. It was cartoonish, it was reckless, it was grotesque. Most of all, it was meant to serve as an example to the rest of the country of how the right can mobilise austerity for its own brutish ends. Northamptonshire is now a front-page scandal, but Barnet is one to watch. I’ve been writing about it on these pages almost since the start of the great contracting out. Largely unnoticed by the newspapers, this summer the council confessed that it faces a giant financial black hole – precisely the fate that their masterplan was meant to safeguard against. The council will now have to cut services even more drastically. To heap on the humiliation, it must also rip up its outsourcing strategy.

Barnet’s Tories raced down this road even before the 2008 financial crash, eventually unveiling the “easyCouncil” model. Just as Cameron’s big alibi was that wretched note from Labour’s Liam Byrne, saying “there’s no money left”, so Barnet brandished a “graph of doom” showing its budgetary crunch. Bringing in the private sector – in particular the FTSE giant Capita, which snared two vast 10-year contracts worth about £500m – was meant to be the fix. It would ensure better public services for less money.

Wrong on both counts. Under outsourcing, basic bits of local administration are now a bad joke. Barnet’s pensions are in such a state that last year the regulator fined Capita for not filing essential information on time. Roads, also managed by Capita, are so potholed that they became a big issue in the May elections. Recently a Capita employee working for Barnet was jailed for 62 instances of fraud worth a total of £2m. He had violated financial controls for well over a year, yet the council admitted to me that the crimes were spotted neither by it nor by Capita, but by the employee’s own bank.

All of this is costing not less money, but more. Just how much more not even the council’s leaders are clear. The Tories went into the May elections boasting of the borough’s financial stability; the next month they confessed to a black hole of £62m by the middle of next decade. To stave off ruin, the axe will be wielded again.

Both Barnet and Capita claim that outsourcing has delivered “significant financial savings”. That is doubtless true on the core work contracted out – but outsourcing companies always make their money by charging for extras. Resident and blogger John Dix reviews the invoices submitted by Capita under the outsourcing contracts (256 for the last financial year alone) and can tell you what those extras typically include. A parent phoning the library to check if a Harry Potter is in stock? Capita used to charge £8 a call. Training for senior officers? Capita pockets £1,200 for just one session.

Just as I and others warned at the outset, having handed over so much to Capita, councillors have effectively lost control of their own council. Last month the council admitted to “significant issues” with Capita’s new system to manage social care – including the failure to “efficiently bill clients and pay invoices” – making it impossible to keep tabs on costs. Not that Barnet isn’t trying to monitor its outsourcing contracts. It’s created an entire parallel administration to do so, costing £7.8m each year in pay and perks. Jorge Luis Borges wrote a story about a map matching precisely in size and detail the territory it depicted. Today, in the entrails of a suburban bureaucracy, his dream has at last come true.

All this cash could have been spent on something other than ideology. Take the £24m spent on management consultants primarily to draw up the plans for outsourcing, or the running total of £90m that Barnet has since shelled out on agency and temp workers: how many school dinners, carers for older residents or council houses could that have paid for?

Instead, that money has been spent on projects that served as a launchpad for a handful of careers, such as Mike Freer who as Barnet leader came up with the easyCouncil model and is today a Tory whip in the Commons. Or Nick Walkley, the former Barnet chief executive who was responsible for implementing that model and who now heads a Whitehall quango. Plum jobs for them, worsening public services for the residents left behind.

All this is directly linked to another issue stalking Britain: the rise of aggressively racist politics. Under austerity, Cameron and his ministers took migrants’ taxes – then, with devastating cynicism, blamed migrants for putting pressure on the NHS, schools and other services that they themselves were starving of money. To further their own careers they fanned the embers of race hate. In places like Northants and Barnet, residents who have already seen their child’s youth centre shut, their nan lose her care visits or their buses stop running will now see even sharper cuts to their services – purely to keep their councils alive. It will not be the councillors who cop the blame for that, nor the predatory outsourcing firms.

It will be the buggy-pushing mum in a headscarf, the teenager in a wheelchair trying to get on a crowded bus, the Polish guy on minimum wage. They’ll be the handy targets when frustrations rise and tempers blow. Because the point about pulverism is that it is never the originators who get pulverised.”


“Virgin awarded almost £2bn of NHS contracts in the past five years”

“Virgin has been awarded almost £2bn worth of NHS contracts over the past five years as Richard Branson’s company has quietly become one of the UK’s leading healthcare providers, Guardian analysis has found.

In one year alone, the company’s health arm, Virgin Care, won deals potentially worth £1bn to provide services around England, making it the biggest winner among private companies bidding for NHS work over the period.

The company and its subsidiaries now hold at least 400 contracts across the public sector – ranging from healthcare in prisons to school immunisation programmes and dementia care for the elderly.

This aggressive expansion into the public sector means that around a third of the turnover for Virgin’s UK companies now appear to be from government contracts. …

Sara Gorton, the head of health at the trade union Unison, said: “The company has been so keen to get a foothold in healthcare, it’s even been prepared to go to court to win contracts, moves that have cost the NHS dearly.

“While the NHS remains dangerously short of funds, taxpayers’ money shouldn’t be wasted on these dangerous experiments in privatisation.”

One former surgery manager who spoke to the Guardian said Virgin appeared to be paid more for doing less in her area, although the company said “because the contracts are generally not directly comparable, we don’t believe it to be true”.

Guardian analysis reveals the way the company that began selling records in the early 1970s has diversified in a bewildering way over recent years. …

In March 2017, it had almost 1,200 staff – a five-old increase from the year before. Over the same period, its turnover increased from £133m to £204m and its operating profit rose from £7.3m to £8m.

Though healthcare is a growing part of the group, Virgin still appears to make most of its money from transport.

Virgin UK Holdings, the UK business which holds its rail and healthcare ventures, reported revenues of £1.5bn in 2016 and paid £22m in tax.

Earlier this year, Virgin Trains had its west coast line franchise extended for another year. …

Paul Evans, the director of the campaign group NHS Support Federation, said: “Virgin Care are the biggest private sector winner to emerge out of the NHS experiment with competition and outsourcing.

“We don’t know the final shape of it, but players like Virgin and Care UK clearly see a big opportunities for business to continue to deliver clinical services for the NHS.”


Privatisation: today Barnet … tomorrow …? The end of “easy councils”

Owl gathers that the company Barnet outsourced most of its services to is known in the borough as C(r)apita!

“London Borough of Barnet is considering proposals to bring 11 services back in-house — including finance and accounting — in a move that could spell an end to its “easy council” approach.

The council achieved notoriety in 2012 when it decided to outsource up to 70% of its services through a separate joint venture company established with Capita.

But a report to the council’s cabinet this week recommended a rethink of the policy in response to the outsourcing giant’s financial problems and continuing austerity.

The council report said: “Capita’s focus in future will be delivering technology-enabled services, at scale, where the company believes it can add the most value to service delivery.”

Capita’s change of strategic direction — including a sale of treasury adviser Capita Asset Services — occurred last year after issuing a series of profit warnings.

The council added: “The rapidly changing external environment has accentuated the need for the council to increase the level of direct control it exercises over the levers that affect its strategic direction”.

In response, the council says it prefers the option of bringing some services back in-house, rather than a wholesale insourcing, or continuing with the existing arrangements.

Finance and accounting — apart from transactional services provided from a shared service centre in Darlington — are among the services earmarked for a return to direct council provision.

Others include estates, strategic human resources, some social care services, regeneration commissioning, highways, economic skills and development, cemeteries and strategic planning.

Another 17 services, among them printing, payroll, pensions administration, customer services, development control, trading standards and licensing, would continue to be outsourced to Capita.

Officers at the authority will now work on defining the best way forward and drawing up a business plan for changes.

Richard Cornelius, Barnet’s council leader, said: “Many things are working well, and it’s right that we build on them. Where this is not the case, changes are needed.”

Cornelius said that changes would only be recommended if they offered a good deal for the Barnet taxpayer.

Jonathan Prew, managing director of Local Public Services at Capita, said: “The proposed review is an opportunity to respond to changing circumstances and needs that have evolved over the last five years to ensure that a future partnership is focused on providing services that will deliver best value for residents and all stakeholders.

“Our partnership has achieved significant financial benefits, and we continue to be focused on strengthening our performance where we need to and delivering quality services across the borough.”

The chief executive and leader of the council have resigned from the board of the joint venture, Regional Enterprise, to avoid conflicts of interest during the review period.”


Privatisation – more evidence of the downside – Housing sale and leaseback

“A “disastrous” Ministry of Defence property deal could get worse when rental rates are reviewed in 2021, MPs have said.

The MoD’s sale and leaseback arrangement in 1996 with Annington Property Limited had left the department between £2.2bn and £4.2bn worse off over the first 21 years of the contract.

The Public Accounts Committee said the deal has been “disastrous for taxpayers” but could cost them even more when rent is reviewed from 2021.

PAC chair Meg Hillier said: “Taxpayers have lost billions as a result of this appalling deal and there could be worse to come if the MoD fares poorly in rent negotiations.

“The uncertainty over those negotiations is a further slap in the face for those forces families who, for far too long, have endured poor standards of subsidised accommodation.”

Under the deal, agreed during John Major’s time as prime minister, 55,000 houses were sold by the MoD to Annington before being rented back on 200-year leases.

A report by the National Audit Office in January found that rising housing prices since the deal was agreed had left the government between £2.2bn and £4.2bn worse off than it would have been if it had kept the properties.

The rents Annington charges the MoD for the houses – subject to a 58% downwards adjustment to date – are expected to increase significantly when the current agreement ends in 2021.

In its report, which was published on Friday, the PAC said that the average annual cost to rent, manage and maintain each property is £7,807 and recommended the MoD develop a plan to reduce the number of empty properties.

The committee said that the number of empty properties currently stands at more than 10,000 – roughly the same as 21 years ago – despite a 30% fall in the total number of properties rented back from Annington over that period.

It said it was “scandalous that the department still holds so many empty properties at a time of a national housing shortage, and has made almost no progress in 20 years in reducing the number.”


The case against privatisation of public services – evidence

“Research conducted in 2015 by the New Economics Foundation for the Trades Union Congress found that outsourced staff at private companies earned less, worked longer hours and were more insecure in their jobs than their counterparts in the public sector. The differences can be stark: a senior care worker for a private contractor will be paid almost half the hourly rate of a colleague in the public sector.

None of this is coincidence. It’s widely accepted that when a low-paid service job, such as cleaning or portering, is contracted out to a company it drives up profits at the expense of workers.

“Through outsourcing, university managers routinely allow low-paid workers to be treated disgustingly, in ways they would never tolerate for their own staff,” says Jason Moyer-Lee , general secretary of the Independent Workers of Great Britain (IWGB), a trade union leading some of the key fights for the rights of college facilities staff. “Yet when we raise these issues, the standard college answer is: ‘This is nothing to do with us; take it up with the contractor’.”

It took 11 years of campaigning by the Unison trade union and students for Soas University of London to agree to bring cleaners in-house, starting this autumn. Last summer, the London School of Economics agreed to do the same. Yet the IWGB is still battling Senate House, the administrative hub of the University of London, for better rights for facilities staff. …”