Too expensive to investigate Barnet Council- the auditor’s excuse

Barnet Council " too expensive to investigate"

Paul Hughes, the auditor who refused a public interest inquiry into the appalling £1.3 m MetPro security staff scandal exposed by my fellow bloggers has rejected a further appeal for an inquiry into Barnet Council’s extraordinary inability to monitor  its own contracts properly.

Only last week his inaction was singled out by Eric Pickles, the communities secretary, in a speech to the annual conference of the Chartered Institute for Public Finance and Accountancy (CIPFA) – the big wigs of the accountancy profession – for  missing the scandal altogether when his firm Grant Thornton audited Barnet Council for a £373,000 fee. Instead Pickles praised Barnet bloggers, Mrs Angry and Mr Mustard among many others, for finding out  what Mr Hughes missed. ( see my old colleague Patrick Butler in Society Guardian).http://bit.ly/pujHys Now he says he can’t really investigate because it will be too expensive for the taxpayer.

In a letter to Andrew Dismore, the  former MP for Hendon and Labour candidate challenging Brian Coleman for the London Assembly next year, he says:

“In considering whether to undertake work in connection with a public interest report we are required to balance the additional cost top the taxpayer with the nature and scale of the issue. The relevant Audit Commission rates for the level of staff  that would be required for this are up to £380 an hour (engagement lead) and £210 per hour ( manager) and there is some risk that at a cost to the taxpayer we can only repeat what is already in, or will be in, the public domain.”

” Our view remains that the most appropriate response for the taxpayers of Barnet is to allow the council to complete its own review before committing to any detailed investigation work on our part.”

He does promise that he will not hesitate to use these powers ” in the public interest” when the oucnil reports back in September if the soon to be privatised management are not ” robust” on their response.

Not surprisingly Mr Dismore is not satisfied. He writes back that  he finds his reply   “very disappointing, as I know will many other Barnet residents. Can you please set out  in detail what steps you will be taking to “monitor the situation and assess the management and internal audit review work”.

So there is no change here. The bloggers who got MetPro need to keep Mr Hughes on his expensive toes. A reminder: his e-mail is paul.hughes@uk.gt.com.

Exclusive :The district auditor’s disgraceful response to the Barnet MetPro scandal

Andrew Dismore: Right to complain Pic courtesy: thejc.com

The scandal over  the employment of security guards by MetPro Rapid Response is one of the worst examples of a council failing to monitor outsourcing of a service – the only one I know where an authority never even signed a proper contract. See my earlier blog at http://bit.ly/ktHKbs

 So it is  outrageous that  Paul Hughes, the  district auditor,has refused a request from Andrew Dismore, the former MP for Hendon and now Labour’s challenger to Tory Brian Coleman, for a full scale public interest inquiry into the affair.

Andrew rightly decided to report the council to the district auditor and call for a public interest report into the scandal. In his letter to Mr Hughes he pointed out:” Having been at the Council meeting when the Robocop style of security used by MetPro at the request of the Council first came under criticism, the consequent investigations have revealed a catalogue of catastrophic failures by Barnet Council and its leadership.

” This poor contracting and lack of financial control  is not a one off, as the Iceland investment fiasco and cost overruns of the Aerodrome Rd bridge confirm.

“What is especially worrying, is that the internal audit found there were inadequate systems to ensure the same thing did not happen again. The “One Council” initiative will create dozens of opportunities for more to go wrong too, with consequent mammoth losses to Barnet’s long suffering tax payers, if immediate corrective action is not taken.”

Mr Hughes reply is equally instructive:

“Where the body is already taking action to remedy deficiencies the auditor may conclude that a Public Interest Report at that point would only have limited impact and may in fact have the effect of unnecessarily undermining public confidence in a public body” (my italics).

“Therefore,whilst we consider that the matters raised in the internal audit report do represent serious internal control issues, our view is that a public interest report is not required at this time.”

He goes on to say the reasons he has refused a further inquiry is because Barnet has promised to investigate further and reform its procedure and because ” the matter is already in the public domain”.

He leaves a faint hope of reconsidering his decision if the council responds by significantly delaying reforms or the failure is found to be systemic (by the council investigating itself).

Barnet has responded. It is cutting  nine more jobs in the department supervising contracts – presumably to increase the scope for more mistakes.

 As  the leader of Barnet Labour Group, Alison Moore  says:” How will cutting posts help deliver an “effective and responsive” procurement service when the council are about to embark on complex privatisations?  I suspect this decision has more to do with saving money than sorting out the service. This is a barmy proposal.”

Andrew Dismore has challenged this pathetic decision of  the auditor whose company Grant Thornton managed to miss the MetPro scandal for three years and pass Barnet’s accounts without any question.

His letter warns: “Nothing could further undermine public confidence in Barnet’s administration, which is now at rock bottom as any objective resident would confirm and as evidenced by the Council’s own satisfaction surveying.”

 “My request for the public interest inquiry was not just in the context of Metpro, but more generally into Barnet’s contract letting and monitoring processes and checks. Only this week, the Hendon Times has carried on its front page yet another example, this time in the contracting (or lack of it) for care services, where failings at the social care centre with whom the Council failed to follow proper procedures and checks and to agree a formal contract actually led to the death of a resident with learning difficulties. Barnet are serial offenders presiding over a catalogue of procurement disasters. ”

…” there appear to be more deep seated problems with procurement and contracts that throw real doubt about the council’s capacity to take on the highly risky “easyCouncil” service outsourcing.  In the circumstances, I would invite you to reconsider your decision. ”

Mr Hughes will know that a public interest report by him could have wider implications for other councils. Given Barnet boasts it is a Tory flagship council that is blazing the privatisation trail – that is even more reason to check its public probity in this area.

Of course  there might be other reasons. I am sure Mr Hughes is a man of such probity that he  couldn’t have reached his decision in the knowledge that Grant Thornton, under new audit reforms following the abolition of the Audit Commission,, would need to persuade Barnet to continue its lucrative auditing contract. I mean he wouldn’t decide the commercial profits of Grant Thornton are more important than public probity. Or that given under the present rules Barnet will have to pay for the public interest report, that he could save the council money and avoid annoying Brian Coleman by refusing to investigate.

But you don’t have to sit back. If you, and say, all the bloggers in Barnet think Mr Hughes is wrong you can demand he reconsider. I suggest you do this to back up Andrew Dismore. You can email the auditor at paul.hughes@uk.gt.com .

A judge is likely to look sympathetically at large numbers of residents demanding the district auditor investigate  the £1.3m non contract with MetPro and Mr Hughes’ decision is subject to judicial review. I hope it won’t have to come to this.

MetPro: A damning indictment of a flagship Tory council

One of three names for MetPro security company

Barnet Council: A damning report Pic: courtesy Barnet Council

The official audit report on  MetPro out this week – the bust security company employed by Barnet Council caught out secretly filming bloggers- is one of the most damning indictments of council incompetence I have ever seen.

The council’s own internal auditors have admitted that it had no business  spending £1.3m on  the security firm – under various titles and guises-  without carrying out basic checks or opening up the tender to competition.

 Frankly some of the findings are so damning as it to be almost unbelievable. Not only were basic checks never undertaken but officials even paid out cash without noticing it was going into an unauthorised bank account from those specified in the contracts and with the wrong VAT number on them. The council is even in danger of being prosecuted by Revenue and Customs for overpayments of VAT as a result. In other cases, there is NO  record of payments made to the company at all.  Any small business caught doing this would find the heavy hand of  the revenue turning them over.

This scandalous state of affairs would never have come to light without the combined work of Barnet’s bloggers – with particular reference to Mrs Angry’s  heroic and diligent work on the Broken Barnet website. See  here for her full report.( http://bitly.com/i13ngn )

As she points out the auditors’ finding are appalling: “No procurement exercise had been undertaken to appoint MetPro, in accordance with the Council’s CPR.
No written contract between the Council and MetPro could be found.
There is no record of an approval and authorisation for the use of MetPro for providing security
services.
In the absence of a formal procurement exercise, we could not locate the following
documents/confirmation for MetPro, which the CPR require:
 Financial viability of the company
 Equal Opportunities Assessment
 Criminal Records Bureau checks
 Confirmation of company’s Public Liability Insurance arrangements
 Confirmation of the company’s Health and Safety registration
 Confirmation on the SIA licence status of the Company Officers
 An agreed specification which outlined the service to be provided
 An agreed schedule of rates for payment of invoices
 A process for monitoring performance of service delivery to establish if the Council was
receiving value for money ”

 It goes on: “Our sample testing of invoices highlighted there had been payments of invoices in the names of MetPro Group and MetPro Emergency Response Ltd where a valid VAT number had not been quoted. However a full review of all payments of invoices should be completed to identify all instances where a valid VAT number had not been quoted and the implications discussed with HMRC. There were inappropriate changes to bank account details on SAP Financial System resulting in payments to an unauthorised vendor – MetPro Emergency Response.”

Download  the full report at http://bit.ly/kqWmR0 .

There are much wider implications from this damning indictment of this flagship Easycare council.

With the government pushing councils to contract out – there must be proper supervision or literally millions of pounds could go astray. And there need to be questions asked of  Barnet’s external auditors, Grant Thornton, who consistently give such an incompetent shower of officials a clean bill of health. The firm can’t be value for money if it misses such a  big black hole.

Sadly the signs are in the name of  localism this could proliferate. Current plans for audit reform by Grant Shapps, the local government minister, intend to encourage a light touch.  This will be good news for incompetents and crooks across the nation but very bad news for council taxpayers everywhere.