Cornwall Council panel scrutinises joint venture
Single Issue Panel publishes report in advance of final council decision
Cornwall Council's Single Issue Panel (SIP) has published its third interim report into the council's proposed part-privatised joint venture with BT.
The report, which was discussed at a meeting of the panel today, has been published in advance of a full council session on 11 December, when councillors will finally decide whether to issue an invitation to tender to BT (the sole remaining bidder following the withdrawal of CSC) or abandon the project altogether.
It raises a number of concerns about the joint venture. For example, the report says that there needs to be consensus both within the council and among the wider public. It also argues that there is a lack of genuine competition - there is only one bid, from BT - and that political instability is to blame for CSC's decision to withdraw from the bidding process.
The report warns that political leadership is, and will remain, crucially important and expresses concerns that the terms of the deal, particularly regarding jobs, have not been properly considered, and alternative options have not been fully explored.
It concludes that Cornwall Council has managed to already achieve many of the "transformational gains" associated with the project on its own.
The panel's conclusions and recommendations will be further discussed during an extraordinary meeting of the Corporate Resources Overview and Scrutiny Committee which is due to take place on Wednesday 28 November, before the full council makes a final decision on 11 December.
The report insists that "the most important aspect of all when considering partnerships and joint ventures with the private sector" is that there is "a consensus agreement, not only from the general membership but also from staff and the wider public."
It then warns that the panel has not been in possession of all the relevant information it would have liked to be able to write the report to its satisfaction.
Looking back at CSC's decision to withdraw from the bid, the report says that a contributory factor was "political instability in the council". The decision was announced the day after Alec Robertson was removed as council leader on 16 October 2012.
It goes on, "the loss of CSC from the bidding process effectively finished the competitive dialogue although negotiations are still being conducted with BT on specific items."
According to the report, the panel stressed the importance of political leadership. A failure to get this right "will at best lead to problems and at worst to failure of the partnership," it says.
The report continues, "on the figures seen by the SIP and using a conservative model the difference between in-house savings against the BT guaranteed figure was in the order of £500,000 per year (in favour of the BT offer). It was put to the officers that this was 0.25% of the addressable spend and was a very small difference. In response the officers said that finding £500,000 in the budget these days would be difficult."
The panel cautions that the lack of consideration of alternatives to the BT bid is a risk as it would provide some mitigation if the current proposal does not go ahead.
In its conclusions, the group argues that the transformational gains usually associated with outsourcing projects "have mostly been completed by Cornwall Council."
However, it warns, a number of risks remain:
- "BT withdraws after a decision is made to go ahead.
- Health partners proceed with Telehealth/Care but without Cornwall Council.
- The required savings targets are even higher than expected, meaning further cuts are required.
- Industrial action as a result of change.
- The need to reduce service quality to meet cost window is not accepted politically.
- Inability to recruit or provide in-house appropriate client side management with the skill set required.
- Poor decision making around contract management.
- Chains of command too long to allow for effective decision making.
- Insufficient communication across all relevant bodies.
- Failure of the Cornwall Strategic Partnership agreement leading to withdrawal of partners."
If the joint venture goes ahead, the panel recommends that, for example, there should be greater clarity and certainty over the number of jobs created, with any transfer of staff to BT taking place under TUPE+ terms and an experienced contract manager appointed as soon as possible.
Conversely, if the joint venture does not go ahead, among other recommendations, the panel suggests that a cross party working group should be set up to consider alternative options and an urgent cost saving exercise undertaken to mitigate budget shortfalls.