Barnet Council claims £31m savings with Capita – and not an auditor in sight.

By Tony Collins

capita

It’s commendable that Barnet Council has published much material on its three-year review of a £322m 10-year outsourcing contract with Capita.

More than a dozen council reports and appendices cover every aspect of the contract.

The quantity of material seems, on the face of it, to answer critics of the outsourcing deal, among them local bloggers, who have pointed to the lack of reliable evidence of the savings achieved. The suspicion is that costs have increased and council services including ICT have deteriorated since Capita took over in 2013.

Now the council has ostensibly proved that the opposite is the case. Barnet’s press release says,

Barnet Council and Capita contract delivers £31m savings

“A review of a contract between Barnet Council and Capita has demonstrated it is delivering significant benefits to the borough with overall savings of £31 million achieved alongside increased resident satisfaction…

“In terms of satisfaction with services provided, the review, showed 76 per cent of residents were satisfied with the outward-facing customer services, up from 52 per cent before the contract was established.

“This increase was even more significant in respect of face to face services, as 96 per cent of residents who engaged with the council in this way said they were satisfied compared with a previous 35 per cent.

“The review also showed that the cost of delivering the bundle of services provided in the contract is now £6m a year less than before the contract was signed and that 90 per cent of the contract’s key performance indicators being met or exceeded.”

The press release quotes two leaders of the council saying how pleased they were with the contract. Capita calls it a “positive review”.

The review has various mentions of items of additional spending including £9m on ICT and it’s not clear whether the extra sums are taken into account in the savings figures.

Among the review’s suggestions is that the council pay Capita’s annual management fee of £25m up front – a year in advance – instead of every quarter in return for extra savings.

The review also raises the possibility of extending the contract beyond the 10 years in return for additional savings. Capita is “keen” to explore this suggestion (though it could tie the hands of a future council administration).

The review reports were compiled by council officers who reported to a working group of Tory and Labour councillors, under a much-respected Tory chairman. By a small margin, Conservatives run the council.

Lack of independent challenge?

It’s unclear why the council did not commission its audit committee, or auditors, to review the contract. In the past the audit committee has been critical of some aspects of the contract.

For this reason the reports are unlikely to silence critics of Barnet’s outsourcing deal. Council officers compiled the review’s findings, not auditors.

As a result, despite the volume of published written material, there is no evidence that the figures for savings have been independently verified as accurate.

Neither is there independent verification of the methods used by officers for obtaining the figures.

Further, some observers may question the positive tone of the review findings. The “good news” tone may be said to be at odds with the factual neutrality of, say, reports of the National Audit Office.

There are also questions about whether the council is providing enough effective challenge to Capita’s decisions and figures.

At a council committee meeting in November 2016 to discuss the review reports, the most informed challenges to the findings appear to have come not from Barnet councillors but two local bloggers, Mrs Angry and Mr Reasonable, who questioned whether the claimed savings could be more than wiped out by additional spending – including an extra £9m on ICT. They appear to have received no clear answers.

Concerns of some officials

The body of the review reports outline some of the concerns of staff and directors. Mrs Angry quotes some of the concerns from the review reports:

“Transparency of costs, additional charges and project spend were raised as key concerns. It was felt that CSG [Barnet’s Customer and Support Group, for which Capita is responsible] are often reluctant to go above and beyond the requirements of the contract without additional charges.

“Directors reported that the council needs to be more confident that solutions suggested by CSG, particularly for projects and capital spend are best value.

“Concerns were raised that CSG has a disproportionate focus on the delivery of process and KPIs over outcomes, creating a more contractual rather than partnership relationship between CSG and the council. Directors noted that many KPIs are not relevant and their reporting does not reflect actual service performance.”

The Capita contract began in September 2013, under which it provides finance, ICT, HR, Customer Services, Revenues and Benefits, Procurement, Estates and Corporate Programmes.

Comment

On the face of it, Barnet Council’s review of the Capita contract looks comprehensive and impressively detailed.

Looked at closely it’s disappointing – a wasted opportunity.

Had the council wanted the review’s findings to be widely believed, it would have made it uncompromisingly independent, in line with reports by the National Audit Office.

As it is, the review was carried out by council officers who reported to a working group of councillors. The working group comprised Labour as well as Tory councillors but the facts and figures were compiled by officers.

Nearly every page of every Barnet review report has a “good news” feel. There’s an impression that negative findings are played down.

Example:

“It should be noted that the failure to meet the target for KPI 30 related to one quarter only [my italics] and discussions are continuing regarding the application of the above service credit.”

Some negative findings are immediately countered by positive statements:

“CIPFA benchmarking data shows that the cost of the ICT service is slightly above the median, but below upper quartile in terms of the cost of the service as a percentage of organisational running costs.”

Another example of a negative finding immediately countered by a positive one, which may be said to be one hallmark of a non-independent report:

“One key area of concern in terms of overall performance is internal customer satisfaction… Survey results in respect of the financial year 2015/16 were universally poor, with all services failing to meet the target of upper quartile customer satisfaction. As a result, service credits to a total value of £116k have been applied in respect of these KPIs.

“To some extent, a degree of dissatisfaction amongst internal service users is to be expected, given the fact that cost reductions have been achieved to a large extent through increased self-service for both managers and staff, along with more restrictive processes and controls over things like the payment of invoices and the appointment of staff.

“Despite the survey outcomes indicating a low level of satisfaction, the interviews conducted with staff and managers as part of this Review suggest that services are generally considered to be improving.”

Integra ERP financial system a “success” – ?

The review report describes Capita’s introduction of the Integra financial system as “successful”. Elsewhere, however, it says,

“Many users raised issues with the Integra finance system, describing it as clunky and not user-friendly or intuitive.”

Double counting?

There’s no evidence that savings figures have been checked for possible inadvertent double counting on overlapping services. Double counting of savings is regularly found in National Audit Office reports.

“There are no standardised way for departments to evidence the reductions in ongoing expenditure,” said the National Audit Office in a report on Cabinet Office savings in July 2014. “Departments provided poor evidence, and double counting was highly likely as projects reduced staff or estates requirements.”

In a separate report on claimed savings in central government, the National Audit Office quoted the findings of an internal audit …

“A number of errors (instances where the evidence did not support the assertion) were found during our review and total adjusted accordingly … In addition, a number of savings were double counted with other savings categories and these have now been removed…

“We assessed some £200m of other savings as Red because they were double counted due to the same savings having been claimed by different units or, for example, because savings on staff were also claimed through reductions in average case costs.”

Omitted costs?

The omission of relevant costs could skew savings figures. It’s unclear from Barnet’s review reports whether extra spending of millions of pounds on, for example, ICT have been taken into account. Barnet blogger Mr Reasonable, who has a business background, raises the question of whether £65m of additional spending has been taken into account in the savings figures.

Reverse Sir Humphrey phenomenon?

The biggest single flaw in the review reports is that they appear worded to please the councillors who made the decision to outsource – the reverse of the “Sir Humphrey” caricature. The positive tone of Barnet’s reports implies that officers are – naturally – deferring to their political leaders.

In a BBC Radio 4 documentary on Whitehall, former minister Peter Lilley talked about how some officials spend part of their working lives trying to please their political leaders.

“Officials are trying to work out how to interpret and apply policy in line with what the minister’s views on the policy is …. They can only take their minister’s written or spoken word for it and that has a ripple effect on the department far greater than you imagine… Making speeches is the official policy of the department and that creates action.”

Another former minister Francis Maude told the BBC he found that too few officials were willing to say anything the minister did not want to hear.

“The way it should work is for civil servants give very candid well informed advice to ministers about what it is ministers want to do – the risks and difficulties,” said Maude. “My experience this time round in government, 20 years on from when I was previously government, is that the civil service was much less ready to do that.

“There were brilliant civil servants who were perfectly ready to tell you things that they thought you might not want to hear but there were too few of them.”

Barnet’s reviewing officers might have been dispassionately independent in reporting their findings and double checking the supplied figures – but who can tell without any expert independent assessment of the review?

The US Sabanes-Oxley Act, which the Bush administration introduced after a series of financial scandals, defines what is meant by an “independent” audit. The Act prohibits auditing by anyone who has been involved in a management function or provided expert services for the organisation being audited.

That would disqualify every Barnet officer from being involved in an independent audit of their own council’s contract with Capita.

The Act also says that the auditor must not have been an employee of the organisation being audited. Again that would disqualify every Barnet officer from an independent audit of their own council’s contract.

Review a waste of time and money?

It would be wrong to imply that the review is a pointless exercise. It identifies what works well and what doesn’t. It will help officers negotiate changes to the contract and to key performance indicators. For example it’s of little value having a KPI to answer phone calls within 60 seconds if the operator is unable to help the caller.

What the review does not provide is proof of the claimed savings. Barnet’s press release announcing savings of £31m is just that – a press release. It does not pretend to be politically neutral.

But without independent evidence of the claimed savings, it’s impossible for the disinterested observer to say that the Capita contract so far has been a success. Neither does evidence exist it has failed.

Capita share price at 10-year low

What is clear is that fixing some of the more serious problems identified in the report, such as obsolescent IT, will not be easy given the conflict between the continuing need for savings and Capita’s pressing need to improve the value of its business for shareholders, against a backdrop of difficulties on a number of its major contracts [Transport for London, Co-op Bank, NHS] and a share price that was yesterday [30 November 2016] at a ten-year low.

The review also raises a wider question: are most of a council’s busy councillors who come to council meetings in their free time equipped to read through and digest a succession of detailed reports on the three-year interim results of a complex outsourcing contract?

If they do glance through them, will they have enough of a close interest in the subject, and a good understanding of it,  to provide effective challenge to council officers and their political leaders?

If nothing else, the Barnet review shows that councillors in general cannot provide proper accountability on an outsourcing contract as complex as Capita’s deal with Barnet.

Either council tax payers have to put their faith in officers, irrespective of the obvious pressure for officialdom to tell its political leaders what they want to hear, or council taxpayers can put their faith in an independent audit.

Barnet Council has not given its residents any choice.

It’s a pity that when it comes to claimed savings of £31m there’s not an auditor in sight.

Barnet declares its contract a success – Barnet and Whetstone Press

Mr Reasonable – important questions on the Capita review

Mrs Angry – who writes compellingly on the council meeting where the review reports were discussed.

Days from taking back outsourced IT, Somerset Council is unsure what it’ll find

By Tony Collins

Facing the TV cameras, officials at Somerset County Council spoke with confidence about the new joint venture company they had set up with the “world-class” IT supplier IBM.

“The contract has to succeed; we will make it succeed, ” a senior official said at the time. Greater choice for residents, more control, sustained improvement of services, improved efficiency, tens of millions in savings and enhanced job prospects for staff.

These were some of the promises in 2007.

Since then, Somerset County Council has been through a costly legal dispute with IBM; projected savings have become losses, and Somerset is days away from taking back the service early.

Now the council faces new IT-related risks to its reputation and finances, warns a team of auditors.

In several audit reports on the exit arrangements, auditors warn of a series of uncertainties about:

  •  what exactly IT assets the council will own as of 1 December 2016, when the joint venture hands back IT and staff.
  • how much software may not be licensed, therefore being used illicitly.
  • how much software is being paid for without being needed or used, wasting council tax money.
  • whether thousands of pieces of hardware have been disposed of securely over the years of the contract, or whether confidential data could later turn up in the public domain.
  • the accuracy of some supplied information. “… the same networking hardware items have the same value associated with them even though one is twelve years old and the other only four” said auditors.

Comment

That Somerset County Council laments setting up the Southwest One joint venture with IBM is not new. What continues to surprise is the extent of the difficulties of ending the joint venture cleanly – despite months, indeed more than a year – of preparatory work.

The realty is that uncertainties and risks abound.

When IT journalists ask leading councillors and officers at the start of outsourcing/joint venture deals whether all the most potentially serious risks have been given proper consideration, the spokespeople inevitably sound supremely confident.

If things go wrong, they are sure the council will be able to take back the service under secure arrangements that have been properly planned and written into the contract.

Yet today some of the most potentially serious risks to Somerset’s finances and reputation come from continuing threats such as the possibility confidential data being found on old hardware not securely disposed of.

Or the council may be paying for unneeded software licences.

In short Somerset County Council is taking back the IT service on 1 December 2016 without being certain what it will find.

In future, therefore, when councillors and officials across the country talk with supreme confidence at the start of an outsourcing deal or joint venture about large savings, sustained efficiencies, and a step-change improvement in services that comes with the benefits of collaborating with a world-class private-sector partner, local residents will have every right to be deeply sceptical.

For the reality is more likely to be that the council and its world-class supplier are about to embark on a journey into the unknown.

Thank you to campaigner Dave Orr for alerting me to the council audit reports that made this post possible.

TV broadcast in 2007 days after the council and IBM signed the Southwest One joint venture deal.

**

Excerpts from reports due to be considered by Somerset County Council’s Audit Committee next week (29 November 2016):

“… laptops, servers, storage devices, networking equipment, etc.) have been disposed of without the correct documentation historically, throughout the term with SWO [Southwest One]. There is a high likelihood that without the documentation to show that SWO were meant to have previously disposed of any specific data baring assets in a compliant manner then subsequent fines and loss of reputation will need to be dealt with by the Council.

“This is being addressed as part of the exit works but initial investigations show an expected lack of documentation.

**

“The quality of asset management and therefore exposure to risk (over and above this inherited risk) is expected to improve significantly once asset management returns to SCC [Somerset County Council).”

**

“Asset locations have been updated and improved though there are still issues regarding all asset details not being recorded accurately in the Asset Register. There is a risk that if wrong details are recorded against an asset then incorrect decisions could be made regarding these assets which may in turn cause the Council financial loss and/or loss of reputation.”

**

“… the same networking hardware items have the same value associated with them even though one is twelve years old and the other only four.”

**

“Software assets are now included in the monthly asset register report though the information collected and lack of correlation to meaningful license information means the original risk is not fully mitigated.

“This continued lack of software asset usage information against licensing proof of entitlement as well as the obvious risk of illegally using non licensed software there is also a risk that the Council is wasting public funds and Council officer’s time to manage unnecessary software. This means the Council will not be able to show “Best Value” in these purchases which could lead to fines being imposed by Central Government and loss of reputation by the inefficiencies being reported in the media.”

**

“I cannot though see evidence of the warranty & support arrangements being recorded or accurate recording of end of life assets. Due to a lack of or incorrect detail on the asset information there is the risk of incorrect decisions being made regarding an asset’s usage which could then lead to loss of money or reputation for the Council.”

Capita to lose part of £1bn+ Service Birmingham contract?

By Tony Collins

Birmingham City Council is set to take back the “Revenues” – council tax – element of its Service Birmingham contract with Capita.

A report which went before a cabinet meeting on Tuesday said that decisions on the “proposed termination of the revenues element of the Service Birmingham contract” with Capita would be taken in the “private” – secret – part of the meeting.

One reason the discussions are in private is that even though the contract allows the council to take back services “at will”, this may still involve paying compensation to Capita,

In the open part of the meeting, the deputy leader said that bringing the revenues service back in-house will allow the council “greater flexibility” – which appears to mean lower costs.

It will require a change to the wider Service Birmingham contract under which Capita delivers Birmingham’s ICT services.

In particular, said the deputy leader, taking back the revenues service will avoid any need to invoke a formal “change control” within the contract. He didn’t say why the council was keen to avoid invoking the change control clause.

Taking back revenue services could mean up to 150 Capita staff returning to the direct employment of the council, according to theBusinessDesk.com.

Service Birmingham is a joint venture company run by Capita since 2006 in which the council owns a minority of shares. The contract, which mainly covers ICT services, ends in 2021.

In the first few years Capita received about £120m a year from the joint venture but the figure has come down to about £90m-£100m a year after much criticism of the cost of the contract.

Between 2006 and 2012, Service Birmingham paid Capita £994m. It’s unclear whether the payments have represented value for money for Birmingham’s residents.

The report for this week’s cabinet meeting said that since Capita took over revenue collection the government has introduced a number of local welfare reforms [related to Universal Credit] “which have resulted in the council wishing to deal with Revenues matters differently”.

Keen to retain the revenues work, Capita had suggested a revised service to the council but the report said, “These were considered and it was concluded that they did not meet the current requirements of the council.”

Taking back revenue collection could result in “savings” worth £10.5m between next year and 2020, according to theBusinessDesk.com.

The gradual introduction of Universal Credit means that the Department for Work and Pensions, rather than the council, will eventually handle housing benefit payments.

This would mean less work for the council and Service Birmingham.

Councillors were expected at yesterday’s meeting to confirm officer recommendations on terminating the revenues collection part of the Service Birmingham contract. The new arrangements are likely to come into effect from February 1, 2017

Capita says on the Service Birmingham website that it has transformed services and “realised savings of approximately £1bn”. Capita had introduced SMS texting to prompt council tax payments and reduce the need to issue paper reminders.

Overspend

Birmingham council has a serious overspend for 2016/17, estimated to be around £49m.

The Birmingham Independent Improvement Panel says, “The Council faces a mammoth task to prepare a balanced budget for 2017/18.  With very limited general reserves available, this potentially places at risk its future success.”

Lessons

In 2012 a “high-level” review of Service Birmingham by the Best Practice Group suggested that the deal had its successes but that trust and relationships might have been breaking down in some areas.

It said,

“BCC [Birmingham City Council] and SB [Service Birmingham] seemed to overcome early challenges in their relationship by having a ‘great common cause’. The Council entered into this relationship in 2006 because it had the foresight to realise it had to fundamentally transform how it operated in order to improve social outcomes for its population…

“Now the transformation has largely been successful and the initiatives are almost complete, the level of innovation seems to have stalled and the relationship has deteriorated. Somewhere in the fire-fighting, both BCC and SB have lost sight of the next ‘great common cause’ – the fact that the Council needs to further reduce the cost of ICT service delivery by £20m per annum. This will require some significant ‘outside the box’ thinking about how to achieve from both BCC and SB.”

The report said that some individuals within the council needed to understand better that Service Birmingham was not a social enterprise, a public sector mutual, or a charity, and needed “to make a significant return on its capital for its shareholders” amid a “significantly deteriorating financial position due to Government cutbacks.”

Best Practice Group also said that Capita reduced its charges when challenged

“There have been statements made by a number of the officers in the Council that SB drops its prices when challenged, especially when the Council has investigated alternative industry offerings. SB have suggested that it is only when the challenge arises that initial data is clarified and therefore, more focused pricing can be provided.”

Trust

There was – at that time – a “general lack of commercial trust between the parties and the fact that BCC have shown that SB have reported some data incorrectly (after discussion around interpretation), means that the KPIs are not fully aligned to the business outcomes BCC now needs to achieve in the current financial climate”.

The report reached no firm conclusions on value for money but questioned whether Service Birmingham was “significantly more expensive” in some technology areas.

Comment

Birmingham City Council expects to make “savings” by bringing the revenues collection service back in-house.

If the new savings are added to the claimed £1bn savings originally predicted for the Service Birmingham joint venture, are the actual savings more or less what the council could have saved if it carried on supplying ICT in-house, without helping to keep Caita’s shareholders happy?

In fact the word “savings” has been largely discredited when used in connection with large council outsourcing deals and joint ventures.

In the absence of published and audited savings figures, council reports can interpret the word “savings” to mean almost anything.

The unfortunate truth, as observers of Barnet Council’s deal with Capita have discovered, is that local residents who fund joint ventures and outsourcing deals, have no idea whether their councillors end up paying far too much for IT and other services.

Hide

Birmingham Council this week discussed a major revision to the Service Birmingham contract in secret, which raises a wider point.

Commercial confidentiality means that councils and suppliers can hide behind the contract when things go wrong. Indeed all parties to the contract have an interest in not telling the public about anything that goes wrong.

Exactly what is going on with Service Birmingham nobody knows – outside the council’s inner circle of officers and ruling councillors.  Could the contract be costing too much but the cancellation fees are too high to make cancellation worthwhile?

How many of the councillors who were involved in the signing of the original deal will care if it ends up costing a fortune?

The ruling councillors in 2006 are highly unlikely to be the ruling councillors in 2016.

Councils have the power to make the wrong decisions in private and local residents have no options but to pay for those decisions; and when, many years later, councillors want to discuss a major revision to the contract, which could involve paying compensation on the basis of further promised savings, they have the power to go into private session again.

Those who have no right to know what’s going wrong are the captive council tax payers – those who fund the council’s decisions on the basis of never-ending promises of “savings” – savings that are rarely if ever independently verified as having been achieved.

The system could work well if big decisions were taken in public view.

ICT suppliers are not always obsessed with secrecy. They tend to want only very specific details kept secret. Ian Watmore, former head of Accenture, later government chief information officer and the first Civil Service Commissioner, has been a notable advocate of public sector openness.

But council officers and ruling councillors usually want to have all discussions about outsourcing deals in private – largely because life is simpler without accountability.

It’s not a political matter. Birmingham council is staunchly labour but it was a coalition of Conservatives and Lib-dems that set up Service Birmingham in 2006.

In the same way as the government imposed openness on local councils, so new laws or government guidelines could force councils to be open on big decision and major revisions to contracts.

There again, if council tax payers knew in advance the whole truth about the likely full-term costs and speculative benefits of a major IT-based outsourcing deal or joint venture, would such a public-private partnership deal ever be signed?

Update 11.05 17 November 2016

Barnet Council has this week published a report on “£31” savings from its contract with Capita, alongside “increased resident satisfaction”. Barnet outsourced IT,  HR, a call centre and other services in 2013 in a 10-year contract. The Barnet report will be the subject of a separate post on Campaign4Change.

Birmingham set to pull out of [part of] Capita joint venture in revenues collection overhaul.

 

Capita cuts out a layer of management

By Tony Collins

Paul Kunert at The Register says Capita has cut out an “entire layer of management” six weeks after the company’s profit warning.

“Those caring souls at Capita have inevitably taken the knife to the business, cutting out an entire layer of management and slicing and dicing the divisional structure …” says The Register. 

Andy Parker, CEO,  said “reshaping and simplifying” the organisation and management structure would lead to “good financial performance in 2017 and beyond”.

Capita will give a trading update to the London Stock Exchange in December.

The company’s share price is well below half its level a year ago.

Comment

It’s difficult to see how Capita can reconcile the need to please shareholders, reduce its own business costs, find the money to resolve problem contracts such as the Primary Care Support Services deal to support GP – and at the same time provide innovations and transform services for local councils and the NHS.

Unless, perhaps, a few customers are supplying much of the profit. Those customers are less likely to be in the private sector.

 

 

 

 

Trump’s election campaign lessons for project sponsors

jim-johnsonBy Tony Collins

Jim Johnson, founder and chairman of The Standish Group, which publishes the lessons from project successes and failures, has identified messages for project sponsors – or senior responsible owners – from Trump’s election campaign.

Project sponsors are those ultimately responsible for the success of a project. A good project sponsor would be expected to consider cancellation of the project if the business case no longer justified its continuance.

In his book The Good Sponsor – published in September 2016 – Johnson listed 10 attributes for good project sponsors. Three of the most important, says Johnson, are inspiration, perspiration and imagination.

Johnson says on his blog,

“Donald Trump’s adult and business life began as a project sponsor. Trump was a project sponsor whether he was building low-cost homes, condos in the Midwest, gaming casinos, or giant high-rise towers in midtown Manhattan.

“Trump often claims his projects come in on time, on budget and on target.  This fact may or may not be true, but one thing is true: most of his projects did get completed and became very valuable. However, the lesson for project sponsors comes from the recent presidential election.

“Trump recognized a core group of stakeholders (voters) and inspired them to his cause.

“He used colorful language and much hyperbole. He gave them examples of how he could make their life better with the tagline “Make America Great Again.” He belittled his foes with rhetoric that was short on substance, but long on shrewdness.

“He gained great press coverage on his outlandish claims. All this inspired his core group and this group inspired others to join the cause. Each primary victory added to his following.

“In the end his presidential project was a success.”

Trump is a workaholic, says Johnson “He would get up early and be out on the campaign trail. He would stay up in the wee hours of the morning sending out tweets to his stakeholders.

“In between he would be holding meetings, or opening up a golf course or a new hotel. He would never stop. He really dedicated himself to the project. This was in contrast to Hillary Clinton; it seemed at times she was coasting through the process. It takes hard work to make a project successful…

“However, in my mind Trump’s strongest skill was his imagination. He would constantly imagine things that were just not true in reality and convince his stakeholders to imagine along with him.

“In contrast, imagination was Hillary’s greatest weakness. Her messages were both stale and flat. Let’s face it, a project sponsor without imagination is like a bicycle without wheels. It is just not going to take you where you aim it.

“A sponsor with imagination will take you anywhere and everywhere.”

Johnson adds that he is not a fan or supporter of Donald Trump. “I was very disappointed in the outcome of the election. I am a fan of good sponsorship and Donald Trump is not just a good sponsor but a great one.”

Comment:

It’s difficult for me to see anything positive in Trump’s election campaign. Even so I admire Jim Johnson’s desire to apply some of the lessons from that campaign to running projects.

Here are links to Jim Johnson’s highly-readable Dead Presidents’ Guide to Project Management and The Good Sponsor.

 

Another village post office closed over Horizon IT controversy?

By Tony Collins

“I really have to apologise for not being able to offer the Post Office service the village deserves.

“The worst thing is that I cannot get a full response from the Post Office for their suspension of the service.”

These are the words of Neil Johnson, owner of the village Post Office located inside the Mace convenience store, High Street, Boosbeck, near Skelton, North Yorkshire.

The local Labour MP Tom Blenkinsop says on his website that the reasons for the closure of the Boosbeck post office are unclear but are “connected to a long running and national issue with the computer system and software used by the Post Office called Horizon”.

The closure leaves the village without a post office.

Dozens of subpostmasters have been forced to quit their local post offices over Post Office allegations that they acted criminally following losses shown on the Horizon system.

The Post Office has made no allegations against Neil Johnson.

The Post Office has required more than 150 subpostmasters to repay losses of thousands of pounds and, in some cases, tens of thousands of pounds – money they say was not a genuine loss but an accounting discrepancy shown on the computer system.

Many of the 150 were made bankrupt, jailed, or had their lives ruined because of what they say are unexplained faults related to the Horizon system.

No evidence has yet emerged that the subpostmasters in question received any of the money they are alleged to have taken. In some cases village communities have pulled together to raise money for the Post Office to be paid the “losses”.

Blenkinsop said of the temporary closure of the Boosbeck Post Office,

It just isn’t good enough and leads to an honest shopkeeper being possibly branded with an unfair image or tarnished by rumours…

“I did write on Mr Johnson’s behalf to the Post Office’s parliamentary liaison office, but all I have had back so far is the standard response that this is ‘being looked at’, and advice as to where the nearest other offices are – which I know anyway!”

Interviewed by The Northern Echo, a Post Office spokeswoman did not elaborate on the reason for the temporary closure. She apologised for any inconvenience caused to local residents.

“We would like to reassure customers that we will restore the service to the community as soon as possible and are committed to maintaining services in the area.

“In the meantime, customers can access Post Office services at Lingdale, North Skelton or Skelton in Cleveland.”

The Justice for Subpostmasters Alliance is taking a group legal action against the Post Office on behalf of the subpostmasters who say their lives have been affected by losses shown on the Horizon system.

An initial High Court hearing is expected to take place in January 2017.

One of the campaigners for justice is Tim McCormack, who worked in IT and later became a subpostmaster.

Although he did not personally have experience of unexplained losses, he believes strongly that problems with Horizon could explain the complaints of the accused subpostmasters.

He has written a fascinating analysis of the Seema Misra crown court case.

Suicide threat?

A subpostmaster has – unsuccessfully – made an anonymous FOI request to the Post Office for its Horizon “known errors” log.

The subpostmaster wrote,

“I am a subpostmaster with a big problem.  Over the last few months my branch has run up a huge loss and I am at my wits end trying to find out what has happened.

“I have contacted the NBSC [Post Office’s Network Business Support Centre] when it first started but they said I had to pay the money back but now it is too much and I just don’t have that sort of money.

“I have been looking on the internet for help and I see that there might be problems with Horizon that could have caused it.

“On this site someone has asked for something called the known errors report but you haven’t let them see it. Please could you tell me what these known errors are so I can try and track down what has caused this loss as I haven’t taken any money.

“I can’t report this to you because I read about Seema Misra and how she ended up in prison even though she said she didn’t take any money.

“Please please please let me see the errors so I can find what went wrong… I don’t want to go to prison I would rather kill myself first.

“Thank you to this site for letting me do this anonymously.”

The Post Office’s Gagan Sharma of the Information Rights team replied,

“Firstly, before I turn to your request under the FOIA, I would like to respond to the personal issues raised in your email. I am naturally especially concerned by the final line of your email and urge you to seek professional help via your Doctor or an organisation such as the Samaritans…

“One of the Post Office senior colleagues, Angela Van-Den-Bogerd would be keen to speak with you in complete confidence and anonymously to see whether we can help in any way…” [Gagan Sharma supplied a phone number.]

On the matter of the losses, the reply said,

“Regrettably, there has been some very misleading and inaccurate information about the Horizon computer system reported in the media. It’s important that you please contact the NBSC [Network Business Support Centre] again and ask for your report to be escalated to a Team Leader so that they can look into your concerns.

“The information that you have requested under the FOIA cannot be provided to you for the reasons I set out below …”

The letter confirmed that the “Post Office does hold information related to your request. However we believe that the information is exempt from disclosure”. The letter said disclosure was likely to prejudice commercial interests.

“… software updates for the Horizon system are released on a regular basis to ensure that operational performance is maintained at optimal levels… such updates include, for example, upgrades and improvements to functionality; and the introduction of new business capabilities for products and services and are, therefore, considered to be commercially sensitive…”

But subpostmasters have pointed out that it’s difficult for them to support their claim that the Horizon system was at least partly to blame for apparent losses if they cannot see the known errors log.

Comment

As has always been the case, the Post Office owns the system; it has a contractual right to claim from subpostmasters any losses shown on the system; it is the prosecuting authority when it believes that subpostmasters have taken the money shown as losses on the system;  it is the investigating authority and it can decide what information to divulge.

What chance do subpostmasters stand – even if innocent – in the face of such overwhelming power?

And how much fun is it to run a village post office when the Post Office could close it suddenly and inexplicably and, in doing so, strike fear into the heart of the local subpostmaster?

Thank you to Tim McCormack for his work and help in relation to the Horizon system. 

Post Office email reveals known Horizon flaw

The Post Office Horizon system and Seema Misra trial

Tom Blenkinsop MP battles for village Post Office

Post Office Horizon IT – for Julian Wilson time ran out on justice

 

 

Capita adds 500 staff to boost recovery on “unacceptable” NHS contract

By Tony Collins

nicola-blackwoodNicola Blackwood, minister for public health and innovation at the Department of Health, yesterday described failings on Capita’s GP support services contract as “entirely unacceptable”.

Blackwood told MPs at an adjournment debate on failures relating to Capita’s £1bn Primary Care Support England contract,

“It was always clear that Capita’s services needed to be at least as good as those that they replaced… Capita put forward the most credible of any of the bids accepted on the short list, and at the time both the Department and NHS England had every confidence that the programme would be a success.

“However, it is evident that Capita was inadequately prepared for delivering this complex transition.”

Under its contract with NHS England, Capita is responsible for providing GP medical supplies such as needles and syringes, transferring medical records when patients switch GPs, payments to GPs and “performers list” applications.

Capita won the “Primary Care Support England” contract in 2015, amid unheeded warnings from some GPs that the private sector would be unable to successfully deliver the complexity of support services to GPs that were being provided by the NHS.

Blackwood said yesterday that MPs were “right to be concerned that the service provided by Capita under the primary care support services contract … has so far fallen well short of the standards that we expect, and GPs have borne the brunt of these failings, as we have heard today”.

She added,

“We need to make sure that GPs and their patients receive the service to which they are entitled.

“We want to restore acceptable services, and the contract contains sufficient financial incentives to ensure that Capita shares that goal, which is an important part of the contract and process.

“Let us be clear that the problems encountered with medical record transfers [in which thousands of records have gone missing, says the BBC] and overdue payments are entirely unacceptable. The Department shares that view.

“Both Capita and NHS England are co-operating fully with the Information Commissioner’s Office in order to address the implications for information governance, and I accept the need for urgent action in order to address the impact that this is having on patients and practitioners.

“That is why I have been holding regular meetings with Capita’s chief executive for integrated services, Joe Hemming, its new managing director for primary care support, Simon England, and NHS England’s national director for transformation and corporate operations, Karen Wheeler, and I will continue to hold such meetings.

“Both NHS England and Capita openly acknowledge that the service has not so far been good enough.

“NHS England has demanded and received rectification plans from Capita for the six most affected service lines, and has embedded a team of seven experts within Capita to support it as it resolves these issues…

“… it is also about having the right resources in the right place at the right time. Capita has informed me that it is adding around 500 more full-time equivalent staff to the service, at its cost, and that it is improving the training provided to ensure that new staff understand the importance of the service to both patients and practitioners.”

The minster denied that patients had been harmed (by GPs not having patient records).

“I know that these problems have caused great inconvenience and distress, but with reference to risk NHS England has assured me that it is not aware of any direct cases of patient harm that can be attributed to service issues.

“However, NHS England is working closely with regional and local medical directors so that we can be assured of patient safety. In particular, Dr Raj Patel, medical director of NHS England Greater Manchester, has joined the embedded team to ensure that clinical risks and concerns are appropriately addressed.

Backlogs

“The priority now is to deal with any backlogs, particularly with medical record requests, and to ensure that services are stabilised with the capacity to deal properly with new requests.

” There has been progress on that, which is encouraging. The backlog of medical record requests has reduced from 17,262 to 3,465 in the past two weeks. Capita assures me that it has an effective triage system in operation for new requests and is confident that the situate”ion will not recur. However, I will be monitoring the situation closely.”

Shortage of supplies

Blackwood continued,

“I am aware that some GPs were left short of basic supplies as a result, including syringes, and that they have had to source those from other suppliers at their own expense.

“NHS England tells me that it has reimbursed practices for any costs incurred from having to buy local supplies of needles and syringes.

Contact centre shortcomings

“I know that many of the members’ GP constituents have experienced frustration with Capita’s contact centre. I share those frustrations.

“Capita assures me that the contact centre has improved the way it responds to urgent queries by investing in more staff, improved processes and enhanced training. Capita is confident that these measures will deliver a quality service to customers. We will monitor its progress closely, including through meetings.

Late payments – compensation?

“I recognise that GPs, and ophthalmologists in particular, have suffered financial detriment as a result of late processing of payments.

“NHS England is working with Capita to explore what can be done to support affected stakeholders, and I have made it clear to Capita that I expect it to consider compensation as an option.”

Absence of medical records

Another Coventry MP Colleen Fletcher said that people who have requested a copy of a late relative’s medical records from the primary care support service have had to wait for more than twice the maximum 40 days that it should take to process such a request.

“It is utterly unacceptable to put anyone through that kind of delay, but it is inexcusable for it to happen to anyone who is already in an extremely vulnerable position following the death of a relative.”

New charges to the public for medical records

Geoffrey Robinson said,

“I have nothing against the private sector making profits—I am all for it—but the irony is that the companies cannot make a profit from a proper service, so they turn to such measures as imposing a £40 charge for access to a deceased relative’s records …

“They do not have to impose that charge. I think it used to be left to the GP’s discretion — but they now insist on it, and people have to pay postage and delivery charges on top, which is a disgraceful pursuit of short-term gain at the expense of the people they are meant to serve.”

Reinstate the old NHS support service?

Blackwood said,

“Some have suggested that the old model for provision of primary care support should be reinstated, but we must remember that it relied on localised services that did not connect with one another, with much duplication across processes.

“The quality of these services varied greatly—in some areas, it was outstanding; in others, it was quite poor. That was simply unsustainable.

“Furthermore, the system was unable to generate useful management information and so, honestly, issues such as the ones that we now face would be very unlikely to have surfaced. They would have gone unreported.

“A new model, with efficient and modernised processes, is the right approach to deliver to our primary care providers the service that they deserve.

“The Department and I will continue to closely scrutinise Capita and NHS England as they work to resolve current problems and build a quality service that is sustainable.”

A long way to go

“I acknowledge fully that there is a long way to go before the service can be considered acceptable and that Capita has much to do to earn the trust of practitioners and patients.

“This is clearly a live issue. I want to be clear today: I am listening. The issue is at the top of my priority list and will remain there until I am satisfied that an efficient and effective service is being delivered that meets the needs of patients and providers.”

Lessons

Coventry Labour MP Geoffrey Robinson, who secured the adjournment debate, told the minister,

“These contracts are gaily handed out to companies that do not have the skills, preparation or sheer commitment necessary to provide the service.”

He questioned whether the contract would make the intended 40% savings.

“… the irony is that we have ended up with a terrible service that is costing more than the previous service ever would, because the company was not properly prepared, did not have a commitment to providing the service, and was unable to do so, and because of the competing and irreconcilable claims about short-term gains in the form of profits and illusory savings for the health service…

“We should not have badly planned impositions from the private sector, which does not know what it is going to do or how to do it.”

He said that minsters and civil servants pride themselves on awarding a contract that they have won a hard-nosed negotiation.

 “We got them down from Y to X and we saved all this. It is great. We really screwed the private sector, didn’t we? That is all a total illusion.”

Labour MP Kate Green said that NHS England trialled the new system in west Yorkshire and it provided unsatisfactory. “Yet the contract was rolled out regardless.”

Savings?

Robinson said,

“How can the Minister talk of savings? How can any savings have been made when 9,000 patients records have been missing for more than two months, without which they cannot attend doctors surgeries? It is illusory to speak of savings.”

MPs to debate Capita NHS contract today

By Tony Collins

In the House of Commons today MPs will debate the Capita Primary Care Support Services contract.

It has been secured by Coventry North West MP Geoffrey Robinson, who wants GPs to be compensated for the failures arising from the outsourcing contract.

The debate comes a day after the BBC reported that “more than 9,000 patients’ records in Norfolk, Suffolk and Essex have gone missing” since Capita took on the task of transferring files.

As part of its contract Capita took on the job of transferring patients’ records, when people move from one GP to another.

A BBC survey of 78 GP practices showed that 9,009 records had been missing for more than two months.

Capita told the BBC it did not “recognise these claims”.

An NHS England spokesman said, “We know there have been serious issues with services delivered by Capita which have had an unacceptable impact on practices. We are ensuring Capita takes urgent steps to improve services.”

Patients “at risk”

Paul Conroy, a practice manager in Essex, has started a House of Commons petition on the delays, which has been signed by more than 3,000 people. It calls for an inquiry into the Capita contract and the impact it has had on GP practices.

“GPs rely on that full medical history in order to make key clinical decisions on patient care,” he said.

“If they can’t get hold of that physical record there could be vital information there could be vital information that puts a patient at risk.”

James Dillon, director of Practice Index – an organisation bringing together practice managers – told the BBC,

“GP practices are getting more and more frustrated by the missing patient records.

“Not only is this debacle putting the health of their patients at risk, it is putting added pressure on already stretched practices.”

In a statement, Capita said it had taken on the “challenging initiative” to streamline GP support services and there had been “teething problems”.

“[But] medical records are now being delivered securely up to three times faster than under the previous system,” it said.

“We do not recognise these claims regarding thousands of files being missing whatsoever.

“We request and move on average 100,000 files a week from multiple sites including GP surgeries and also third party run storage facilities which are contracted and managed by NHS England.”

GP magazine Pulse quoted MP Geoffrey Robinson as saying that the secretary of state should intervene directly “as this is extremely dangerous”. Robinson said that some medical records are not being delivered at all, or delivered late or delivered to the wrong practices.

Dr Richard Vautrey, deputy chairman of the British Medical Association’s GP Committee said that the problems arising from the outsourcing contract “are directly impacting on the ability of many GPs to provide safe, effective care to their patients in the area”.

He said, “They are in some cases being left without the essential information they need to know about a new patient and the tools to treat them.”

In August 2016, NHS England published the results of a User Satisfaction Survey of primary care support services over the previous six months. Only 21% of GPs were satisfied with the outsourced service, giving it an average overall score of 2.91 out of 10.

Lunacy?

An anonymous GP told Pulse how the problems are affecting him. He refers to the “performers list” that assures the public that GPs are suitably qualified, have up to date training, have appropriate English language skills and have passed other relevant checks such as with the Disclosure and Barring Service and the NHS Litigation Authority.

Said the GP,

“I moved 12 months ago and still haven’t been able to transfer performers list. I am 6 months late for my appraisal and unemployable except for my current salaried job as a result.

” It would have been easier to emigrate. The department responsible for the performers list at Capita is uncontactable except via a national email that isn’t responded to and a phone line that isn’t able to put you through to anyone.

“… As it is it’s virtually impossible to move region if you a UK GP. I am basically a slave bonded to a geographical region, forbidden to move house and work anywhere else other than short periods. Totally at the mercy of a faceless uninterested bureaucracy incapable of helping. Lunacy and utterly depressing. Why the hell did I become a GP? I curse the day.”

“I urgently need my medical records”

A patient who wrote to Campaign4Change said,

“My medical records were requested at the beginning of June 2016 when I changed to another health centre about 2 miles away.

“[I] phoned Capita today and was told there was no record of this request and to get my solicitor to contact them. Then they put the phone down. I don’t have and cannot afford a solicitor.

“I urgently need my medical records with my new doctor and am feeling helpless and extremely stressed by this.”

Pulse magazine reported yesterday (7 November 2016) the results of a snapshot survey of 281 GP practices carried out by the BMA’s GP Committee. It found:

  • 31% of practices had received incorrect patient records;
  • 28% failed to receive or have records collected from them on the date agreed with Capita;
  • 58% reported that new patient registrations were not processed within the required three days.
  • 81% of urgent requests for records were not actioned within three weeks.

GP practices also noted a reduction in the number of incorrect payments and fewer delays in registrations of the “performers list”.

Comment

It would be a pity if MPs today, in criticising Capita, lost sight of the bigger picture: how such outsourcing deals are considered and awarded.

The root of the problem is that before the contract is awarded officials concentrate their attention on the minutiae of the benefits: exactly how much will be saved, and how this will be achieved.

Pervading the pre-contract literature and discussions are the projected savings. This is understandable but wrong.

It’s understandable because it’s the projected savings that justify the sometimes-exciting time and effort that go into the pre-contract negotiations and discussions.

Large amounts of money are at stake. For officials, the pre-contract work can be a euphoric time – certainly more interesting than the day-to-day routine.

But what happens to negotiation and discussion of risk?

Risk is a table or two at the back of the reports. It’s a dry, uninspiring vaguely technical and points-scoring analysis of the likelihood of adverse events and the seriousness of the consequences materialising.

Sometimes the most serious risks are highlighted in red. But there’s always a juxtaposed “mitigation” strategy that appears to reassure. Indeed it appears to cancel out any reason for concern.

Risk is mentioned at the back of the internal pre-contract because it’s a cultural anathema. It’s the equivalent of visits by Building Regulations inspectors at a theme park under construction.

Who wants to talk about risk when a contract worth hundreds of millions of pounds is about to be awarded?

A bold official may dare to point out the horror stories arising from previous outsourcing contracts. That hapless individual will then be perceived by the outsourcing advisory group to have a cloud over his or her head. Not one of us.

And the horror stories will be dismissed by the officer group as the media getting it wrong as usual. The horror stories, it will be explained, were in fact successes.

Even when big public sector outsourcing deals end in a legal action between the main parties, officials and the supplier will later talk – without explanation or detail or audited accounts –  of the contract’s savings and overall success.

We’re seeing this on the Southwest One outsourcing/joint venture contract.

No doubt some will claim the GP contract support contract is a success. They’ll describe problems as teething. Marginalise them. And later, when it comes to the awarding of future contracts, supporters of the GP outsourcing contract will be believed over the critics.

And so the cycle of pre-contract outsourcing euphoria and post-contract rows over failure will be repeated indefinitely.

It would be of more use if MPs today debated the role of NHS England in the award of the GP support contract.

Blaming Capita will do little good. The supplier will face some minor financial penalties and will continue to receive what it is contractually due.

Countless National Audit Office reports show how contracts between the public and private sectors, when it comes to the crunch, strongly protect the supplier’s interests. The public sector doesn’t usually have a leg to stand on.

A focus today on Capita would be a missed opportunity to do some lasting good.

NHS England letter on Capita contract – September 2016

Capita NHS contract under scrutiny after “teething” problems – June 2016

GPs decry Capita’s privatised services as shambles – The Guardian

Did NHS England consider us in the Capita take-over?

NHS England vows to hold Capita to account

Capita mistakenly flags up to 15% of GP practice patients for removal  

Capita primary care support service performance “unacceptable”

 

 

 

Well done to Unite for challenging council’s joint venture “savings” claim

By Tony Collins

When councils make unexplained (and self-congratulatory) claims that they have made savings at the end of a joint venture, it will usually raise a series of questions.

So well done to Nigel Behan of the Unite union for putting a series of FOI questions to Taunton Deane Borough Council about its joint venture with IBM, as part of Southwest One.

In an “Efficiency Plan” published on its website last month, Taunton Deane
Borough Council announced that it was “part of the ground-breaking Southwest
One shared services joint venture partnership, between Somerset County
Council, Avon and Somerset Police and IBM”.

“This ten year partnership, which is now drawing to a close, has delivered significant savings to the Council and has made an important contribution to our finances.”

Unite is not so sure. Its officials believe the joint venture has, for Taunton Deane,  broken even at best. Its FOI questions to the council:

  • Please will you provide the unitary charge payable by TDBC to
    Southwest One/IBM for each financial year from 2007-2008 to date?
  •  For each financial year since 2007-2008 what was the cost of
    letting and managing the contract – including legal costs, procurement costs etc. etc.?
  • Re IT – software, hardware and peripherals. What was the value in 2007 of all IT (Hardware, software, peripherals and infrastructure) and what is the value of these assets now, ie what has been the depreciation on this asset class since 2007? What will cost of replacing these?
  • What are the net savings achieved by Southwest One for Taunton Deane Borough Council for each financial year since 2007-2008? Will you define “significant savings” (provide a measurable test)?

 Comment:

Taunton Deane Borough Council’s claim of savings was imperious, self-serving and unexplained. The council’s Efficiency Plan looks like a glossy commercial brochure that local residents have had no option but to pay for.

Were a newspaper to make a controversial claim without any explanation or justification, its readers would be entitled to question the article’s veracity.

Taunton Deane’s joint venture peripherally involved a costly legal action between the two main parties to the joint venture: IBM and Somerset County Council.

To make a claim of savings in such circumstances is like officials claiming a mission to space was a success even though the spacecraft blew up.

No rational judgement can be made without a detailed weighing up of the costs and benefits.

Even then the costs and benefits may be subjective. What costs have been excluded from the “savings” figure? What were the baseline costs on which the savings have been measured? And were those baseline figures audited as accurate  – or were they intelligent guesses? Have any benefits been double-counted? Are the benefits audited?

Without people like Nigel Behan and Somerset campaigner Dave Orr, and organisations like Unite, councils would get used to saying publicly whatever they liked, possibly without challenge.

 

 

 

Vodafone’s apology for poor customer service – a template for Whitehall?

By Tony Collins

In response to Ofcom’s fine of £4.625m, Vodafone has published a detailed and contrite apology  – albeit one that blamed computer systems more than senior management for a botched data migration exercise.

Nothing similar has been issued by a central government department, even after a major failure such as HMRC’s loss of 25 million records, or the DWP’s failure to provide timely benefits to people most in need of them, particularly the disabled.

Vodafone needs customers to stay in business. So an apology that explains in general terms what went wrong may be seen by some of its customers as a sign of remorse.

The Vodafone apology could be a template for government departments that tend not to apologise for anything that goes wrong, largely because they don’t have to.

This was Vodafone’s apology:

“Vodafone UK today issued its response to the Ofcom investigations into compliance matters related to Pay As You Go (PAYG) disconnections between December 2013 and April 2015 and general complaints handling between 1 January 2014 and 5 November 2015.

“The company also explained the background to the errors identified by Ofcom and set out the actions taken since to address the concerns raised.

“We deeply regret these system and process failures. We are completely focused on serving our customers: everyone who works for us is expected to do their utmost to meet our customers’ needs, day after day, and act quickly and efficiently if something goes wrong

“It is clear from Ofcom’s findings that we did not do that often enough or well enough on a number of occasions. We offer our profound apologies to anyone affected by these errors.

What happened – and why

“The matters under investigation were a consequence of errors during a complex IT migration which involved moving more than 28.5 million customer accounts and almost one billion individual customer data fields from seven legacy billing and services platforms to one, state-of-the-art system.

“The IT project began at the end of 2013 and was the largest of its kind ever undertaken by Vodafone anywhere in the world.

“Despite multiple controls in place to reduce the risk of errors, at various points a small proportion of individual customer accounts were incorrectly migrated, leading to mistakes in the customer billing data and price plan records stored on the new system.

“Those errors led to a range of different problems for the customers affected which – in turn – led to a sharp increase in the volume of customer complaints. This was the focus of the Ofcom investigation under General Condition 14.4.

“We accept that numerous customers were frustrated and affected by these issues and accept that we were not as effective as we should have been in handling and resolving customers’ issues fairly, consistently and in a timely manner.

“As Ofcom confirms, we were working to address the issues from October 2014 but also accept that that the steps taken weren’t effective or sufficient until November 2015.

The PAYG top-up error

“From late 2013 until early 2015, a failure in our billing systems – linked to the migration challenges explained above – meant that customers who had topped up a PAYG mobile which had been dormant for nine months or more received a confirmation message that the credit had been added to their account; however, the mobile in question continued to be flagged as disconnected on our systems.

“This meant that customers who had paid Vodafone in order to resume using a previously inactive mobile were led to believe – incorrectly – that they would be able to make calls, send texts and use data on Vodafone’s network.

“Affected customers continued to have access to the emergency services as all charged mobile phones can dial 999 via any mobile network, including when out of credit.

“This was a serious error that affected a total of 10,452 PAYG customers and forms the focus of the Ofcom investigation under General Condition 23.2 and 11.1.

“Unfortunately, as the circumstances of the IT failure in question were very unusual (at the time, less than 0.01% of all Vodafone UK PAYG customers’ phones were inactive for more than nine months before being reactivated), the teams responsible for the day-to-day operation of the relevant areas were not fast enough in identifying the issue and did not fully appreciate its significance once they did so.

“Once the issue was finally escalated to senior management there was a prompt, full and thorough investigation and every effort was made to fix the underlying failure and to refund in full all affected customers as quickly as possible.

What have we done to put this right?

“We have fully refunded or re-credited 10,422 customers out of the 10,452 affected. The average refund per customer was £14.35.

“We were unable to track down the remaining 30 customers affected. As we cannot refund those customers and have no intention of profiting from this issue in any way, we have instead made a donation of £100,000 to a number of UK charities.

“The IT failure involved was resolved by April 2015 – approximately 11 weeks after senior managers were finally alerted to it – with a system-wide change implemented in October 2015 that – as Ofcom acknowledges – means this error cannot be repeated in future.

“More broadly, we have conducted a full internal review of this failure and, as a result, have overhauled our management control and escalation procedures. A failure of this kind, while rare, should have been identified and flagged to senior management for urgent resolution much earlier.

Investment in improving our customer services

“Our new billing and customer management system is designed to give our customers the best experience possible. It puts the customers in control of every aspect of the Vodafone products and services upon which they rely.

” It also enables our customer service and retail employees to respond quickly and efficiently to changing customer needs and swiftly put things right if they go wrong.

“All of our consumer customer accounts have now been migrated successfully to the new system with a number of positive effects as a consequence.

“For example, there has been more than 50% reduction in customer complaints since November 2015 and our Net Promoter Score – which measures the extent to which our customers would recommend Vodafone to others – has increased by 50 points.

“We fully appreciate the consequences for our customers of various failures in the migration process over the last three years.

“We have sought to remedy these through an additional £30 million investment this year in customer service and training including hiring an additional 1,000 new UK-based call centre personnel and more than 190,000 hours of training to improve how we identify and resolve individual customer problems.

“We are also working with the Ombudsman to ensure that customers are able to escalate problems more effectively if we are unable to resolve these within our own systems quickly.

“This has been an unhappy episode for all of us at Vodafone: we know we let our customers down. We are determined to put everything right. We are also confident that our customers are already beginning to see the benefits of our substantial investment in new systems designed to meet their needs much more effectively in future.”

 

Comment:

The fine of £4.625m is the largest Ofcom has levied against any telecoms supplier.

No regulator exists that can force an admission of failure from any central government department, let alone extract an explanatory apology.

Margaret Hodge, former chairman of the Public Accounts Committee, concludes in her wonderful book Called to Account”

“There is a mind-boggling waste of taxpayers’ right across government.”

And not an apology in sight.

Botched IT migration – Computer Weekly