Agenda item

Capita Contract (Agenda item 16)

To agree and sign off the outstanding Capita contractual matters, in accordance with the Council’s decision.


Report of the Executive Member for the Transformation Portfolio (William Smith).


David Spencer and Dave Jolley from Capita Symonds were in attendance for this item.


This item had been referred to Cabinet for a decision having regard to a range of issues that had emerged during final negotiations and due diligence that, in the opinion of the Deputy Chief Executive, had a material impact on the five criteria against which the contract was to be evaluated, and the risks associated with proceeding to execute the agreement. 


The report updated Members on these issues and the essential features of, and the risks associated with, the final draft of a contract between the Council and Capita Symonds Limited. 


Specific issues related to:


·              securing substantial efficiency savings;

·              generating significant income;

·              demonstrable improvements to the quality of service;

·              provisions for the return of s strong planning and building control service upon the termination of the contract; and

·              pension costs


There were concerns of how projected savings could be measured and whether the Council would end up paying more for services if a specification of work Capita would have to complete was not comprehensive enough.  There were also concerns about the legality of the delegated planning decisions and what would happen if the contract was terminated.


The Deputy Chief Executive was satisfied that the contractual arrangements that had been agreed with Capita had been met.  However, this did not necessarily mean that the Council should enter into the agreement.   It had become apparent that the negotiation process demonstrated that it would be impossible to devise a simple, robust mechanism for tracking the delivery of savings over time as the baseline and subsequent service levels demanded and provided would change.  This was not to say that savings would not be delivered; they could not, however, be identified with sufficient precision to be incorporated into the contract.  Members therefore needed to satisfy themselves that the mechanism for controlling costs as volumes changed would promote delivery of more efficient services than could otherwise be provided in-house over the same period.  Officers believed that if the service did remain in-house, it would be possible to formulate a management plan with a cost profile that would deliver savings over the 15 year period broadly comparable to those offered by Capita as guaranteed efficiency savings.


Members were informed that the arrangements for making delegated decisions had been agreed to the Deputy Chief Executive’s satisfaction. The Deputy Chief Executive explained that normally delegated decisions were made by the Head of Planning or one of his two principal officers.  In future, Capita’s agreed arrangement was that those officers would not now be able to make decisions on behalf of the Council.  They would instead have to prepare a notice of decision, complete with reasons and any conditions together with a Proforma report for the Deputy Chief Executive and he, or an officer authorised by him, would make the decision. 


If the contract was signed, Capita would provide all of the services that were presently provided by the authority’s Planning and Building Control teams, including the land charges service.  The remit that had been given to Capita had been described in service specifications that form part of the contract.  The service specifications were intended to capture all the activities planning and building control currently carried out but it was important to bear in mind that it would be impossible to specify what they did in a comprehensive and precise manner.


One of the biggest challenges facing the Council would be that these service areas would no longer be Member-led and Members might find it culturally difficult to adjust.


Referring to the termination of services, Members were informed that the Council could not terminate the contract without a very good reason. If Capita caused such a significant harming event, such as the business plan not being settled in a certain amount of time, then the Council could terminate the contract.  The occurrence of three critical service failures, such as slipping a quartile in the performance indicators, would be another reason to terminate.  Capita would be given a chance to come up with a remediation plan first and then if the Council was still not satisfied, the contract could be terminated.  Everything else was as proposed as at the last Cabinet meeting.


The Assistant Director for Governance had come to the conclusion that the contribution to the Council’s efficiency budget would be in the region of £250,000 per annum.  This figure would be generated through a mix of a lower contracted cost of service with Capita, an opportunity to remove residual costs from the Council and a sharing of the turnover generated by the growth of the Breckland Capita team.  The Assistant Director for Governance said that this was very much an opportunity that, in his opinion, was worth pursuing.  As far as pensions were concerned, there was a big pension liability that had arisen over the last few months and whether the Council retained those liabilities was another matter.  The Government’s Actuary’s Department had certified that Capita’s scheme provided benefits that were broadly comparable to the Local Government Pension Scheme.


David Spencer, the Executive Director for Capita Symonds, said that Breckland was ahead of others in looking at selling off its planning department and that many others were looking to follow suit.  He believed that local government was on the brink of change of how authorities thought about different ways of delivering services.


The Vice-Chairman asked about the governance arrangements and how this would affect the roles of the Overview and Scrutiny Commission and the Audit Committee.  He also asked how Members would sit with Capita.  In response, the Deputy Chief Executive advised that operational issues would be managed through a Service Planning and Improvement Group, which would be responsible for the development of the annual business plan, monitoring performance, agreeing variations to the service, setting the contract price (subject to approval by Council), and resolving operational issues that could not be settled informally in the course of normal day to day business.  This Group would meet monthly and would be attended by senior officers and elected Members and chaired by the Director of Services.  More strategic planning and long term improvement of the service would be managed through a Service Improvement Group.  This forum would meet every six months and would consider the potential for significant enhancements of the service that was being provided to local people and the Breckland Business Unit – the latter being with a view to maximising the income received by the Council.  Sitting outside these two groups would be the Overview & Scrutiny Commission, which might want to look at any contractual issues and the Audit Committee for the financial terms.


The Chairman of the Development Control Committee asked what substantiated critical service failure, as she had concerns about problem applications at Committee which might get deferred and therefore deadlines could be missed. She also asked about the formulation of staff if the Council was to exercise a ‘get out’ clause. In response, the Deputy Chief Executive explained that Capita could not force the Committee to determine any application. As far as the future of staff was concerned, Members were advised that because it was impossible to predict what kind of service would be transferred back to the Council or to another provider in 15 years time, the contract had been set out with a range of principles to guide the formulation of an exit plan.  Capita would be responsible for preparing this exit plan within six months of the commencement of contract.  This approach did carry with it some risk; Capita’s staff might not, for example, wish to transfer back to the Council.  It would also be difficult in practice to determine precisely who should transfer or remain with Capita.  Capita would performance manage its staff so therefore the risk that the Council might not get back everyone if wanted would be a big one.


The Chairman of the Overview & Scrutiny Commission asked if the Council found that critical service failure had occurred, was there a clause in the contract that Capita paid the costs.  The Deputy Chief Executive advised that there were limits to Capita’s liability and if the Council was judicially reviewed, Capita would be seen as the interested party and therefore Breckland would end up paying costs. 


A Member asked what the Council would gain from this contract considering that Planning’s current performance levels had a 90pc satisfaction rate.    He had concerns about the word ‘risk’ being used many times in the document.  Savings were not guaranteed and very little profit would be made in the next few years.  He called for the matter to be deferred so that the Overview and Scrutiny Commission could consider these specific issues.  He also queried the £225k on page 142 of the report and asked whether this amount was from Breckland Council or whether this was part of Capita’s monies.  The Vice-Chairman agreed with the points about risk and asked the S151 Officer, in his professional opinion, whether £250K mentioned in the document would indeed be saved.


In response, the S151 Officer informed Members that as well as the risks, the opportunities had also been highlighted in the document.  In his opinion, this contract would be very much an opportunity that was worth pursuing.  Dave Jolley from Capita Symonds agreed that there was a risk but what Breckland Council had in front of it was a formidable contract.


As far as the £225K on page 142 of the report was concerned, Members were informed that this amount was a contribution from Capita.


Referring to the risks involved, the Chairman of the Overview & Scrutiny Commission pointed out that all aspects of Council business contained risks.  What mattered most was that we understood the context of it and what the outcomes would be.  He asked for the requested deferment to be deferred until the debate had finished.


A Member was very much in favour of the scheme as described by the Deputy Chief Executive; however, he asked whether Capita could provide an assurance that any initial problems that the Council might be faced with could be overcome and not distorted.  The Member also mentioned Breckland being a very local working Council and hoped that this would continue. In response, David Spencer assured the Cabinet that Members, parish councils and the public would still be able to have the same access and contact with planning officers under Capita as they previously had.  In answer to a concern about charges, the Deputy Chief Executive reassured Members that the Council was responsible for setting levying charges and would remain so; Capita could not levy charges on any member of the public.


The Executive Member for the Economic and Housing Portfolio assured the Cabinet that Parish Councils were not afraid of change.  Members must not lose sight of how much better the access was going to be for everyone in Breckland once the new IT software systems were installed.


The Executive Member for the People First Portfolio read out questions from her residents which the Deputy Chief Executive answered in the positive.


The Executive Member for the Planning and the Environment Portfolio supported the contract between the Council and Capita and admitted that although it had been a very long process there were no major differences on the table.  She said that many of these issues raised had been thoroughly discussed at the Panel meetings that had been set up specifically for this.  She had no misconceptions about Planning and Building Control still being very much under Member control.  She felt that the contract had been a huge achievement for the Deputy Chief Executive who had answered and dealt with all the questions that had been put.  The Executive Member also thanked all the staff for their involvement and patience in which had been a very long drawn out process.


The Vice-Chairman asked Capita whether the contract was viable.  Members were informed that it was; this was why the content of the contract had been discussed at great length.  With regard to the quality of service, the performance standards would be based on current performance levels and if the service ever returned to Breckland it would be returned in the upper quartile.  Capita would aspire to have upper quartile teams. 


The Vice-Chairman said that any additional services would incur costs so it would be no different to what the Council had now.  He was quite happy for this proposal to go ahead as he was quite content with what had been said.


The Chairman referred to the Thetford Growth Point team and asked whether Capita would cease to charge the £8,000 per annum if staff in that team were redeployed elsewhere.  The aforementioned amount was to reflect the fact that the Thetford Growth Point team would not be making a full contribution to the Breckland business unit. Capita confirmed this request.


The Vice-Chairman felt that this was a unique contract and he thanked all the Officers involved for enduring the various debates which had been held with Members and with the Deputy Chief Executive.


The Chairman pointed out that, Members had the right to call in this matter if approved.  He asked the Chairman of the Overview & Scrutiny Commission whether he was happy that this contract had been fully debated.  In response, the O&SC Chairman said that having been involved in this Scrutiny process for a very long time, there was nothing in this final contract that indicated that Capita wanted to fail and he wholeheartedly supported it.


A Member said that the calibre of questions from this authority was far higher than any other authority that he had dealt with.




To enter or not to enter into the contract with Capita Symonds Limited.




See report.


Members then voted on the matter, and it was




1)           the externalisation of the Council’s Planning and Building Control Services be approved;


2)           the contract be entered into with Capita; and


3)           the Deputy Chief Executive be authorised, in consultation with the Business Transformation and Planning and the Environment Portfolio Holders:


a)           to make minor amendments to the agreement to finally resolve any outstanding matters of detail as follows:


b)           to execute the agreement on behalf of the authority; and


c)            to take such steps as required to implement the agreement, including specifying the date of commencement of the contract.

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