SB Cares is only the latest 'business' failure

by OUR INVESTIGATIONS UNIT

The recommendation to kill off SB Cares, the arms length company set up by Scottish Borders Council to deliver adult social care follows an almost identical debacle in faraway Buckinghamshire with a similar range of services having to be rescued from potential meltdown.

And the link between the Borders and Bucks is much closer than appears at first sight. For in both cases the plans which led to out-sourcing with such far-reaching consequences were partly hatched by the same firm of consultants, Care and Health Solutions.

Within the last few weeks companies called Buckinghamshire Cares Ltd. and Buckinghamshire Supports Ltd have been dissolved, their functions having been taken back in-house by Buckinghamshire County Council who 'externalised' them in the first place.

On Thursday of this week members of SBC are expected to approve taking back services currently run by SB Cares Ltd and SB Supports Ltd with both companies - formed by the council in 2015 - to be dissolved like their Bucks counterparts. It seems setting up special vehicles to handle some of the most sensitive and vital services in local government is fraught with risk and uncertainty.

Our research reveals that Borders and Buckinghamshire followed very similar paths to failure.

Buckinghamshire Care was established in October 2013 as a limited company known as a Local Authority Trading Company (LATC) and was a wholly owned subsidiary of Buckinghamshire County Council. It employed 394 staff (approximately 250 Full Time Equivalents). 

Council members were assured in a report dated June 2013 that: "The LATC is forecast to generate a cumulative surplus of £600,355 at the end of the fifth year of trading. The total investment cost is circa £400,000 for set-up costs. The total cumulative benefit to the Council over 5 years of establishing the new company is £2,354,692."

So how did that pan out?

The last full accounts for the Bucks LATCs covering 2016 stated: "As a result of continuing losses, additional funding was provided by the company's sole ultimate shareholder, Buckinghamshire County Council in the form of a working capital loan. The balance of the loan stood at £1.749 million on 31st December 2016.

"In late 2016 the county council decided that it was in the best interests of clients, staff and suppliers to retake direct control of all of the services that were transferred to the group in October 2013." 

Financial returns for Buckinghamshire Supports showed a loss of £1.234 million had been incurred for 2016 and £1.210 million in 2015.Yet when the fledgling Buckinghamshire Care Ltd advertised for senior staff in 2013 potential applicants were told the managing director's post would command a six-figure salary while the finance and commercial director would receive between £75,000 and £85,000 a year.

County councillor for Ryemead and Micklefield, Julia Wassell, called the move to return the services in-house a “good example of a crisis” and said it had the potential to be “disruptive” to staff, service users and carers, despite reassurances from the council that it would not be.

She said: “It is a good thing that the county council has taken it back in-house but the question remains whether it should have been outsourced in the first place." 

The sheer scale of the issues facing Buckinghamshire's social care LATCs was set out in a report to the county council by Trevor Boyd, its managing director for Communities, Health and Adult Social Care.

He wrote: "The Council has lost confidence in Buckinghamshire Care Ltd’s ability to manage and deliver services to the high standards it requires. It decided that it was in the best interests of service users and their families to bring the services and eligible staff back 'in-house', while a longer term solution is considered.  Notification of the termination of the contract needed to be provided immediately to enable the Council to take the necessary steps to ensure that the appropriate governance and financial arrangements are put in place to secure the sustainability of services."

Mr Boyd added : "Over the last year there have been a number of operational issues related to leadership, financial management and more recently service quality.

"Service Quality - The Council lost confidence in Buckinghamshire Care Ltd’s ability to work to its required standards when, in November 2016, it was made aware that a number of operational and quality issues first raised by the Care Quality Commission during an inspection of one of their regulated services run by Buckinghamshire Care Ltd in April 2016 (Seeleys House) had not been satisfactorily rectified and were still in evidence.

"Despite the Council taking decisive remedial action to ensure services were able to continue in line with the standards it expects (this included additional staffing and training) the Council does not have the confidence that quality services will be delivered consistently. This poses a potential risk to the safety and wellbeing of our service users. With this knowledge the Council feels unable to leave delivery of care services under the management of Buckinghamshire Care Ltd."

"Resource Implications - There will be some one-off costs (£364,000) relating to bringing Bucks Care back in-house. These costs mainly relate to ICT expenditure which had been capitalised and was being charged to the profit & loss account over a 5-year period. Additional gross recurrent costs (£594,000) will be incurred relating to pension costs. Although no disruption to services is anticipated we have sent reassurance letters to all service users, carers and parents explaining our decision to terminate Buckinghamshire Care Ltd’s contract and transfer services to Buckinghamshire County Council."

Scottish Borders Council has taken similar steps within the last few days. But to claim the switch to in-house is merely administrative must surely be challenged.

The Buckinghamshire 'model' was one of those included in a 2014 options appraisal report which SBC commissioned from Care and Health Solutions. The firm of specialist consultants had previously been involved in the set up and implementation of Buckinghamshire Cares.

SBC was told by the consultants: "The [Borders] review and analysis is based on the knowledge and expertise within the CHS consultancy and our experience of alternative service delivery model implementations with other Local Authorities in both Scotland and England. This assessment is based on our extensive experience in designing and implementing alternative delivery models such as LATCs and comparing these successful externalised bodies with those in scope in this appraisal."

And this was another message included in the appraisal report: "Historic attempts to reduce costs have often resulted in reducing service provision. This “salami-slicing” of services has been seen to reduce quality and capacity of services to the point of extinction and is generally accepted as a non-viable option. Experience in implementing and managing recently launched vehicles evidences a cultural change in the new company that leads to a “team environment” and a sense of individual responsibility towards colleagues and the organisation as a whole."

Perhaps Scottish Borders Council and Buckinghamshire County Council should compare notes...while external auditors might wish to investigate the circumstances surrounding the SB Cares collapse.