Cancelling Mouchel contract could herald cuts to services, claim Lib Dems

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THE exact amount of money to be paid to end the deal with council contractors Mouchel could forever remain a secret.

Liberal Democrat leader Douglas McCall yesterday said the cost could be ‘millions of pounds’ and warned that the changes could make it easier for the Conservative administration to bring in cuts to services.

Milton Keynes Council announced on Friday that it was preparing to sever its contract with Mouchel, worth £23million a year to the private company.

A council statement said Mouchel would no longer supply the substantial proportion of the council’s operational and back office functions.

Milton Keynes Council and Mouchel entered into an agreement in 2004, but Friday’s announcement said that the original contract ‘no longer allows the council sufficient flexibility to operate most effectively in what is a very different political and economic environment from when the contract was originally conceived’.

Under the proposal, which has yet to be ratified, services will now be brought back in-house, with an upfront payment having to be made to Mouchel.

But although it said the changes would ‘save the council – and taxpayers – money,’ the council refused to reveal how much that payment would be.

Instead the exact financial details will be reported to Cabinet on September 5. Even after a final agreement is eventually reached ‘there may well be a need to keep the figures confidential, for reasons of commercial sensitivity’.

But Councillor McCall, whose Liberal Democrat party first brought in the agreement with Mouchel in 2004, said cancelling the contract would cost ‘millions of pounds’.

And he added that the most likely reason to cancel the contract is to allow cuts to be made easier, something that Conservative leader Andrew Geary catagorically denied.

Mr McCall said: “It is a bit of a surprise that the Conservatives should want to ditch the private sector and bring everything in-house. It goes against the grain.

“Clearly moving to Mouchel had a lot of benefits, not only financially but it brought in a lot of private sector expertise which helped to re-organise departments that weren’t working very well.

“People were having to wait up to 12 weeks to get their benefit claims, leading to threats of eviction as a results as it was so poorly run.

“We have got to remember all the massive benefits that Mouchel brought. I am concerned that these benefits will now be lost.

“Why have they done this? They want to cut the services that Mouchel are running because if Mouchel are still running them they would have to re-negotiate the contract. If they move them in-house they can cut them more easily. It is the only reason I can think of.”

“Flexibility, I think, means cuts,” he added.

And Labour parliamentary spokesman Andrew Pakes said: “Firstly it is evidence of the huge financial pressure the council is under due to cuts handed down from Government.

“They wouldn’t have to talk about this flexibility otherwise.

“In part this is a welcome admission thaat outsourcing is not the only option.

“To have a Conservative leader admitting that outsourcing has had its day is remarkable.

“It raises questions about cuts, value for money and service provision. It is up to the council leadership to be clear that this isn’t cover for cuts down the line.

“The council say this will save money over time. If you can save money now could you have done so in the past by not having this contract?”

But Mr Geary, while admitting the move was an unusual one for a Tory administration, said it was the best deal for the current circumstances.

““It is not aabout having a greater ability to make cuts, absolutely not,” he said.

“It gives us greater flexibility to be able to manager different services.

“The contract with Mouchel was the right one, but time has moved on.

“We haven’t even done any sort of deal yet. We are currently negotiating terms. The announcement was just to inform people that we are on the negotiating path.”

He added there are no plans to outsource to another major contractor.

Mr McCall said the deal with Mouchel had been brought in after the Lib Dems took control of the council in 2002.

He said they had inherited problems such as 42 days wait to remove abandoned vehicles and a 12 week wait to deal with housing benefit claims, something which often left tenants facing eviction notices.

“We had to address the poor service the council was giving. The private sector did it more efficiently and cheaper, with better skill sets,” he added.

“We need to remember, putting aside individual issues, that there have been masses of benefits to the people of Milton Keynes. Saving money off council tax and bringing in practices so services can be delievred better.

“Our fear is that there will be a retrograde step in the quality of the service.

“If it is being done just to be able to cut services more easily, then the people who will suffer are the people of Milton Keynes.”

When asked about the cost of cancelling the contract, a council spokesman said: “Once the Heads of Terms have been approved as a basis for detailed negotiation by the MKC Cabinet in September, an important next step will be to quantify and agree the size of the proposed upfront payment from the council to Mouchel.

“The exact financial details will be reported to the Cabinet before any final deal is approved (possibly in October), but there may well be a need to keep the figures confidential, for reasons of commercial sensitivity.

“However, if the deal goes through the council would no longer have to pay the current annual cost of the contract (c £23m) although it would need to meet the direct costs of providing the services itself.

“That is still likely to leave the council with a substantial annual saving that would offset whatever upfront payment is agreed. We will not agree to anything that is not financially advantageous to the Milton Keynes taxpayer.

“The crucial thing is that the new partnership arrangement is not expected to affect services to the Milton Keynes public – our main customers – who can expect ‘business as usual’.”

Milton Keynes Council’s chief executive, David Hill, said: “Mouchel has successfully delivered significant benefits to the council over the years.

“However, the political and economic environment has changed dramatically over the past nine years and both Mouchel and the council agree that, as a result, the flexibility of the existing contract is insufficient to meet the council’s future requirements.”

And Mouchel’s partnership director, Michael Hodgson, added: “We have worked closely with the council for many years to help them deliver excellent services to their residents.

“Over the past 18 months we have looked at ways to provide additional benefits and added value through the services we already provide, in order to meet their changing requirements.

“Under the new framework, we would be in a position to provide the council with greater flexibility to respond to new and changing requirements.”

A new framework between the two partners will now run until 2018. It will see Mouchel continue to provide services such as software to manage business operations support (SAP) and other specialist services.