Somerset dodges questions over its throttling of IBM outsource

Payments to Southwest One by Public Bodies - 2008 to 2011.pngSomerset County Council has dodged questions over the reason why it imposed the blockade that caused its Southwest One outsourcing venture with IBM to fail.

Its answers would have revealed, on the eve of a local election, whether the Conservative Council leadership had intentionally precipitated the failure that it later blamed on Southwest One. It would show whether the they had chosen frontline service cuts over efficiency savings that would have made those cuts unnecessary – thus fulfilling their public aim to replace council services with private companies. It would show they lied about Southwest One to gain political kudos for their council cuts.

The council’s evasion, combined with evidence of what really did happen, suggest the council was indeed to blame. It’s blockade of Southwest One did precipitate the failure: that much is fact. The crucial question is why the council caused the obstruction.

Why, when Southwest One had already found more than £50m of savings for Somerset when the Conservatives were elected in 2009, did the council subsequently refuse to approve another £70m of savings Southwest One put up every year that followed. The Conservatives had opposed the Libdem outsource venture in their election campaign.

Every year for three years, Southwest One offered savings that would have added up to over £100m for the council. Every year, the council ignored them. Why?

The council refused to say, So Computer Weekly asked again under the Freedom of Information Act.

Now the council has said – in testimony under FOI law – that it does not know why it stopped approving Southwest One’s savings. It refused to recognise the savings were ever proposed at all.


Computer Weekly asked about a crucial £76.6m of savings Southwest One has had on the table since 2010, and has been repeatedly ignored by Somerset. The first £58m of savings Southwest One put up before 2010 were approved by the council immediately.

“The £76.6m does not represent proposed savings offered to Somerset County Council in any format or forum,” said the Council’s FOI response.

“The value represents an undefined number of possible ideas presented by Southwest One around this time, that may at some later stage emerge as firm proposals, and thus be presented in the correct forum for mutual agreement and sign off by both parties

“Consequently, anything other than a firm proposal, backed with supporting evidence and processed through the contractual mechanisms agreed, is not information that SCC holds and therefore we are unable to respond to your request,” it said.

The council did not approve the savings, it said, because they were never really offered. But this story didn’t stand up.


Paul Harding, performance & client manager for Taunton Deane Borough Council, a neighbouring authority that joined the Southwest One venture, said Southwest One routinely offered savings. Taunton Deane regularly implemented them.

“A procurement update report goes to our Corporate Scrutiny Committee every six months,” said Harding.

“It’s been an upward curve, year-by-year. Each year we’ve been delivering savings and signing off new initiatives.

“There needs to be a business case – some form of procurement activity. That’s investigated by our finance people, to check the business case checks out. And if that’s the case, the savings are signed off as being identified as realistic.”

John Williams, Conservative leader of Taunton Deane Borough Council, said how well he thought this had worked.

“As far as we are concerned, the relationship with Southwest One is working, has worked and will continue to work,” he told Computer Weekly.

Even the possibility that Somerset had simply found Southwest One’s savings schemes to be unrealistic does not stand up to scrutiny.


Last month Somerset settled out of court on a claim brought by Southwest One over the savings. Neither party will speak about the lawsuit. But one source close to action said this: “It was linked to the process of how Southwest One had been signing off, or not signing off the savings. The dispute was about the council not signing off the savings.”

Settling out of court, the Council was able to able to make the issue go away without admitting liability. Now it must be asked if the timing of the settlement betrayed the council executive working to protect the elected party from embarrassment. Or whether, despite all appearances, Southwest One had been such a genuinely abject failfure for Somerset that the council just had to be shot of it as best and as quickly as it could.

Somerset’s annual audit statements, along with Southwest One’s annual accounts, had already shown how the savings proposals were as good as Taunton Deane claims. That initial £58 of savings were quickly approved.

Smoking gun

Documents the council released to Computer Weekly show how this added up. Southwest One had, for example, negotiated savings by 2010 of £30m for social services and £10m for transport, to be realised over 10 years that the contracts would run. It had barely got started on the work the Libdem council had contracted it to do.

Now that Somerset has reclaimed services it outsourced to Southwest One in 2007. It has ensured the venture will never deliver the £190m savings it originally promised. The venture may nevertheless limp on.

But because Southwest One was a shared services venture and Somerset was the major partner, the County Council’s withdrawal from parts of the contract have now forced Taunton Deane to cut its outsource back too. Somerset’s obstruction of Southwest One may turn it into a failure for all involved.

Both Somerset and Southwest One meanwhile proceed with apparent contempt for public scrutiny. Southwest One was, as often, unavailable for comment. Somerset was reduced to using truisms to evade answering its FOI request.

Asked by Computer Weekly what was the deciding difference for Somerset between those Southwest One savings schemes it approved and those it ignored, the council said those it had approved were savings it had approved while those it had not were not.

Or in FOI speak of the sort that will be familiar to anyone used to seeking such statements from officialdom: “The £58.5m comprised of savings proposals that had been appropriately proposed and processed within the defined protocols of the contract between SCC and SWo, mutually agreed as being likely to generate savings. The latter were not.”

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Do the Taunton Deane glowing references hold water as the loan for SAP etc is not repaid by March 2012 and has cost £330,000 (more than 2x a year’s procurement savings)?

And if the relationship is “working well” then why are Taunton Deane services being brought back in house as the Police resources and shared services remain invested with SW1?

Whither the Police now??

The Council has prepared a reasonable estimate of the notional interest

related to capital borrowing requirement of £2m, for the period up to

2013/14 financial year. The notional sum is £330,000. This has been

calculated using the ‘consolidated rate of interest’ which is the net

average of interest on borrowing and investments. This amount is not the

same as a notional value in interest that the Council could have received

if the money was deposited in an allowable investment account.

I have “crossed swords” with Taunton Deane leader John Williams, where he maintains that SW1 has saved money, but will not net off gross savings for costs & overheads and state actual net savings.

Taunton Deane have dodged a number of FOIs about costs of letting the SW1 contract and managing the contract by stating that to find out this information would exceed the FOI limit. Both Somerset and the Police answered these questions within the FOI limits:

Will Taunton Deane answer the actual gain share FOI?

One last point. When Somerset took up the lawsuit they formed a Joint Members Advisory Panel with councillors from the opposition Lib Dem and Labour parties on it & the out of court settlement was agreed with that group.

None of the Lib Dems or Labour demurred and the out of court settlement, like the original contract in 2007, had cross-party support.

The Lib Dems signed the contract with IBM for Southwest One in 2007 and yet they did not make this an election issue? Why not??

In fact, on all the election leaflets, Southwest One is simply swept under the carpet. All political parties in Somerset do that because everyone comes out of the disastrous IBM contract for Southwest One smelling of dung!

The Lib Dem Leader Nick Clegg preferred to focus on BBC regional news on the £36K repairing a fish pond at Somerset County Hall rather than mentioning the net £60m lost from Somerset to IBM via Southwest One.

Conspiracy or c**k-up?

Let the reader choose!

Taunton Deane had been left with no choice to bring its services back from Southwest One, it said in official documents.

Since Somerset had pulled back itself from many parts of the contract, they were no longer viable for Taunton Deane.

So Taunton Deane is having to pull back as well. It's a house of cards. It is good to ask where this leaves the only other participating authority: Avon & Somerset Police.

Southwest One had been a shared services venture from the start. Participating public bodies used it to pool their resources. This way they got cost savings - economies of scale. The particular advantage SW1 gave them was what they could get better prices if they put all their buying power together and negotiated long-term procurement contracts.

Somerset County Council was the big draw for other authorities. Taunton Deane could save a lot of money by pooling its buying power with Somerset's massive budget.

Somerset stopped approving Southwest One's savings schemes in 2009/2010. Southwest One consequently failed. Now Somerset is pulling its services back in-house, SW1's failure will spread to the other participating authorities. They will have to pull back as well.

The unanswered question is simply why?

On the matter of who was to blame, well that is implied most firmly by recent history. Somerset blamed SW1 for its own failure. SW1 sued Somerset over it. Somerset conceded.

It was Somerset's fault. But not merely Somerset. SW1 had been doing well under the Libdems. They supported it. They made it work. It collapsed under the Conservatives, after they took over the Council in 2009. They admitted they were determined to be shot of it. But their own actions caused the failure. Then they tried to blame the failure on SW1.

Mark - Come one - Please answer the glaring, unanswered question.

If SW1 was great under the Lib Dems and the Conservatives wrecked it, then why total silence before today's election?

Not a word or peep at all. Nothing, zilch, nada!

Two weeks ago, I pressed my Lib Dem Ward Councillor (Hazel Prior-Sankey) and Lib Dem Opposition Leader (Sam Crabb) to tell me what their policy on IBM/SW1 would be, if they won the election (voting is today 2nd may).


If your theory was correct, then why wouldn't IBM/SW1 be an election issue, with the Lib Dems openly holding the Conservatives to account for their sabotage and the costly failure?

Why then do the Lib Dems talk about £36K duck pond repairs instead?