Hidden! Derby City Council’s missing £millions

40 million squanderedDerby City Council concealed the waste of up to £40 million of tax payers’ money, lost through missed efficiency savings, unnecessary consultancy, and duplicated spend on information technology.

Senior council members and officers were briefed from 2008 onwards that the city was failing to take advantage of technology investment that had put Derby at the forefront of the government transformation agenda. Despite council leaders being personally briefed on the losses, they tried to sweep the inconvenient truth under the carpet. The key questions are:

  • Why did council leaders sweep an inconvenient truth under the carpet?
  • Why was a whistleblower the subject of an orchestrated smear campaign?
  • Why have chief officers not held been to account?
  • What’s to stop it happening again?

Enterprise Architect, whistleblower and investigator, David Gale, takes up the story:

“I joined Derby City Council in 2002 and within a few months was asked to write my own job description to enable me to architect a new platform for transforming the council’s business processes. Within a year, I’d written a new IT strategy, an Information Management strategy, and an e-Derby Roadmap. I based our model on previous work that I had delivered for a global supplier within a major British aerospace company. The concept was simple: to build a range of reusable components that could be used across the city to deliver a customer-centric focus across multiple public agencies. The vision was to build a platform that would scale to a regional services centre, providing massive savings and improved services for local authorities and their partner organisations.

“We built a small, highly skilled internal team supplemented by the very best people from a wide range of hand-picked private sector suppliers. Initially, progress was slow, as we put in place the key building blocks that would drive change through the organisation. I still have a presentation slide that told chief officers and councillors that we would get one chance of doing this, as I anticipated severe cuts in the future, based on my prior investigations within a banking industry that appeared to be running out of control. By 2004, we were really starting to motor, forging strategic partnerships with global corporations that recognised the ground-breaking nature of our strategic IT framework, linked to our in-house Customer Services Information System (CSIS), and the transformed business processes that it enabled.

“The world’s leading public sector organisation for business transformation…”

“By 2005, Derby City Council was being hailed as the world’s leading public sector organisation for business transformation, with pilot systems rapidly going into full production as they demonstrated the benefits in both savings and improved services. It seemed surreal that an averagely sized UK local authority could be hot-linking via video conferencing to the development labs of major global suppliers in the US. We were inundated with requests for advice from national governments, local authorities, and even private sector organisations, as they realised the significance of our endeavours.

“By 2006, we had implemented the full model to roll out change across the city, enabled by partnership agreements that saw companies that would normally be competing for business working together to drive the programme of change across the city. Council staff were empowered to start with a clean sheet and rebuild their services from the ground up. They revelled in the new found opportunities to provide better services and to be able to tweak them very quickly when new ideas popped up.

“I was surprised though that many large UK IT suppliers regarded Derby’s initiative as a threat. The managing director of a large public sector IT company told me, “David, we understand the benefits of what you’re doing but the difference between doing it your way and the old way is the difference between me having four people on site or forty people on site. I have shareholders to answer to. What would you do in my situation?” We became the target of a number of suppliers who were keen for us to change tack and do things ‘their’ way. Most notable was BT who made numerous attempts to impress us with their involvement at Rotherham council. We weren’t having any of it, as we could see that they weren’t even on the same page as Derby. Little did I know that the Rotherham connection would come back to haunt us.

“Midway through 2006, I realised that my job was done and that all that would be required was a watching brief to ensure that everything stayed on track. I left the council’s employment but maintained a seventy five days per year two year contract to ensure that the council had someone who could provide strategic guidance.

“Chief Officers are downing tools until Labour’s back in…”

“2007 onwards saw changes to a number of chief officers at the council, as well as a change of political flavour in 2008. It was at this point that alarm bells began to ring. The roll out of the transformation programme had slowed to a halt and it became increasingly obvious that my advice was being ignored and I was being ‘iced out’. As befitted my role, I began to warn chief officers and members that we had to keep our eye on the ball to deliver the already proven efficiency savings. Perhaps the most extraordinary revelation came from an assistant director who told me in 2008, just after the Liberal Democrats had come to power in the city, that chief officers were ‘downing tools’ until a Labour administration was back in control.

“Smear campaign…”

“Between 2007 and 2012, I briefed every party leader, an MP, and the council’s chief executive. Every one of them ignored my warnings. I also warned council members with numerous formally tabled questions at full council meetings. My report of those briefings, including copies of the council’s own cabinet papers that evidenced my claims, is here. It evidences substantial duplicated IT spend, with orders being placed for software the function of which the council already owned. In 2011, after a tip off, I used a subject access request to evidence a smear campaign being orchestrated against me by senior council directors. The intention was documented by a council director as being “to close down discussion on our IT strategy”. I documented that smear campaign and the council’s subsequent formal apology here.

“The Rotherham connection…”

“It’s probably coincidence that Derby ended up with one of Rotherham’s change management team as its CEO. It’s also interesting to note that Rotherham’s BT contact ended up as managing director of Serco public sector, the company that took on Derby’s outsourced IT contract. Even more interesting is Serco’s access to Derby’s CSIS software code and the subsequent development of its own e-Services software, an expensive proprietary version that performs some of the same tasks. In 2006, Derby’s CSIS code was already well on the way to becoming a commercial product in its own right, the intention being to distribute it globally, with a share of the profits to be accrued to the city. I am told that, in recent years, Derby has spent upwards of £2 million on a Serco e-Services implementation that has delivered very little.

“Others have commented that Derby was delivering a business model that, if implemented nationally, would rip upwards of £2bn a year out of the bottom line profits of public sector IT suppliers and was therefore targeted by the private sector to be derailed. I have no evidence that substantiates those allegations but I can tell you that, in 2014, I met with the CIO of a global corporation to discuss TADAG, my 21st century vision for the internet. He told me frankly, “David, this is brilliant. I can see the benefits but this cuts across our business model and that’s not in our interests. If you move forward with this, we will fight it with all of our resources. We will lobby ministers, run PR through the media and fight it all the way. We could not support something that would cost the industry so dearly.”

“£40 million and counting…”

“In 2006, from a total of over six hundred services, Derby scheduled twelve per year to be transformed. It was a deliberately conservative programme that allowed a firm commitment to the savings. The average savings were already demonstrated as averaging £50,000 per service per year. In failing to move forward with that programme, the city has squandered savings in excess of £20 million. It has spent an additional £10 million on IT equipment and software, much of which is an inferior duplication of functionality that it already had, and a further £10 million on related consultancy. I have received reports from multiple sources that a council director was being instructed to write orders to suppliers ‘to keep them sweet’.

“To his credit, in 2014, the new Council Leader Ranjit Banwait initiated a ‘best practice’ consultancy review of Derby’s IT strategy, something that I had been advising councillors to do for the best part of six years. I only discovered this after contacting all of the companies that provide such services in an attempt to get such a review moving. What is not to Cllr Banwait’s credit is that he appears to have tried very hard to keep this under wraps, no doubt the political embarrassment posing a significant threat to all of those involved. The Serco / Derby contract now appears to be on the rocks, a complete vindication of the warnings that I gave. Disturbingly, I have briefed all of the local media and not one of them will run with the story. There appears to be a consensus amongst the Great and the Good that this story should be left untold.

“£billions of unnecessary cost to taxpayers…”

“I can confirm that the savings available to Derby have been similarly missed by most local authorities in the UK. Sadly, most simply do not have the skills to conceive a different way of doing things. Nationally, the bill to the tax payer runs into £billions per year as the status quo of inefficiency is maintained to the benefit of the private sector. The difference in Derby’s case is that its council was ahead of the game, had a proven solution, and was warned of the consequences of it being allowed to go off track.

My subsequent experience in Whitehall tells me that public sector IT suppliers, many of whom are large financial donors to political parties, will continue to impede real progress and that central government, knowing that the public and the media has little interest in public sector IT, will continue to allow cuts to critical front line services that would not have had to have been made had a coherent national strategy been in place.



Letter from Chief Legal Officer

Click to enlarge

As well as a refusal to discuss the issues relating to the IT strategy, this letter from the council’s Chief Legal Officer in 2011 was also a refusal to respond to a total of thirteen libellous / malicious statements made in emails between council directors, council employees, and external contacts, retrieved following a mail scan initiated as part of my subject access request. The letter evidences senior councillors and officers having knowledge of the written and verbal warnings about the costs to Derby’s tax payers. Not only were they warned but they smeared my name in trying to defend their position.

Cllr Banwait’s covert initiation of a ‘best practice’ review of council IT strategy in 2014 has since vindicated my stance.


David Gale | Leader | British Independents | Derby | England | W:

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