NEWS: “Throw good money after bad” – concerns raised over the real cost to fix Birmingham’s Oracle IT system

Words by Ed King

(The following article is part of an ongoing investigation with Birmingham Dispatch, looking into Birmingham financial crisis and governance issues. For more on The Dispatch, and to subscribe to their daily content, visit www.birminghamdispatch.co.uk )

Birmingham City Council remains shocking unclear as to just how much money – and time – it will take to fix their beleaguered IT system, as the reality of the Oracle scandal starts to come to light.

In a fraught audit committee meeting on Wednesday 21 February, the projected costs outlined to aid with the “reimplementation” of the financail management programme came under fierce scrutiny, with Cllr Meirion Jenkins (Con, Sutton Mere Green) asking “a straight forward question” about how many more paid consultancy days were needed until the problems was solved.

Cllr Meirion underpinned his concerns by reminding the committee “these people are coming in at £1000 per day… possibly more”, mirroring more widespread concerns over the City’s arguably exuberant expenditure on outside consultants.

He further compared the local authority debacle to the private sector, where, he argued, commercial companies would decide “we don’t want to throw good money after bad.”

In response, the City’s Interim Finance Director and Section 151 Officer, Fiona Greenway, admitted the Oracle recovery team “are getting to grips” with the situation and pulled back on providing “a set of numbers and deadlines… only to come back and say, actually they’ve changed.”

Greenway, the Council officer who issued the Section 114 Notice in September 2023 – effectively declaring Birmingham as bankrupt, has recently been appointed as the Council’s Senior Oracle Responsible Officer working underneath Oracle Programme Lead, Philip Macpherson.

Macpherson, who sat on a table alone with slumped shoulders throughout the 21 February Audit Committee meeting, further confirmed his team still has “a lot of work to do” and whilst “estimates” have been put into the Council’s budget to pay for the Oracle fiasco they may have to “refine those”.

Having already reportedly cost Birmingham City Council and its taxpayers £86m, in recent budget proposals for 2024/25 and 2025/26 a further £45m was allocated across the two years to help support the Oracle recovery.

But those projected costs now appear to be more wishful thinking than a concrete cashflow forecast, as an “options analysis” is still being done to decide the best way forward with Oracle.

Greenway further stated the need for an interim financial management system to avoid “a number of risks from manual workaround” as one of the “fundamental issues”, but did not clarify the cost for putting a new system in place “through due procurement process.”

Perhaps the only point that can be agreed upon is the importance of having a functioning system in place, as no financial recovery plan is fully possible without auditable accounts. The Commissioners appointed by Central Government to clean up Birmingham’s financial mess, led by Max Caller CBE, have cited the “Oracle recovery” as one of the “fundamental elements” of their plan to save the city.

But in the same statement, made ahead of the Audit Committee last week (21 February), Commissioners also call out Birmingham City Council for not having “demonstrated the ability and capability” to follow the advice to do so.

After bringing in external auditors Grant Thornton, recommendations over Oracle made to Birmingham City Council on 31 January 2024 again highlighted “a lack of Oracle knowledge” leaving the local authority “without the capability and expertise” to properly balance their books.

But the viability of the entire system is now seemingly under question, which since it’s initial ‘go live’ date nearly two years ago has never operated successfully – leaving the UK’s largest local government to manually “adjust inaccuracies” in its ledger.

Questioning whether the City had now in fact reached “the point of no return” with Oracle, Councillor Paul Tilsley CBE (Lib Dem, Sheldon) went on to challenge previous decisions not to pull the plug on the defunct system as it could have been “cheaper for (the Council) to start again”.

Cllr Robert Alden (Con, Erdington) also questioned the strength of any previous analysis, which was reportedly conducted after the first failings in the Oracle system were addressed, asking that “when the new options appraisal is shared, we can make sure the old one is shared too.”

However, Mark Stocks, Grant Thornton’s Head of Public Sector/Not for Profit Audit and author of their recommendations made to Birmingham City Council on 31 January, explained the Council were still “a way away from making that decision” – leaving the future of the Oracle system, and the costs involved in fixing or replacing it, hanging in the balance.

Erdington Local has asked Birmingham City Council for a breakdown to the costs for the Oracle recovery to date, and to clearly identify how much of the projected budget would be allocated to outside consultants or technical support.

It is expected the ongoing financial and logistical concerns over the Oracle system will be addressed at the Cabinet meeting held today, on Tuesday 27 February.

If you would like to get in touch about any of the issues raised in this article, or around Birmingham City Council’s ongoing financial crisis, please email: edking@erdingtonlocal.com