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Burying the Rubbish

Burying the RubbishHere we bring together the strands of two earlier stories, and round them both off to a conclusion - or at least to a conclusion of sorts. Sadly they demonstrate yet again how Fylde's taxpayers are being taken for an uncomfortable financial ride by the present administration.

Back in 'Incompetence or Fraud?' we broke the news that Dim Tim's StreetScene department had overspent by £609,000.

Worse, they had presumed an income of another £100,000 that they had almost no chance of achieving, so the total loss they produced was £709,000.

And in our last issue 'Management Shakeout' we predicted that Fylde Council was about to shake up and shakeout its senor management - a process which it has now begun.

We also suggested these two stories were connected.

We believe the management reshuffle (which will save hardly anything, and may end up costing us even more) is being used as a front to mask the dissolution of the troubled 'StreetScene' department that is now widely known to have caused the £709,000 loss.

According to the incompetent Commissar, this was, at least in part, why there was not enough money left to keep the swimming pools open.

The StreetScene story just won't lie down and die for the Commissar. It's making him deeply unpopular, threatening several members of his Cabinet, and detracting from the programme he wants to implement on us. No wonder he wants it buried.

But the real problem is that he simply doesn't get it. This pool closure, (reshuffle or not), is his "Derby Baths" moment.

Like his former colleagues in Blackpool, his closure of a much-loved swimming pool, together with his financial incompetence, risks putting his party out of power for decades. But like the Emperor's suit of clothes, no one seems to have the nerve to tell him.

So onward goes the management reshuffle - and the name 'StreetScene' will be expunged from future Council publications.

Before it vanishes altogether, we're taking a final look at what happened - to explain some of the details we've discovered.

We have said previously the officer in charge of StreetScene was suspended pending inquiries into the cause of the overspend, and external people were brought in to investigate. We understand at least one interview has been conducted, but so far, no hard news is coming out.

But that's only to be expected. We probably shouldn't know until the enquiry is complete. However, the gossip suggests he may not have been entirely open about the problems his department was storing up for the Council.

Even more ominous, we think the planned departmental dismembering and the renaming of the rump of his department, suggests there probably won't be anything for him to come back to anyway - which in turn suggests there is no great expectation he will be coming back at all. We sense a constructive or unfair dismissal claim approaching.

He may have a case. It's probable he's not the real cause anyway. There may be some blame there, but the most likely cause is the abject failure of Fylde's finance department - especially the accounting section - where the introduction of a new computer system went disastrously wrong, and no one could tell how much had been spent, and how much was left. (See 'No Accounting for Fylde'). On a budget of £10 million or so that's a really serious problem.

At the end of last year Fylde's former finance officer left for pastures new. We suspect that's where the main attention and blame will eventually focus.

However, the implications of this financial disaster continue to rumble on. We look to be losing St Anne's Swimming Pool, and it has caused real trouble to the embattled Conservatives who are now deeply unpopular in the eyes of the public. Largely it has to be said, this problem is of their own making.

So we thought our readers would like a closer look. We may not have the full story yet, but we're much closer to what happened........

For reasons that would take too long to explain here, Wyre Council let a contract for Fylde Council to empty Wyre resident's bins.

Part of this contractual arrangement was that Fylde would take over the lease on 'Wyre's' dustbin lorries and use them to empty the bins.

So far so good.

Fylde also took over two of Wyre's depots, one on Poulton Industrial Estate, and one at Thornton. Fylde also closed its own maintenance depot at Heeley Road St Anne's, and now plans to sell that off as a hostel for the transient homeless. (see 'Hostel Plan Approved')

On 14 January 2007 (around two years into their contract) there was a terrible fire at the Thornton Depot. There have been rumours about arson and disgruntled employees, but we have no evidence of that.

What we do know is that according to the Gazette's report of 15 January 07, the fire totally destroyed five vehicles and caused damage to eight others. They said "The cabs of three vehicles have been destroyed and a fourth has been completely gutted. Several other vehicles on the site have been damaged."

They also reported that "The vehicles destroyed, which all belong to Fylde Council, were used to collect recyclable materials and will cost more than £100,000 each to replace"

Chasing information of this sort at the Cabinet meeting of 14 February 2008, Cllr Paul Hayhurst pushed Dim Tim into answering questions about the huge loss.

Readers will remember (as we reported in 'Where's the Money Gone?') in answer to "What does the anticipated deficit on fleet costs relate to?" the answer from Dim Tim was: "It is with a heavy heart I answer this question, and I can assure the Council that I am taking all actions to make sure this doesn't happen again"

He went on to say there were three main elements.

Firstly, they couldn't engage in trade - using (what he described as) "spare capacity". They had predicted they would be able to do this, and it would produce £140,000 in income.

£100,000 of this was income expected from private work that was not achieved. (The mind boggles at having 'spare capacity' on that scale, but perhaps that's just his way of running a business)

Secondly they budgeted for £432,000 in fuel costs, and the actual cost rose to £580,000. So the extra fuel cost was £148,000

Thirdly, the cost of servicing and spares for the vehicles had been estimated at around £800,000 and they actually spent £1.1 million on them.

He also said they had "some uninsured losses following a fire at the Poulton Depot" (actually we believe this was the fire at Fleetwood Road, Thornton)

Now, using that answer, and our calculator, that means that the "uninsured losses" arising from the fire, must have been around £161,000. (i.e. take the £609,000 loss and subtract £148,000 for extra fuel, and £300,000 for the extra  'servicing and repairs'  - leaves £161,000 for the uninsured losses).

We can now report more details of the £300,000 excess repairs and the losses.

It seems that the Council's vehicle insurance is not on a 'new for old basis', but is intended to replace the value of what has actually been lost.

The Council maintains that on 14 Jan 2007, it lost 6 vehicles completely. It agreed its claim with its insurers in the sum of £153,281

This, (apart from a £1,000 excess) is also what the Council was due to pay the Leasing Company for the loss of the vehicles.

But as well as the completely written-off vehicles, there were others that were damaged (but not complete write-offs). And in respect of these damaged vehicles, the insurers agreed that the Council could keep the write-offs and have an extra £7,834 in cash to settle the 'damaged vehicles' claim

So in total £161,115.20 was received from the insurance company for the fire, but most of this was owed to the leasing company for the bin lorries.

Once this debt had been paid, FBC owed no money on the formerly leased vehicles, but at this depot, it only had six written-off wrecks and some others that were damaged. So it had no vehicles fit to use, and a contractual liability to perform the bin emptying service.

So it hired some bin lorries in to keep Wyre's bins empty.

The cost of hiring was estimated by FBC at around £115,000, but this was not covered by the insurance policy (because when they took the policy out, they didn't think 'hire-in cover' was worth the extra premium). So the hiring cost was itself an uninsured loss.

Whilst they kept going with the hired vehicles, they cannibalised some of the written-off lorries, and repaired others, (probably needing loads of spare parts bought in), and had mechanics working literally through the night in order to get some of the write-off lorries working again. This work had huge costs in unplanned overtime which contributed to the overall loss of £609,000.

Now to some extent, you can say this was an unfortunate situation not of the Commissar's making. Fires can ravage any sort of business or service.

But look at what's happened here

They cannibalised written-off vehicles, spent hours of overtime and an extra £300,000 on parts, and probably still didn't have enough bin lorries to complete the work they were contracted for, so we probably still have some hired lorries to pay for as well.

This hire charge, and the increased fuel cost, might account for the £500,000 a year EXTRA that this debacle is going to cost us for the next three years. (That's on top of the £609,000 loss last year)

If the extra fuel cost is around £150,000 a year, we can estimate this solution (repairing written off lorries, and hiring-in as needed) will cost an extra £350,000 a year for the next three years

We wonder if it might not have been better to have borrowed the cost of six new lorries which are £125,000 each. That would have been around £750,000 which, including 5% loan interest, would be around £788,000.

Over six years this would have cost around £131,000 a year rather than the £350,000 it looks set to cost.

But the probability is that the Wyre contract doesn't have more than three years to run, so it's probably not an option, and we could end up paying a three year subsidy towards emptying bins in Wyre in this wonderful world of shared and sub-contracted services between councils (and losing our pools at the same time).

None of this trouble appears to have been reported properly to Dim Tim, or if it was, he didn't report it to the Cabinet, and the disaster, just like "Ole man river" just kept on rolling along. There was no financial report until December. That's ten months of running blind.

So it must be that either Dim Tim as Portfolio Holder for 'StreetScene', or Paul Rigby, Portfolio Holder for 'Finance and Efficiency' is culpable here, as is the Commissar in personally selecting them for those posts.

On the officer side, we think the key fault lay in finance, though some attaches to StreetScene. The finance officer in post at the time has already left, and it sort of looks to us as though the StreetScene officer may not be coming back, so that could put the position of Chief Executive Phillip Woodward or perhaps Deputy CE David Joy in doubt as well, for not keeping track of what departments were doing.

Now dear reader, if you were in a position of power and influence, and this had happened on your watch, you can understand how tricky it would get.

You can see how people might be tempted to try and escape the consequences. First on your agenda might be to do away with the StreetScene Department. Then you would be able to say, 'Yes, but we took action to cut out the rot and disbanded that operation, its all history now' - or words to that effect.

But that crude stroke would make it obvious what was going on, so you might also be tempted to hide that process inside another. Something even bigger, so it looks convincing. You might try a wholesale management restructure. Not one that saves lot of money, but one that will minimise problems and protect most of the present employees.

Maybe you'd gamble that the StreetScene man won't be coming back, and you have one senior manager who is looking to leave anyway, and there may be a third ready for a move. So what better way than a complete restructure of senior management.

Then you can claim it's nothing to do with the StreetScene problems.

Reduce from the present eight to say five or six under the Chief Executive, Mix the jobs up a bit from what they were before to give the restructure some sort of credibility, pay each of the new post holders a bit more than they get now, give a few extra special responsibility allowances on top of that, and then ring-fence the posts so there are no external candidates, and there you have..... what Fylde's Cabinet agreed as its new senior management structure last week.

Having done this, the architects of the disaster, Councillors Coombes, Ashton and Rigby can pat themselves on the back and show that they are taking decisive action to rectify the StreetScene losses, and implement a modern management system that is as they might say, fit for purpose.

We couldn't possibly comment.......

On their own figures, the best saving achievable is £89,000 in the first year. The saving might be as low as £25,000 a year (this is after reducing three top management posts remember), and if they have to advertise ANY of the posts this would be wiped out, because they expect the job advert to cost £10,000 to £15,000 and support from 'Recruitment Consultants' is expected to cost around £18,000 per post. (Yes really. And that's after signing a Human Resources contract with Blackpool Council that will cost Fylde almost £200,000 a year for HR advice)

So that's anywhere up to £33,000 EXTRA, just to make an external appointment. We're amazed there are not riots in the streets with this sort of lunacy.

Lord preserve us.

At the Cabinet meeting to approve this arrangement, Cllr John Davies (of last year's new intake, but growing in confidence and stature), asked if StreetScene was being done away with, would we also see the StreetScene Portfolio Holder done away with as well? The answer was no. (But we suspect he will have a name change for his Portfolio before too long)

One of the less noticed quirks of the reshuffle is that the new senior managers - to be known as Directors - will not relate directly to the Cabinet Portfolio Holders as you might expect. In fact, it seems that the Director's responsibilities have been deliberately (and confusingly) structured to spread them amongst several Portfolio Holders.

Instead, they will relate directly to an Overview and Scrutiny type Committee.

You might wonder why this is being done, and if that thought is taxing you, try this answer for size. The Commissar has realised he made a disastrous mistake in tying a Portfolio Holder directly to a service, because it makes (or at least should make) the Portfolio Holder personally accountable. (When StreetScene goes belly up it risks taking the Portfolio Holder for StreetScene down as well - just as Cllr Davies had spotted). 

How much better to insulate the Portfolio Holders from being held accountable by ensuring no one Director attaches to any of them directly.

What if it makes the lines of communication even longer, and the chain of command even more complex, and the overhead costs even greater? At least the Cabinet members will be SAFE.

So there we are. StreetScene is being killed off, we will continue to pay £500,000 a year extra to empty the bins in Wyre. We're going to lose our swimming pool, and get a new (badly designed) management structure - a process that will, in all probability, add even more to the bloated overhead that is helping to kill off our public services.

As our correspondent said in High Performing Council "We're a high performing Council..... cos there's nowt left here to do"

Dated:  12 May 2008


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