www.counterbalance.org.uk

 

fylde counterbalance logo

search counterbalance

plain text / printout version of this article

countering the spin and providing the balance


 

What a Waste

What a WasteThe Wyre Waste Management Contract is one of the items we've been waiting to hear about.

It's the tail-end of the contract to empty the bins in Wyre Borough that has been such a disaster for Fylde taxpayers.

It's no real surprise, but the report to Fylde's Cabinet attempts to cover up - or at least minimise the political damage from - what has been an absolute financial disaster for Fylde's taxpayers - the Wyre Waste Contract.

Just follow us through the catalogue of errors that this operational adventure has left in its wake.

Under the control of Cllr Tim Ashton, this contract has lost us hundreds of thousands of pounds. It lurched from crisis to crisis, getting deeper into the mire with every step.

But unless you're a forensic accountant, you'll never see that of course, because the losses have all been hidden in different bits of the accounts.

And when that process couldn't hide losses like staff overheads, those and other fixed costs were re-assessed and re-apportioned as a cost over Fylde's refuse service rather than the Wyre contract.

This lessened the apparent damage that the Wyre Contract was doing to Fylde residents and went some way to avoiding the public humiliation of Councillor Tim Ashton's StreetScene and the legendary financial incompetence he and they had showed in the field of contracting

We said in 'Rubbish Accounting' (which was part of the September 2010 Cabinet Item) "Readers will remember Dim Tim ranting at Council that the contract had made a profit since it started, and (after reporting the huge 700,000 loss which - in our opinion - necessitated the closure of St Annes Pool), readers will also recall his subsequent quote at the Faux Scrutiny Committee of "It was unfortunate it happened, I regret it...... that it happened..... but I don't think anybody acted in a way, deliberately, to act wrongly in what happened, and at the end of the day nobody died"

He's right to say nobody died, but unfortunately, the 700,000 loss he reported was only the half of it.

First off was below-cost price submitted by FBC's sharp-penned operations manager who wanted to win the Wyre Waste contract to spread his overheads over a bigger base and thus reduce his unit charge out rates for future tenders he went after.

His idea was to load the contract 'extras' with abnormally high charges so as to recover and profit from the low tender price he had submitted.

It's the oldest trick in the contracting book, and Wyre fell for it, hook line and sinker.

They took Fylde on to empty their bins at a low rate, but were stung with high prices whenever a new property was built and had to be added to the round.

We heard the squeals of pain from Wyre's finance department as far away as St Annes.

There was never any chance Fylde were going to be awarded that contract ever again. counterbalance has said that repeatedly since 2008

Then we had the stupid plan to give away Fylde's Vehicle Maintenance Depot at Heeley Road for a Homeless Hostel (The land turned out to be worth 400,000 when Fylde's so-called experts said it wasn't worth more than 125,000)

Then we had the cost of taking a lease on a new depot in Poulton le Fylde and one at Thornton.

The latter was fired - whether by a disgruntled employee is unclear - and that produced the report of a 600,000 deficit and the loss of 100,000 of assumed income that didn't materialise because Fylde was judged not to be fit to conduct a business. (And that was the judgement of the previous Government who, it turns out, were not that brilliant at financial judgement themselves).

This fire, and the cack-handed measures taken to rectify it, led directly to the massive cash deficit that brought about the closure of the Swimming pools, and the subsequent cost (again, never to be revealed in the accounts), of the golden handshake made to the former manager  in order to secure his silence, and because it "....was felt to be the most pragmatic option which exposed the Council to the least amount of additional financial and reputational risk ...." (Chief Exec's own words in quotes)

This was a small disaster in itself.   In in our view, it was an intentionally compromised investigation so as to minimise upstream risk of damage.

Then there was the 150,000 on unforeseen fuel costs.

Commonsense would have told anyone with half a brain cell that moving your vehicle maintenance base to Poulton when you've got two thirds of your Fylde work emptying bins in St Annes and Lytham is likely to increase fuel consumption.

This whole sorry saga is set out in 'Faux Scrutiny Committee' (The non-investigation that was run by the same Chairman as the Community Focus Scrutiny Committee that we don't think much of)

Readers can also find the saga in numerous previous articles we provided on this topic, as the crisis twisted and unfolded again and again.

Then we had the warning in the September 2010 Cabinet that it was accepted there would be no profit from the Wyre contract, and there may be extra costs that had not (at that time) been provided-for in the budget.

So the Cabinet agreed an amendment to its future financial forecast regarding the Wyre refuse contract at that time - to "exclude any assumed surplus forecasts and include an estimate for any potential exit/restructuring costs (including all residual contract lease costs) beyond March 2012."

It also noted that future reports would be made on, amongst other things, any costs associated with the "exit strategy or restructuring and redundancy as a result of service delivery changes."

And there have been extra costs of course,

A new vehicle depot was built near the tip (see Snippets - August 2008) and that is now being expanded. There are termination penalties for the leases on depots in Wyre. There are vehicle lease termination costs, and new vehicles have been acquired. There will probably be costs associated with redundancy although they hope to transfer some of the current staff to the new commercial contractor who takes on the Wyre contract - (and if they think that's going to happen, well, lets just say it's consistent with their thinking up to now).

But despite their knowing all of this, FBC kept up the pretence of expecting to be asked to re-tender for the next contract. They even set plans in place to price Wyre's next tender (albeit in secret).

We said at the time

"What this means is that FBC will now take the decision as to whether to bid for Wyre's next contract out of the public eye, and with minimal debate. And if they don't get the contract, they will try and seduce Wyre into what's called a "Shared Service Arrangement" where the two Councils work together to deliver the service.

We think both of those options are unlikely and, as a result, Fylde is going to be 'in trouble'.

They're unlikely because, in private, Wyre is very angry with what Fylde did. We've shown before how, in order to win the contract and beat Wyre's internal bid by its own staff, Fylde put in a low contract price and high charges for any extras - (so when new houses came on stream Fylde were coining it in). Wyre councillors thought they were being ripped off, and eventually they closed down some parts of the Fylde contract. So we'd be surprised if Wyre even let Fylde onto their list of tenderers, let alone chose them to undertake their next contract.

It is bad news for Fylde because they're currently spreading their overheads over a comparatively large number of employees. If (or more probably when) FBC has to lose some of its bin-men (assuming Wyre don't re-engage FBC), they'll also have to cut maybe 40% of an accountant, 30% of a secretary, and other support staff and indirect overhead costs and so on. And they can't easily do that, so the overheads on the remaining bin men will increase and they will be less competitive."

And exactly as we predicted - having (they thought) had their eyes ripped out by Dim Tim's Streetscene over the years, Wyre have now refused even to let Fylde onto the list of people that can submit a tender to empty Wyre's bins.

The great irony of all this is that Wyre actually got a good deal. Fylde's outturn (if you added it all together) will show a significant overspend on the cost of emptying Wyre's bins (and that amounts to a subsidy to Wyre taxpayers from those in Fylde), but Wyre thought the low tender price was a real one and, having paid highly over the odds for the extras, they have forgotten about the savings they made on the basic tender price,

The Recommendations to Fylde's Cabinet on Wednesday are

1. That Cabinet note the decision and the reasons announced by the evaluation panel of Wyre Borough Council not to include Fylde Borough Council on the Select Short List for the new waste collection contract from April 2012.

2. That Cabinet and officers provide all the support possible to Wyre BC and the new waste service provider to ensure a smooth transition from the existing contract to the new waste contract and in-house street cleansing service.


That's a solid kick in the teeth for Fylde, but nothing less than they deserve for making such a cock-up of contracting.

Councils, and especially small Councils like Fylde, are not structured and (thankfully) don't have the ethos to operate as businesses outside their patch in competition with commerce. If they did, they would already be businessmen making money for themselves, not Local Government Officers. And that's no slur on those who try, or who are forced to try, to do so.

The whole point of Local Government is that it ISN'T business. It is - (or at least it should be) - government, and there's a world of difference.

But sadly, things look as though they're about to get even worse at Fylde as they wake up a dormant shell company they created called "FBC Solutions Ltd" which we detail in Cabinet Misc March 11

But we conclude this article with the throwaway line in the report to Cabinet on Wednesday

Is absolutely pure David Brent.

After all the losses that have arisen from this ill fated adventure into cross border tendering for the work of others, and the - we estimate probably 1.5m it has probably cost us overall - they still have a sense of humour.

We need do now more than quote the conclusion of the official report..

"However, on the positive front, provision had been made in the approved budget for 2011/12 of 15,000 to support the preparation of a detailed tender document for the new contract, that will now no longer be required."

Yes really. That's what it concludes.

1,500,000 up the spout, but look - we've saved 15,000  isn't that good?

Dated:   20 March 2011


info@counterbalance.org.uk

To be notified when a new article is published, please email 
notify@counterbalance.org.uk