Westminster Council lose millions of motorists money in Pay-By-Phone scandal

Westminster City council were the first and so far the only Local Authority in the United Kingdom to go completely cashless when it came to parking in the city. One of the key benefits in selling the idea to councillors and the motoring public was its cost savings. But we can reveal that Westminster City Council’s Verrus run pay-by-phone parking scheme is costing millions more to run than the old coin based parking meters.

After two years of research we have obtained all the invoices from Verrus sent to Westminster City Council, which from December 2008 – March 2010 amounted to over £2M. The latest batch of invoices covering April 2010 until March 2011 increased to a whopping £3.49M.

These figures far exceed the costs Westminster City Council were paying out to handle the cash from the now redundant parking meters, as a Freedom of Information (FoI) request revealed ( view FOI ).

The contract cost of running the Westminster Bullion services, with regard to Parking Meters, annually from 2005 were as follows:

2005 -- £470,877.16

2006 -- £444,278.12

2007 -- £430,949.48

2008 -- £170,427.92

2009 -- £52,991.64

Considering that one of the main reasons for the introduction of pay-by-phone parking was to achieve cost savings. Let us look at the maths. According to the councils cabinet paper it cost £3.6M to pilot and then roll out pay-by-phone across the city. Council officers claimed that the ‘cost savings’ of going cashless would mean they could recoup the £3.6M set up costs within three years.

The cost of handling the cash from the council’s parking meters never exceeded £500k per year, yet two and a half years since going cashless we learn that Verrus are invoicing Westminster City Council £3.49M in the last year alone.

The call centre charges

A large percentage of the costs Verrus are charging Westminster Council are for call centre charges.

Call centre charges are invoiced to Westminster Council when, for example a motorist has to register to use the pay by phone system. But the charges are increasing year on year even though Westminster Council removed its last coin operated parking meter back on the 6th May 2009. It would seem reasonable to assume that the bulk of new motorists registering to use the system would be at the beginning of its introduction, so you would be correct to question why Westminster are paying out increasingly more in call centre charges as the years go by.

Nutsville has learnt that Westminster Council officers had done a back room deal with Verrus to allow other London Authorities to use Westminster Councils pay-by-phone contract with Verrus. As other Local Authorities such as Islington, Enfield, Tower Hamlets and Spelthorne started to roll out the use of pay-by-phone parking across their own boroughs it caused more motorists to register with Verrus which in turn caused the call centre charges to Westminster Council to keep on rising.

Why have call centre charges at all?

Nutsville has checked with many other LA’s who use the Verrus pay-by-phone system and found that none of them were being charged call centre charges by Verrus. Even Local Authorities which are not using the original Westminster pay-by-phone contract are not paying Verrus any call centre charges for their pay-by-phone system.

We have also checked the UK’s three leading pay-by-phone competitors to Verrus, each one of them has confirmed to us that they do not charge Local Authorities call centre charges.

So how did Westminster City Council come to be not only paying call centre charges for motorists parking in its own borough, but also for motorist parking in many other boroughs as well?

westminster pay-by-phone sign phone 0207 005 0055

westminster pay-by-phone sign phone 0207 005 0055

 

islington pay-by-phone sign phone 0207 005 0055

islington pay-by-phone sign phone 0207 005 0055

In 2006 a pilot pay-by-phone scheme was trialled in Westminster at a cost of £408k, announced in this cabinet decision (source);

25-7-2006

Councillor Danny Chalkley, Cabinet Member for Economic Development and Transport and Councillor Colin Barrow, Cabinet Member for Finance and Support Services have made the following executive decisions on the above mentioned subject for the reasons set out below.

  1. That the Cabinet the proposal to run a trial of Pay By Phone technology for parking payments in two pilot areas – G zone and C2 zone be approved.
  1. That the award of a contract to Verrus (UK) Ltd for a 12-month period to cover the periods of the two pilots be approved.

That capital expenditure of £408k for two pilots be approved.

At the start of the pilot the council received opposition to the pay-by-phone system. It was often clunky and time consuming for first time uses to register. There was also opposition to not having a cash alternative when paying to park. The council needed a way to ‘sell’ this to the public; they did this through inflating figures on cost savings and using the old public persuader of fear of street crime.

There had always been a problem of thefts from the old coin operated parking meters, so it was time to bring the issue to the fore. The council laid the blame on the mysterious Albanian mafia running around the streets of Westminster pocketing £120,000 per week in £1 coins from the meters. The problem was the council had no idea of the amount of money being stolen from meters. With a bit of luck no one would ever question the figures the officers were feeding to the media, and the Councillors wouldn’t think of questioning their own officers.

So the truth behind the street crime story was that council officers had no idea how much was being taken from coin meters, and like many of the figures they come out with even to this day have little relation to fact.

An FoI request in 2010 asked the question;

How much money estimated to have been stolen by the “Albanian Mafia” annually from 2005?

The council replied with;

“It is not possible to provide you with the requested information.  This is because the parking meters in use by Westminster Council do not maintain a total of how much money has been paid into them.  This entails that it is not known how much money they contain at the time of any theft, and it is not possible, therefore, to calculate the amount stolen by a particular party or parties.”

But not knowing how much money was being stolen did not stop Westminster Council’s PR department from spining stories to help gain public acceptance and push the Verrus pay-by-phone parking scheme on to the streets.

BBC Nov 2006 (source);

“Alistair Gilchrist, from Westminster Council, said the thefts are costing the council as much as £20,000 a week.”

Telegraph April 2007 (source);

But according to Keith Banbury, chief executive of the British Parking Association, meters are vulnerable to vandalism and theft. Westminster council estimates that £50,000 a week is stolen from its machines alone.”


 

Westminster Councils Scrutiny Committee report May 2007 (source);

“Since 2004, the theft of cash from equipment had increased to a significant level primarily in relation to Parking Meters where the estimated weekly loss due to theft in the latter part of 2006 was over £100K per week”


 

The Reporter – Westminster Councils magazine April 2009 (source);

 

“Not having to use money for parking helps us to reduce crime and antisocial

behaviour. The reduction in theft from parking meters saves the taxpayer approximately £8 million per year.“

 

ConservativeHome – Cllr Chalkey April 2009 (source);

“One of the primary drivers was the estimated £120,000 per week being lost to organised crime.”

“In addition, the cost of collecting cash was £600k of council tax payers money.”

 

Remember through FoI we learnt that by 2009 the cost of collecting cash was just under £53,000 per year, and even at its peak never exceeded £500k per year.

Westminster Councils ‘Keep this’ leaflet 2009 -2010 (source);

“we’ve introduced cashless parking to stop the £7 million of your money that was stolen from parking meters every year” “Cashless parking = £3.806m savings’

“Replacing meters with cashless system so money isn’t stolen and doesn’t need to be collected.”

In the final 2007 report on pay-by-phone presented to cabinet everything was great with pay by phone parking, the pilot had gone ‘great’ the parking wardens thought it was ‘great’ and even those motorist who had managed to register thought it was ‘great’. It was ‘great’ that Westminster could get rid of its bullion operation; it was ‘great’ that those nasty Albanians could be stopped and it was ‘great’ that the number of issued Penalty Charge Notices had not been affected (source).

The report admitted that by changing the locks on the parking meters it had thwarted the Albanians, but councillors were warned the Albanians would be back, and perhaps just like the sand people, they would be back in greater numbers. There could be no on street alternative for motorists who wanted to pay cash such as Pay & Display machines, as the report warned the pay and display machines would simply be a bigger prize for those igneous Albanians.

There is no indication in the final report on what evidence the officers had made their assumptions, going cashless was the only way.

So the die was set, with plans to offer the Verrus pay-by-phone contract to Westminsters fledgling parking quango Partnerships in Parking (PIP).

In Febuary 2008 Verrus was awarded a framework contract procured by Westminster Council which would run for 5 years and allow an extension of a further 2 years if required. Westminster Council awarded Verrus the contract because they say it was the most economically advantageous tender, but to who? The total value of the contract was £2.5M, so you would expect, would you not, the annual invoices to Westminster to be no more than £500k per year, not £3.49M as invoiced by Verrus in the last financial year.

Leith Penny, Westminster Councils Strategic Director for City Management has in his ‘right numbers in the wrong place parking report spreadsheets that the pay-by-phone call handling charges for the four years thus far comes to nearly £8m. As the councils 5 year life of the Verrus pay-by-phone contract value was to be £2.5M and considering that at the most recent scrutiny committee meeting Penny confesses that their assumptions were woefully inadequate as far as parking income was concerned, it would be a shame to buck this trend on incorrect assumptions:

If the council and their officers in defiance of what the EU Commission were told by the UK Government, which was that the Verrus pay-by-phone contract would end on the 29th January 2012 and council officers still persist with this contract by extending it for a further 2 year term, (as Nutsville has recently learnt from a mole in Westminster), this contract will end up costing the residents of Westminster approximately £14M pounds.

So Verrus stand to earn £14M out of a contract estimated to only be valued at £2.5M, and those council officers had the cheek to suggest that the Albanian mafia were the highway robbers.

How did Westminster City Council officers get their sums so wrong, and is their failings connected to why they were so obstructive when we wanted to see copies of the Verrus invoices? Officers knew they were breaking criminal law by preventing Nutsville access to the invoices but continued to stubbornly refuse to cooperate. You must draw your own conclusions as to the officers’ behaviour and their abilities in predicting parking revenue and expenditure.

Perhaps one way the council officers could claw back some of the millions paid to Verrus would be to introduce some extra parking hours, say on a Sunday and perhaps even weekday evenings.

The real reason PiP was set up

 

Before PiP came into existence London Councils were working on a similar idea to encourage all London Authorities to join them in a purchasing group. But London Councils were taking their time setting up their group as they ran into a legal snag concerning how data could be shared across the London boroughs.

London Councils could see the sense of having one London wide phone number for pay by phone parking and motorist only having to register once when parking in different boroughs. But they wanted to explore the Data Protection Act issues of sharing that data with several pay-by-phone operators and LA’s.

It seems Westminster Councils solution was to set up their own club (PiP) get in there first and offer its members use of their contracts such as their new Verrus contract.

Without seemingly much caution Westminster Council jumped in with expensive consultants ( source ) and set up PiP, with of course themselves in control. Data Protection is really for sissy’s anyway, and no one would dare ask questions of Westminster, they ‘were’ the kings of the parking business. Who could have expected that all of their contracts would end up being brought to the attention of the EU Commissioners?

Setting up PiP cost over £1million of taxpayers money: £675k from Department of Communities & Local Government and £400k in partnership fees.

Anyone who asked about PiP was told it was set up to ‘save money’ for Local Authorities who by joining PiP could use any of the quangos’ framework contracts and avoid the expensive costs of tendering their own contracts and it had the potential to bring in an era of harmonisation between London boroughs as far as parking was concerned. We were later to discover that joining PiP wasn’t even a requirement to use their contracts, so much for the £1,168.50 per day consultant (yes you read that figure correctly, it’s not a typo) brought in by Westminster Council to set up this quango to run in a professional and legal manner. To this day it is not clear what this consultant actually achieved for the taxpayer.

We do know that PiP was intended to be big, with certain Westminster officers showing unfettered megalomaniacal behaviour set on rolling out PiP to be the UK wide parking quango of choice. This would have meant that those parking companies lucky enough to have contracts already set up with Westminster Council were in at the ground floor and about to step in the lift with Westminster to take them to huge financial gains for both parties. Yes, lovable old Westminster Council were about to make money from their own fellow local authorities tempting them with off the shelf contracts with companies chosen by Westminster Council which were subsidised by the taxpayers of Westminster. Not only that but Westminster Council were also milking those ‘fellow’ PiP members in annual subscription payments and commission payments from the contracts Westminster Council told them to use. This was in express violation of the Local Government Act 2000 section 3 subsection 2. The power under section 2(1) does not enable a Local Authority to raise money (whether by precept , borrowing or otherwise). See RMP –V- Laml.

Because of complaints to the EU Commissioners, Westminster Council were forced to stop charging fellow London boroughs’ commission, which left them now with a rather un-lucrative Verrus contract. Westminster Council are left still paying the other LA’s call centre charges but they are not able to invoice them for commission payments. That is why Westminster Council is paying out increasingly high charges to Verrus.

Promised cost savings went the same way as the old parking meters, on the scrap heap.

Dam they’ve found out about our slush fund

How could anything else go wrong, well it did when Nutsville obtained secret minutes from the PiP management board meetings. The management board of PiP consists of unelected council officers who because of their long standing friendships with members of the parking industry can set the course for PiP members to follow.

PiP an organisation which is not legally supposed to be making profits, was as this quote shows from their own minutes caught red handed doing just that.  So they decide to donate the illegal profits to ‘worthy causes’;

“…boroughs were asked to note the surplus and that we should look to put forward proposals at the next Board Meeting to make effective use of the funds available.   Some of the motorcycle campaigners have noticed these funds and are stating that PiP is a money making organisation.  To quash this, it would also be advisable to allocate Development Fund Contribution to worthy projects. (Source )

Not surprisingly, we have never been told what if any ‘worthy projects’ benefited from the PiP slush fund, drinks all round perhaps?

It’s every man for himself, run for it!

Other interesting points from the above minutes are that Barnet Council were on the verge of joining PiP but never did. Barnet council have since rolled out pay-by-phone parking with guess who, yes Verrus. Barnet’s contract with Verrus is about to be reported to the EU Commissioners. Hammersmith & Fulham were waiting for the outcome of the EU complaint before making a decision to join PiP, they’ve also now wisely run a mile.

Camden council, although still a member of PiP decided to buck the trend and procure their own pay-by-phone, this time with a rival provider.

In July the board of PiP were told of Richmond and Enfield’s withdrawal from PiP and now at the latest board meeting Tower Hamlets and Croydon have also left, heeding the advice of Nutsville to leave this partnership as enough public money has already been spent on it.

Last September (2011) Nutsville attended the most recent PiP board meeting, where a comedy sketch was played out before us. There were not enough PiP members to form a quorum to elect a new chairman of the board. It seemed that with so few members attending it would not be possible to elect a new board chairman, so PiP would finally cease to be. Everyone in the room knew this, but nevertheless led by the head of PiP’s programme management board, Mark Edwards, members and non members of PiP managed to elect Barry Tebbut of Havering Council as their new chairman. Despite Havering not even being members of PiP and after Barry explained at the start of the video that Havering was very likely to be leaving PiP.

PiP member Lambeth didn’t send anyone who could legally vote yet Lambeth Councillor Nigel Haselden votes anyway after declaring he does not have voting rights.

It was clear from the video we shot that the officers were very keen to keep PiP going, at whatever cost and no matter how crazy it all looked.

As for the borough who started PiP, well their board member Councillor Lee Rowley hasn’t attended a single PiP board meeting since taking over the cabinet post for parking with Westminster. It could be said of Cllr Rowley to be a dereliction of his duties, as one of his duties according to the Leader of Westminster Council, Colin Barrow is that Rowley has responsibility to attend the PiP board meetings.

Funnier still is that PiP’s head of the management board Mark Edwards had already given a months notice and promptly left PiP the day after this video was shot. Edwards never told any of the PiP board members at the meeting that it was his last day with PiP.

So why did the few remaining councillors who attended the last PiP board meeting go along with the farce? Apparently they told us it was out of a sense of loyalty and respect to the outgoing chairman, Archie Galloway representing City of London.

It must by now have dawned on these remaining PiP councillors that they have been left hung out to dry having had their purses raped by Westminster Council. It certainly has dawned on Archie Galloway who in a letter to Colin Barrow let him know in no uncertain terms what he thought of their friendship after being left holding Barrow’s PiP baby.

PiP still limps on with Lambeth Council employee Des Crehan replacing Mark Edwards as PiP’s programme manager. When Crehan learnt of our video he claimed we would not be allowed to film any of his future PiP meetings. Crehan has since ignored FoI requests and childishly refused to say who were the new Local Authorities interested in joining PiP.

Those London Authorities that Crehan doesn’t want us to know are part of the South East London Procurement Group (SELPG)

Bexley, Bromley, Greenwich, Lewisham, Southwark

It is our civic duty to make those authorities fully aware of the antics of PiP and ensure that Lambeth and Westminster do not get their money grabbing hands on those LA’s in pursuit of flogging  the PiP dead horse.

It’s perhaps a shame that Des Crehan has started off in his new job unaware that Lambeth bought pay and display machines illegally through PiP using a contract from Westminster which only Westminster Council could use. Or that Lambeth’s roll out of Verrus run pay-by-phone parking in Waterloo using Westminster’s framework contract will meet with an EU challenge.

Could Crehan not really be aware that the British Government told the EU Commissioners’ that the Verrus contract would come to an end on the 29th January 2012 a year early, when he allowed Lambeth to call off a year long contract with Verrus under Westminster’s PiP framework agreement?

So Lambeth council and Westminster council are on notice that they will have to answer further questions from the EU Commission with regard to the framework contracts they have undertaken and with regard to the running of PiP.

Nutsville understands that Westminster City Council is to change the wording on its crest to ‘Stand and deliver’.

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2 Comments

Julian SilvermanDecember 19th, 2011 at 6:25 pm

A wonderfully clear and well-researched exposure of an outrageous scandal. Well done for your efforts. We, in Barnet are just at the beginning of this nasty tale, but we’re trying to fight it.

NutsJanuary 6th, 2012 at 6:12 pm

Thanks

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