The Westminster City Council officer who saved taxpayers a bit of money all by himself
Last week the West End Extra newspaper revealed that Westminster City Council had made an overpayment of £144,000 to its pay-by-phone contractor.
Leith Penny, Westminster Councils Strategic Director for City Management said the overpayment was discovered after he had instigated an internal audit by the councils’ auditors RSM Tenon. He added it was normal procedure to call in the auditors when a contract is coming up for a re-let, such as the pay-by-phone contract.
RSM Tenon found that the councils Pay-By-Phone parking supplier (formerly known as Verrus) now owned by PayPoint incorrectly calculated the call center charges being invoiced to the council.
After Councillor Paul Dimoldenberg asked for further details of the discovery Penny revealed that it was the pay-by-phone suppliers themselves who alerted the council to the overcharging saying “We were being overcharged, but not for the reasons or to the extent alleged, and it was PaybyPhone themselves (Verrus’s successors) who drew this to our attention”.
The allegations Mr Penny is referring to relate to a Nutsville post titled “Westminster Council lose millions of motorists money in Pay-By-Phone scandal”, which we wrote in December last year.
Leith Penny said at the time about our allegations that they were “entirely without foundation” and later went on to brand them as “wild allegations”.
So it would look to be all hail Leith Penny for commissioning the internal audit off his own back, or with a clue from Verus. Perhaps he deserves a bonus for his sterling work in uncovering the overpayment thereby saving us the taxpayer £144K, except Westminster Council don’t pay bonuses, or do they?
We published our post back in December 2011 which was just about 20 months after we formally informed Westminster City Council by way of a letter (view source letter it’s scary) detailing our concerns sent to both the District Auditor and the Council. Four months prior to sending the letter of objection we had spoken to a senior council officer, who even checked with other local authorities known to be using the Verrus pay-by-phone contract to confirm that none of them were paying call center charges. That gave the council two years of prior notice before Leith Penny, after having dismissed our findings, took action. The Inspector Clouseau of council officers then claimed it was everything but Nutsville that led to the discovery of the overpayments.
Along with Leith Penny’s earlier dismissal of our claims of call center overcharging Westminster Councils top legal brains had also dismissed our objections to the accounts arrogantly telling us at the time, they were not even sure they were really objections.
According to Mr Penny our “wild allegations” in our December post were of an altogether different order. If the council had nothing to hide we do wonder why Westminster Council refused for so long to show us any invoices from Verrus, causing month upon month of needless delay for something they claim was unfounded. So it is a pity we cannot claim to have saved the tax payer £144,000, as just five of our objections alone have cost Westminster City Council £54,860 in auditing fees so far, which is more than 10% of the total District Auditor fees for the council.
We remain just as confident that Westminster City Council taxpayers are paying millions more than they should be for other boroughs call center fees.
How did Westminster Council end up paying call center charges?
This came about because of the now failed and abandoned Partners in Parking (PiP) quanqo Westminster Council set up and ran as the lead authority.
- Islington, Tower Hamlets, Lambeth, Spelthorne, City of London and Hackney councils were all using Westminster Councils pay-by-phone contract. All are using the same 0207 contact phone number (we go in depth in this post).
- Westminster’s framework contract with Verrus says quite clearly “If the City Council or other Local authority adopting the contract wishes to use a geographical number for the Touchtone system, then Verrus will look to charge an additional fee to meet the cost of any terminating costs that may apply to such a number” (view source).
- None of the other Councils who use the Verrus pay-by-phone system are being charged call centre charges by Verrus. (we have checked their invoices)
- The contract cost to Westminster City Council has jumped from the original tender price of £2.5M to over £8M at the same time as other boroughs make more use of Pay-By-Phone parking through Verrus.
Paying the call center charges of other Councils would not have been a problem for Westminster taxpayers had the PiP quanqo carried on as originally planned. This is because in the PiP partnership agreement at (page 36) “in the case of any new Partner Authority joining within one year of the Commencement Date, the Partnership Development fee shall be 1% of the total value of all services and/or supplies procured through all Specific Contracts entered into by such New partner Authority during its participation in the partnering Arrangement and..” it goes on to say that new members joining in year two and after get to pay 2% of all contracts used.
So that’s how Westminster City Council were going to get the call center charges back, if only we had allowed PiP to continue.
Now there is no need to take our word for all this, as the District Auditor has published this (view source, it’s also scary):
“Internal Audit’s recent report on the pay-by-phone parking services contract identifies significant examples of non-compliance with the proper procedures required by the Council’s Procurement Code and internal financial regulations, in particular for:”
- contract variation, where the contract value has increased from £2.1m to £7.7m over the financial years 2007/08 to 2011/12 without appropriate control, authorisation and reporting; and
- payment validation, where the Council appears to have relied on the accuracy of information provided by the contractor, without verification.
We are not the only ones who find it difficult to get straight answers from the council either, as the District Auditors say in this years report “I have also continued to experience delays, in some instances, in the receipt of information from the Council. I am also concerned with the quality of the Council’s responses to my enquiries in some instances.”
Tut, tut, so much for a new era of openness and transparency.
Leith Penny’s explanation for the millions of pounds difference in the pay-by-phone contract value is mainly down to how popular it has become, and this could not have been anticipated at the time. Can you imagine being in the private sector and awarding a contract for £2.5M on the grounds of value for money and cost savings and later discovering it cost over £8M?
Penny also says the introduction of motorcycle parking charges contribute to the increase use of Pay-by-Phone. Both statements are true, but whether you accept those two factors account for such an enormous increase in fees and the fact that the other boroughs are not paying these call center charges must cause a wise man to demand a better explanation.
Plans for introducing cashless parking had been circulating City Hall for years. Even the motorcycle charging scheme (the cause of a lot of Westminster Councils current woes) would only account for around a mere £500,000 extra transactions over the life of the pay-by-phone contract. Hardly two trends which could not of easily have been anticipated. But what really could not have been anticipated was having the councils money earner PiP cruelly snatched away from them, because according to the EU Commissioners’, it was illegal, game over.
So who is pulling whose leg here?
Perhaps one easy way to reduce call center charges would be if Leith Penny himself handled the calls, imagine that.
If you have a story you think we would be interested in please email: