Call for fresh inquiry into debacle which left Cumbria County Council with £21m legal bill

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The causes of a catastrophic legal battle which left Cumbria County Council with a £21m legal bill should be subjected to a fresh independent review.

That's the view of Carlisle MP John Stevenson, who wants a “forensic” investigation of the debacle as fresh details emerged about the High Court dispute with roads contractor Amey – including an admission that officials do not know who made the decision to withhold a £4.6m payment to the firm.

It was that decision which triggered the costly High Court litigation.

One national campaign group described the council's handling of the legal wrangle as “extraordinary incompetence.”

A review of the dispute, carried out by another local authority chief executive, has left key questions unanswered.

Cumbria County Council confirmed that officers discussed the the non-payment decision with some councillors but they have declined to say who.

The council's ruling cabinet was not asked to consider the decision to not pay Amey for the final three months of its contract. The council has also confirmed that there was no legal risk-assessment made before withholding payment.

The dispute focused on claims that some of the work done by Amey as part of its £272m seven year contract was “sub-standard.”

After a 42 day trial, a High Court judge judge ruled overall in Amey's favour. The council has now published its "lessons learned" report but Mr Stevenson and South Lakeland's Tim Farron said more needs to be done.

Mr Stevenson described the council's conduct as “inept.”

He said: “This is so serious because there has clearly been a fundamental breakdown in corporate governance, which has caused a considerable loss to the taxpayers of Cumbria.

“It's financial ineptitude of the worst kind.

“It's cost taxpayers more than £20m – money that could have been spent on frontline services. I would therefore call for an independent external review by forensic accountants familiar organisations of this size who understand the governance issues involved.

“There is also the critical issue of political leadership, and the management of the council. Clearly, this has broken down.

“It's therefore vital that another review looks at the role played by the council's chief executive, finance officer, the leader of the council, and the holder of the finance portfolio at that time. Politicians and senior officers must be accountable.

“Decisions should be properly made and accounted for. If those involved are found wanting they should be called to account.”

The council's leader in 2012 was Conservative Eddie Martin, whose deputy at the time was Stewart Young, the current council leader.

Mr Martin said he was not told of the decision in 2012 to withhold Amey's £4.6m payment, a state of affairs he described as “bewildering.”

He said: “There is no paperwork to show who made the decision, as I recall it, and I find that surprising, not least because I and my deputy Stewart Young had frequent meetings with the chief officers to keep us abreast of what was going on.

“If the decision was made, I wasn't told about it.

“I truly am surprised because most senior officers and assistant directors were pretty good at keeping elected members informed. I would have thought a decision of that magnitude would have gone to the chief executive, and to the cabinet for approval.

“There should also have been a risk assessment.

“It's right to go down the lessons learned route, having this reviewed by an external and independent chief executive officer of many years standing, who is also a lawyer. I'm sure lessons will be learned.”

Mr Martin said while he regarded himself as a “middle of the road” Tory, he felt the experience showed the pitfalls of contracting out to firms such as Amey and suggested that such services can be provided more flexibly in-house.

Any in-house profits can be reinvested, benefiting council tax payers, he added.

Councils should have the right to stand up to contractors but such large firms can run rings round local authorities, Mr Farron believes.

“There should be an independent review,” he said.

The Amey contract that was at the centre of the legal wrangle ran between 2005 and 2012. The firm was responsible for maintaining was responsible for maintaining 4,800 miles of roads, 1,700 bridges, and 44,000 street lamps across Cumbria.

The conclusion of the High Court trial saw the judge ordering the council to pay Amey £11.6m, as well as its own legal costs, totalling £10m.

The council's lessons learned report, published this week, began by outlining how there were complaints about Amey's highways patching and street lighting work and as a result the decision was made to withhold the firm's final payment.

Attempts to settle the dispute failed and Amey launched its claim, asking the court to award it £30m while the Council submitted a counter claim for £20.7m.

“Being involved in major civil litigation of this scale was a new and unprecedented experience for the council,” states the report, explaining that the authority continued its efforts to settle the dispute while also launching its couterclaim.

On the decision to withhold Amey's final payment, the report says: “The total withheld from these last three monthly valuations amounted to circa £4.6m and was a decision made by senior officers following discussion with appropriate elected members.

“There is nothing specific in the 2012 cabinet terms of reference which would require the decision to withhold a payment to be referred to cabinet.”

The review found no written record of the decision to withhold payment. The report adds: “The decision to withhold payment was an officer decision, not a decision made by cabinet.

"A cabinet decision would ensure wider professional input and consideration. For example, cabinet reports routinely ensure professional input from legal, risk, and finance professionals with options fully considered and decisions documented.”

Any decision to withhold a contractor's payment should always be referred to the Council's cabinet, says the report.

Chloe Westley, campaign manager at the TaxPayers' Alliance, said: “This extraordinary case of incompetence has wasted tens of millions of pounds of taxpayers' money.

“Sunlight is the best disinfectant and residents in Cumbria deserve a thorough explanation of what happened and who is responsible.”

The Cumberland News was yesterday unable to reach Mr Young for comment.

The council's own lessons learned report was conducted following a review that was carried out, at the authority's request, by David Parr, the current chief executive at Halton Borough Council in Cheshire.

A qualified lawyer, Mr Parr's background is in planning, environmental and transportation law.

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