Council’s auditor Grant Thornton declare P & R contract was NOT value for money

After fourteen months the auditor of Folkestone & Hythe District Council accounts – Grant Thornton (GT) – has finally stated that the former gas contract with  P & R was NOT Value for Money (VfM).

In July 2019, the same month the P & R contract ended, an objection was made to the Council’s accounts for 2018/19. The objector raised the issue of the £1.5million pounds worth of overpayments made to P & R by all four councils who own East Kent Housing – (Canterbury, Dover, Folkestone & Hythe and Thanet Councils).

Between April 2017 and March 2019, FHDC paid P & R £1.2m according to their payment to supplier data. Of this amount approx £265,000 pounds were overpayments or duplicate payments.

The objector states it was not lawful for FHDC to pay P & R £265,000 of overpayments; and as such “contrary to law“, as per s28 of the Local Audit & Accountability Act (2014)

In February 2019, GT carried out an initial risk assessment  on the P & R overpayments and duplicate payments and identified a number significant risks in respect of specific areas of proper arrangements (VfM), using the guidance contained in AGN-03.

In March 2019 GT communicated the risks of VfM in their Audit Plan to the Audit & Governance Committee.  In July 2019, GT reported their findings in respect of these risks to the Audit Committee.

As GT were concluding their 2018/19 audit, GT identified a significant risk in respect of the management of the contract with P&R for the provision of central heating, gas and hot water repairs. The Council identified weaknesses in the management of the contract with P&R.

GT noted There have been a number of problems with the contractor during the year and “potential overpayments” had been made to P&R.

Now here’s the rub. East Kent Audit Partnership (EKAP) – who are Folkestone & Hythe District Council’s internal auditor – released a report on Oct 3rd 2018 titled:

• Contract Management of Planned Maintenance Contracts

which clearly states that both duplicate payments and significant overpayments  had been made to P & R.

One has to remember, Folkestone & Hythe District openly admitted that in 2017/18 and 2018/19 they did not hold a list of all their overpayments.

• The authority does not hold a list of all overpayments and I am therefore not able to provide it to you.  We have explored the available routes but we neither hold this information nor are able to generate it.

The lion’s share of the Council’s overpayments which amounted to approximately £265,000, were made in 2017/18 and early 2018/19.

With regards to the duplicate payments, this was not the same invoice being submitted twice, but rather charging twice for the same piece of copper piping, or boiler etc, as is made clear in the Oct 3rd 2018 report.

So, one has to ask:

• How can GT state these were “potential overpayments ” when the internal auditor – EKAP – state the overpayments were made?

• How can GT state these were “potential overpayments” when the council does not hold overpayment information nor is able to generate it, so cannot pass such data to GT?

At the beginning of Sept 2020, we wrote about the fact the four Councils who own EKH, tried and failed to recover the duplicate payments and significant overpayments of £1.5m made by them to P & R via adjudication.

There were two adjudication dates, the 1st was the 2nd August when the adjudicator found in favour of P & R. The second was August the 16th. FHDC and the three other owners of EKH counterclaimed, but failed to get their money back.

You do not go to adjudication for money that wasn’t paid out.

As such, FHDC cannot say they did NOT pay overpayments to P & R because why did they go to adjudication if there was no money paid?

The internal Auditor – EKAP – is certain that significant overpayments were made, as their  3rd Oct 2018 report states:

• Charges are being raised by the contractor for new heating installations and duly paid for work which has not been completed.

The report mentions overcharging 9 times and duplicate payments 9 times as well.

The Audit & Governance Committee, which will take place on the 30th Sept at 7pm,  will receive The Audit Findings for Folkestone & Hythe District Council and at page five and twenty six GT state:

• GT have now reviewed the arrangements in place for the P & R contract during 2018/19 and concluded that they were not adequate. To that effect GT are proposing a qualified “except for“ conclusion in respect of 2018/19.

In layman’s terms this means the P & R contract was NOT Value for Money.

GT have NOT concluded their investigations as they state at page 29:

• We are in on-going discussions with the Council on the matter; work surrounding the objection remains in progress.

The work is ongoing due to the fact the Council paid P & R for work they did not carry out and duly got paid for.

So, under s28 of the Local Audit & Accountability Act 2014,  the auditor Grant Thornton, has no choice – in our opinion – but to declare the overpayments made by the Council are “contrary to law“, as the council never clawed the overpayments back from P & Rs mother company Bilby PLC, but they were made.

The Shepway Vox Team

Dissent is NOT a Crime