Tuesday, 17 April 2018

Uncontested council contracts "extremely rare"


The decision by Scottish Borders Council to extend a lucrative waste recycling contract without going through the tendering process is "extremely rare in local government", Not Just Sheep & Rugby has been told.

And research suggests that in the five years from January 2013 to December 2017 only one other Scottish local authority announced its intention to award an uncontested contract. However, in that particular case the value of the work was below the threshold covered by European contract rules.

As we reported recently SBC has issued two so-called VEAT (voluntary ex ante transparency) notices via the Public Contracts Scotland website during the last twelve months, the second one earlier this month. On both occasions contract extensions have been handed to J & B Recycling Ltd., of Hartlepool without inviting rival bids.

The company has been hauling mixed dry recyclates from Borders waste transfer stations the 110 miles to Tees-side since 2011 when it was appointed as a sub-contractor to New Earth Solutions, the now bankrupt and dissolved waste treatment "specialists".

The arrangement continued following the collapse of the SBC New Earth deal in 2015. The mixed consignments of recyclable garbage are transported south after the council has collected the rubbish from communities throughout the region.

Critics argue that an alternative haulage firm might have been able to submit a lower tender while there are treatment centres in closer proximity to the Scottish Borders than the Hartlepool facility.

On the other hand the council claim in their latest VEAT notice that the selected award procedure for the £300,000 a year contract can be justified due to "extreme urgency brought about by events unforeseeable for the contracting authority and in accordance with the strict conditions stated in the Directive.

"Explanation - Scottish Borders Council is in the process of reviewing future requirements for all Waste Management Services. During this period the highest priority for the Council is existing service delivery. Therefore until the new Waste Management Plan is fully implemented and to avoid a disproportionate impact on current waste operations it is necessary that existing arrangements relating to service provision continue."

There were no VEAT notices issued by any local authority during 2013, 2014, 2015 and 2016. So the 2017 notice posted by SBC was indeed a rare event.

The second 2017 notice emanated from Aberdeenshire Council under the heading Laurencekirk Affordable Housing. As stated earlier, in that case the value fell below the European procurement regulations and directives.

A procurement expert told us: "VEAT notices are only used in very rare circumstances when directly awarding or extending contracts in exceptional circumstances. I see no justifiable rationale for directly awarding to J&B.

"They collect from waste transfer stations and do not do the collections; therefore any other operator could have done this without disrupting waste collections or strategies. It seems SBC have done this for convenience."

The expert explained it was open to anyone who felt aggrieved by the lack of competition to report the matter to Audit Scotland with a request for an investigation.

Objectors could highlight the alleged lack of regard for the procurement regulations (i.e. open, fair, transparent process). The consequences for the Borders public could be not obtaining best value.

"A couple of other points relate to potential disregard for air quality via carbon emissions through transporting such long distances when other facilities are available much closer to the Borders", added the expert. "A local company may have wanted to tender for this and have therefore been denied an opportunity."

Sunday, 15 April 2018

Borders recycling contracts awarded without competition


The collapse of Scottish Borders Council's waste management strategy in 2015 when a £65 million contract with a debt-ridden treatment business had to be abandoned has apparently forced the local authority to award valuable recycling contracts without exposing the work to competitive tendering.

This month for the second time in a year SBC has published a notice confirming that their long-standing contract for dealing with so-called dry mixed recyclates will continue to be in the hands of J & B Recycling Ltd, of Hartlepool without rival firms having the opportunity to bid because of "special circumstances".

Since that company became sub-contractors to New Earth Solutions, the now defunct firm chosen by councillors to solve the Borders' waste treatment problems, collections of domestic recyclable rubbish have been hauled 110 miles by road to the Tees-side facility. It seems this is the most cost efficient method even though there are treatment plants closer to the Borders than Hartlepool.

In April 2017 SBC published an extremely rare voluntary ex ante transparency(VEAT) notice.

This notice indicated that Scottish Borders Council intended to contract with J & B Recycling Limited for the continuation of the current service.The work has an estimated cost of £300,000 per annum (including haulage from the Council's Waste Transfer Stations to Hartlepool). The contract  duration would be up to 3 years.

So what was the justification for the selected award procedure?

According to the notice:"Scottish Borders Council is in the process of reviewing future requirements for all Waste Management Services. During this period the highest priority for the Council is existing service delivery.

"Therefore until the new Waste Management Plan is fully implemented and to avoid a disproportionate impact on current waste operations it is necessary that existing arrangements relating to service provision continue. A detailed options appraisal has been conducted which confirms that this approach is the most appropriate solution delivering best value while meeting the necessary requirements of the Public Contracts (Scotland) Regulations 2015."

The Borders council has been working on a waste strategy for well over a decade, and their decision to link up with New Earth Solutions in 2011 cost local taxpayers at least £2.4 million when a planned project to build a £23 million treatment facility at Galashiels collapsed in disarray without a single brick being laid.

Now another VEAT notice has appeared on the Public Contracts Scotland website indicating the "award of a contract without prior publication of a call for competition in the Official Journal of the European Union".

The reasons cited on this occasion: "Extreme urgency brought about by events unforeseeable for the contracting authority and in accordance with the strict conditions stated in the Directive Explanation - Scottish Borders Council is in the process of reviewing future requirements for all Waste Management Services.

"During this period the highest priority for the Council is existing service delivery. Therefore until the new Waste Management Plan is fully implemented and to avoid a disproportionate impact on current waste operations it is necessary that existing arrangements relating to service provision continue."

A public procurement expert contacted by Not Just Sheep & Rugby offered the following opinion on the April 2018 VEAT notice: "Looking at the notice I do not believe the reasons are justified for the application of section 6 of the Procurement Regulations (Scotland) 2016. Paragraph (1)(c). The Regulations go on to state: (3) For the purposes of paragraph (1)(c), the circumstances invoked to justify extreme urgency must not, in any event, be attributable to the contracting authority.

"The circumstances stated in the notice do not comply with the regulations.This is simply poor planning.The council would have known for some time the strategy would not have been ready.

"In addition any strategy would have included a requirement for an interim arrangement during a transition period. (i.e. if they were going to build their own facility or use a third party, they would have needed to continue to dispose of the recyclables with a provider; therefore requiring a tender process). They could simply run a tender process for a short period of time."

COMING NEXT: How often have Scottish councils used VEAT notices in the last five years?

Saturday, 7 April 2018

Borders taxpayers at least £500 better off!


A widening gap between average Scottish and English council tax bills means residents in Band D properties in Coldstream will be more than £500 better off this year than their near neighbours in Cornhill village across the Tweed.

The council tax comparisons for 2018/19 give the lie to recent claims in the Right Wing press, and by Conservative politicians that taxpayers north of the Border were about to be hammered by Scotland's SNP Government.

Much has been made about new Scottish income tax rates which will see those earning £40,000 having to pay an extra £70 a year (that equates to £1.34 pence per week).

In an article in this Friday's Scottish Daily Mail, the leader of the Scottish Conservatives Ruth Davidson wrote: "From today anyone earning over £26,000 will see a rise - and that's before you take into account council tax hikes too".

But someone should have pointed out to Ms Davidson that average council tax rises in Northumberland - governed by her party from Westminster - will hammer hard working families to the tune of up to £88, even more than the SNP's additional income tax demands for those on £40,000 per annum.

It is also highly unlikely that residents of Band D properties in rural Northumberland will be in the £40,000-a-year bracket, so their budgets will be stretched even further after Westminster allowed English local authorities to let rip with inflation-busting council tax increases.

Research shows that householders in Coldstream, where council tax rises for 2018/19 have been restricted to three per cent by the SNP Government face a Band D "hike" of £35 to £1,150. Less than a mile away in Cornhill, governed from Westminster by the Conservatives, Band D bills have been increased by £88 to £1,764. The difference of £614 is equivalent to around £12 per week!

Similar rises have been imposed by Northumberland County Council across their territory. In Berwick-on-Tweed the new Band D level is £1,821 (+£87, and in the parish of Carham, close to the Scottish border, the bill will be £1,762 (also +£87).

While the Scottish Government has strictly controlled council tax rises in each of the last two years after a series of 'freezes' which saved taxpayers hundreds of pounds, the situation is starkly different in England.

There the 2010/11 average Band D figure of £1,439 was already higher than the current Scottish bill. And average "hikes" of £61 (4%) in 2017/18 and £80 (5.1%) in 2018/19 have taken the demands on a typical Band D property in England to £1,671.

A local government expert told us: "People living in Northumberland and elsewhere in England will be outraged if they realise they are paying over £500 extra each year for their shrinking council services. English council taxpayers do not enjoy a superior service to their Scottish counterparts so they deserve to be told why they are having to fork out so much more."

This month English residents also face another "hike" in NHS prescription charges. The new charge of £8.80 per item is 19% higher than it was in 2011 when the Scottish Government abolished the charges.

Meanwhile Scottish students attending Scottish universities will continue to benefit by being exempt from tuition fees. Their English counterparts will continue to pay up to £9,250 a year for their education.

Monday, 2 April 2018

Tapestry project £1.4 million cheaper this time


The cost of developing a visitor centre to house The Great Tapestry of Scotland in Galashiels is expected to be £4.6 million - considerably cheaper than the estimated £6 million needed to provide the now abandoned custom-built facility at nearby Twedbank.

A new set of tender documents for the town centre project was published by Scottish Borders Council on the Scottish public procurement website on Easter Saturday. The same notice also appears in the Official Journal of the European Union (OJEU).

Bidders have until May 14 to submit prices for the work with the council hoping to attract bids from five contractors.

The contract notice says Scottish Borders Council (SBC) has recently committed to the delivery of a new high quality and permanent visitor attraction in a strategically important area of Galashiels (Channel Street/High Street, linking the old and new town developments that will provide the permanent home for the Great Tapestry of Scotland (The Tapestry).

The Tapestry is described as a unique community arts project to stitch the entire story of Scotland from pre-history to modern times. The Tapestry is a linear pictorial history of Scotland depicting key events going back 12,000 years. It is also the world’s longest tapestry at 143 metres (469 ft) and consists of 160 separate panels.

Description of the procurement

The new Great Tapestry of Scotland will be an internationally important visitor attraction and a strategic asset of architectural importance to the Borders. It will provide a bespoke solution for the display of the Tapestry and become an instantly recognisable setting to local, national and international audiences.

The design proposes that existing retail premises at 14-20 High Street (which will be demolished through an advance works contract) become the primary site for the new 2 storey tapestry gallery is constructed on this prominent site at the corner of Channel Street and Sime Place linked back to the refurbished former B Listed Post Office building.The proposed site is a prominent key nodal point within the town of Galashiels, and is located at the corner of Channel Street and Sime Place.

An existing retail property (located at 14-20 High Street) will be demolished through an advance works contract which will commence in April 2018. On this cleared site, a new two storey tapestry visitor attraction will be constructed, comprising the main tapestry gallery (located at first floor level) with associated cafĂ©, shop, temporary gallery space and ancillary support areas located at ground floor level. 

In addition, the adjacent Grade B listed former Post Office building, will be refurbished and brought back into productive use to supplement the Tapestry proposals. An active Post Office sorting office and operational depot will remain in use throughout the duration of the contract.

The site sits within a Conservation area that will require the design to provide a considered and positive response to the surrounding environment. Overall, the design will deliver a high quality finish that takes account of the built environment, and also improves the quality of the town centre environment.

Value and duration of the contract

Estimated value excluding VAT: £4 600 000.00 Duration in months: 16.

The original contract notice for the Tweedbank site, published in September 2015 declared: "Scottish Borders Council (SBC) has recently committed to the delivery of a new building on land owned by Scottish Borders Council at Tweedbank that will provide the permanent home for the Great Tapestry of Scotland.

"The new Great Tapestry of Scotland Museum will be a high class visitor attraction and an asset of architectural importance to the Borders. It will provide a properly designed solution for displaying the Tapestry and be an instantly recognisable setting to hold Local and International events.Estimated value excluding VAT: £6 000 000. 

Sunday, 1 April 2018

Borders textiles and the missing Chinese tariffs


The fraudulent avoidance of United Kingdom customs duties - estimated at 1.87 billion Euros - by a tidal wave of Chinese imports of clothing and footwear may have caused economic harm to textile and knitwear businesses in the Scottish Borders and the rest of Scotland.

A set of disturbing results from investigations by the European Commission Anti-Fraud Office (OLAF) and by the European Court of Auditors has received scant attention from the mainstream press and media.

But the apparent lack of financial controls by the UK Government on shipments of textiles from China does not generate confidence over what might happen post-Brexit. Britain is already being asked to make good the missing duties and VAT to EU coffers.

The Commons European Scrutiny Committee has expressed concern over the contents of the European documentation, and has been less than satisfied by explanations tendered by Westminster politicians, including Treasury minister Liz Truss.

According to the Committee, the most important element of the Commission’s Report is its description of a two-year investigation into HM Revenue and Customs by OLAF. It concluded that HMRC had enabled importers of Chinese textiles and footwear to evade customs duties totalling €1.87 billion between 2013 and 2016. 

In response to these findings, it asked HMRC to take “all necessary actions” to stop the fraud from reoccurring, and to take “all appropriate measures to recover the customs duties evaded to the extent possible”. Separately, the European Commission has asked the Government to compensate the EU for the loss of these customs duties.

After being told of the European allegations, the Commons Committee declared: " The Commission has publicly warned that the UK may face an infringement procedure before the European Court of Justice for its failure to apply EU customs law and compensate the EU for the customs duties that were allegedly evaded.

"In view of the background to the allegations against HMRC, the potential implications of this dispute for the UK’s public purse (including any compensatory payments into the EU budget for the missing customs duties), and setting it in the wider context of possible negotiations on a new UK-EU customs partnership , we are asking the Minister to clarify [a number of matters].

From the documentation made available by OLAF and the European Commission, it appears HMRC was warned repeatedly from 2014 onward about the weaknesses identified in the valuation of imports from China without the necessary measures being taken to address the problem. A spokesperson for OLAF said: “Despite repeated efforts deployed by OLAF, and in contrast to the actions taken by several other Member States to fight against these fraudsters, the fraud hub in the UK has continued to grow.” 

In a letter to the committee Ms Truss claimed that, while not disputing (widespread) undervaluation fraud at UK ports, the Government "does not recognise OLAF’s estimate of total customs duties evaded but is unable to provide a different estimate until 'individual cases' have been pursued to their conclusions based on their own facts”. The Minister also argued that the dispute would not have an impact on any forthcoming negotiations with the EU on a post-Brexit customs partnership,  as it related to “historic transactions”. 

In response the committee stated: "We thank the Minister for her response to our questions on OLAF’s allegations. It still leaves questions unanswered about the scale of undervaluation fraud on imported goods at the UK border. 

"We are also concerned that the European Commission by November 2017 was still of the view that widespread undervaluation fraud at UK ports had not been addressed. The Court of Auditors also found that HMRC’s approach to Chinese textiles imports had led to trade diversion, apparently to benefit from the opportunities to avoid duties when seeking customs clearance at UK ports."

And the committeeIn a blunt warning the committee continued: "As we have noted before, the dispute could give rise to a considerable payment from the UK public purse to the EU budget to compensate for the duty loss. In addition, after the UK leaves the EU Customs Union and ceases to make direct contributions to the EU budget, undervaluation of imports would present a direct loss to the Exchequer as customs duties collected by HMRC would be retained entirely by the Government. It is unclear to what extent undervaluation fraud at UK ports has been able to take root precisely because the fiscal losses accrue to the EU budget, and not the UK Exchequer."

The serious issues revealed by the investigations have now been referred to the influential Public Accounts Committee and to the Treasury Committee.

The sheer scale of the problem was highlighted in the special report from the European Court of Auditors.

It claimed: "The values declared on the basis of fake invoices were undervalued from 5 to 10 times with a significant impact on customs duties and taxes collected. From the period 2007-2016 on the five Member States selected by the Court. Member States which implemented thorough release controls on undervaluation of textiles and footwear from China saw an increase in the average declared import prices but experienced a decrease in the volume of imports.

"The increase in the volume of imports in the UK was 358 000 tonnes, while the overall decrease in the other four Member States was 264 000 tonnes. According to OLAF, “the UK should have made available an estimated amount of 1.9874 billion euro (gross), or 1.5736 billion euro (net), more than it did from 2013 to 2016.

Tuesday, 6 March 2018

Regulator urged: "End this scandal now"


Financial advisers who persuaded unwitting clients to invest millions of pounds in unregulated offshore funds like the one chosen by Scottish Borders Council to bankroll a £23 million waste treatment facility should be banned from the sector, it has been claimed.

It follows the latest revelations involving the liquidated New Earth Recycling & Renewables [Infrastructure] fund (NERR) which loaned over £30 million to insolvent waste management contractors New Earth Solutions Group (NESG).

Back in 2011 NESG was handed a 24-year £80 million contract by Borders councillors to solve the region's refuse disposal problems before landfilling of rubbish is outlawed in a few years time.

But the deal had to be abandoned in 2015 when the local authority finally realised NESG and its "funders" NERR were incapable of delivering the planned treatment plant on a site at Easter Langlee on the outskirts of Galashiels.

While the contract was 'live' over a four year period SBC provided credibility for the useless partnership to lure hundreds, if not thousands, of investors to sink their savings and pension pots into what turned out to be a bottomless pit. At the same time the council squandered £2.4 million of taxpayers' money pursuing their dream which developed into a horrific nightmare for all concerned.

The latest tragic story resulting from Isle of Man-based NERR's collapse has been told by The Sunday Times, which had already uncovered other tales of woe linked to the New Earth businesses.

Meanwhile liquidators financed by the Manx financial services regulator continue to pore over 200,000 documents in a bid to establish the reasons for NERR's catastrophic collapse which has left more than 3,000 investors out of pocket. Action may be taken against the parties responsible.

The Sunday paper's latest expose centres on friends Jackie Naghten and Louise Brassey, two clients of adviser Terence Brimble, who lost over £650,000 of pension savings they invested on his recommendations, with fees totalling £100,000.They ended up having to claim on the Financial Services Compensation Scheme (FSCS), receiving the maximum £50,000 each.

The newspaper told how Naghten and Brassey, sought advice from Brimble in 2011 - the same year SBC awarded New Earth that £80 million deal - after their employer offered an enhanced defined benefit transfer value. 

The pair described themselves as low to medium-risk investors. However, Brimble recommended they invest in a "high-risk, unregulated offshore fund called Premier New Earth Solutions Recycling Facilities". Over the following five years the fund’s value fell by 35%. The fund was suspended in 2014. It collapsed in 2016.

. According to the FSCS, Naghten’s lost a total of £471,462 and Brassey lost £181,698, as a result of Brimble’s advice.

Speaking to The Sunday Times Brassey, said: ‘At no time did [Brimble] tell me New Earth was high-risk, but actually sang its virtues, saying he had his entire pension invested in it. At no time did he say it was unregulated.’

To compound matters, Brimble is said to have applied to have his company struck off the Register of Companies in 2016 only to have it replaced by a different advice firm which means he is still advising clients on how to invest their cash.

Frank Field MPO, chairman of the Commons work and pensions committee, told the paper the Financial Conduct Authority (FCA) should 'get a grip on this scandal now and start to act like the consumer protection agency they are supposed to be’.

Only last month the same newspaper told the story of David and Sheila Solomon whose adviser Paul Herd persuaded them to invest their remaining savings of £281,000 in NERR.

At one stage Mr Herd even wrote to them advising that they ignore a written warning from their pension provider about the risks of the New Earth fund.

But sure enough, it hit financial difficulties in 2013 and was frozen – along with their money. The couple complained to the ombudsman about Herd's advice. An investigation revealed that he had also encouraged an 82-year-old woman with a "low attitude to risk" to invest £99,000 of her £125,000 savings in the fund. 

The ombudsman ordered Herd's firm to pay the Solomons' £500,000 in compensation, but the business did not have insurance to cover such a vast sum.

It is worth reminding readers that Scottish Borders Council claimed to have carried out "all due diligence" before placing its faith in the New Earth companies. In fact the local authority has stated: "We do not believe that the contract with New Earth Solutions was handled badly".

When asked about the loss of £2.4 million - mainly on fees for specialist advisers and consultants - a senior officer declared: "The majority of these costs were incurred through the employment of various industry experts who provided SBC with the due diligence assurances that the processes and decisions that were being taken were sound and in the best interests of the Scottish Borders public. We view these costs as the costs associated with ensuring best value rather than failure".

The fact that not a single brick was ever laid at Easter Langlee between 2011 and 2015 appears to have been completely overlooked. And not a single Scottish politician has been prepared to back calls for an investigation into a saga which resulted in the loss of many millions of pounds for investors and taxpayers alike.

Wednesday, 21 February 2018

Common good reform kicked into long grass


An initiative aimed at reforming laws governing Scotland's centuries old Common Good property and funds has been scuppered after the Scottish Law Commission (SLC) deemed the subject was not worthy of consideration.

It means work done by Holyrood's Local Government and Communities Committee, including evidence taking and a call for written submissions appears to have been rendered a complete waste of time with the controversial topic stamped 'completed'.

Committee convener Bob Doris MSP had written to Lord Pentland, the SLC chairman to include proposals for Common Good legislation in the next programme of law reform.

Mr Doris, whose request followed deliberations by his committee, told Lord Pentland: " Over a number of years the issue of modernising the statutory framework for common good property and funds has featured in the work of Scottish Parliament Committees. The Local Government and Communities Committee has sought written views and taken oral evidence on this issue".

The letter continued: " At the meeting on 20 December 2017 the Committee heard that whilst work is underway at the Scottish Government to provide for a register of common good other challenges remain. These challenges stem, in part, from the ancient patchwork of legislation and subsequent court rulings which have arisen in this area over time. It is fair to say that it is an area where legal expertise is particularly vital in understanding how those aspects work together.

"Work in this area is long overdue but we also recognise that as a Parliamentary Committee we could not do justice to this issue in the time we have available and given the specialist legal knowledge required to modernise legislation in this area."

Mr Doris invited Lord Pentland to consider a late request to include consideration of modernising the law in the area of common good property and funds as part of the SLC's agenda. 

In his response the SLC chairman said that In the course of last year "we consulted widely on topics for inclusion in our Tenth Programme of Law Reform.  I should say that one consultee did raise the issue of common land and common good as a potential law reform project.".

But Lord Pentland added: "We took the view that there was inadequate support for a project on the law of common good property and funds, and that other topics had to be given higher priority."

As Not Just Sheep & Rugby reported recently many local government lawyers are against reform of the common good legislation. One of them told the committee he would prefer to see all common good assets - across Scotland these value tens if not hundreds of millions of pounds - handed over to local authorities to "do with as they please".

But according to retired Selkirk GP Dr Lindsay Neil, a fierce campaigner in the defence of Selkirk's common good property and funds, such a proposal was likely to provoke a riot in Hawick.

Some of the strongest written submissions to Mr Doris's committee did in fact emanate from Hawick.

Former Hawick councillor Andrew Farquhar told the committee: " Common Good assets have not fared well under Council Stewardship due to councils having to do more with less.   Administering the Common Good is low down in their list of priorities.  E.g. Progress made with registers of assets! 

"In communities which still have Common Good assets their full potential is not being realised. The assets could do much more if properly managed under some form of local democratic control with good management."

Meanwhile Hawick businessman Derick Tait, who has served on a number of local civic committees wrote:"Sadly, as local government has become bigger (but not better), management of individual common goods has merged and passed into the trusteeship of those who neither appreciate their significance and importance to local communities, nor care particularly about their management.

"In recent years, I personally have been aware of instances of failure to manage common goods properly in three towns, principally because of lack of local knowledge.  There have also been recent instances in my home town Hawick, where public meetings have been convened to demand proper and dedicated management by trustees (councillors) from outwith the town.  Unfortunately, as the drive towards centralisation and city regions develops, remoteness of trustees from local knowledge will continue."

One advocate for change who observed the committee's discussions at close quarters told us: " You can tell there was a lack of interest by the fact that three members didn’t even ask any questions. Not sure many committee members even read the written evidence."

The decision to kick this issue into the long grass - possibly for decades - must be regarded as regrettable. It means past abuses of common good assets, and the mismanagement of land, property and cash may well continue into the future.