Published:

9 comments

Often the Labour Party present the Conservatives as being a soft touch for greedy capitalists in the private sector. Yet the Labour Government was willing to be pragmatic about involving the private sector in delivering public services. However it was Labour that would be more inclined to allow taxpayers to be ripped off when it came to drawing up the contracts.

There were plenty of PFI deals involving billions of pounds where the political motivation was to achieve public spending without the borrowing showing up in official figures – all the Enron-style accounting. Then therewerethe tens of billions spewing out on the Decent Homes programme and the Building Schools for the Future programme with a failure to secure value for money from those who won the contracts.

The Housing Minister Mark Prisk offers a further example, relatively modest involving millions rather than billions, but again a reminder of the casual way that Ministers under the Labour Government went about spending other people’s money. He reports on spending “that the Government have been forced to undertake as a result of poor decisions made by the last Administration.

The Department for Communities and Local Government has two service concession contracts with Landmark Information Group for the operation of the Domestic and Non-Domestic Energy Performance Certificate Registers. These commenced in 2007 and 2008 respectively. The contracts, signed under the last Administration, were let on the basis that the revenue from the fees paid whenever an Energy Performance Certificate or related document is entered onto the Registers would cover the full cost of operating the Registers.

As a result of low transaction volumes, due to the economic downturn under the last Administration following the financial turmoil in 2008 and 2009, and a number of enhancements to Register services, the revenue from fees for entering documents onto the Registers has not been sufficient to meet the full cost of operating the Registers.

This has left the current Government with a contractual obligation to meet the cost of services that had been delivered through the Register contracts but which had not been covered by revenue from fees for entering documents onto the Registers.

As a result, the Department has reluctantly agreed to make a payment of £5.7 million to cover these costs to April 2013. It is the view of Ministers that it is clearly unacceptable that contracts were drawn up and operated which
outsourced a service to the private sector, but left taxpayers with unreasonable commercial risks.

Ministers in this Government have acted decisively to address this situation and safeguard the future operation of the Registers for the benefit of consumers and industry. Fees were revised in April 2013 to cover the full cost of
operating the Energy Performance Certificate Registers and will be reviewed annually to ensure that remains the case. The recent payment has ensured that these fees were not higher for property owners, and that current service users are not paying for services delivered in the past.

The contracts have now been extensively reviewed in order to deliver improved value for money. This has included a reduced margin for the contractor and enhanced scrutiny of any future proposals for changes to Energy Performance Certificate Register services to minimise future liabilities for the taxpayer.

This is not the first botched contract that the Coalition Government has been forced to fix. As Ministers indicated in the answer of 19 July 2011 the last Administration’s poor drafting of the Tenancy Deposit Protection scheme contract similarly resulted in a £13 million liability for taxpayers, again as a result of commercial risk from an outsourced service being left with taxpayers.

The private sector should certainly be far more involved in delivering services on behalf of the Government. In some ways the Government is the client from Hell – delays, form filling, constant irrational demands. In other respect politicians and bureuacrats are not spending their own money and so will be attractive people to do business with. For a greedy capitalist wanting to really make an excessive profit off the back of the taxpayer it does seem that Labour are the people to do business with

9 comments for: Botched contracts by the last Labour Government are still wasting millions

Leave a Reply

You must be logged in to post a comment.