Why we must open up the Liverpool Direct relationship with Lancashire


The news that the homes of David McElhinney, Phil Halsall and one other have been raided by Lancashire Police in connection with their enquiry into One Call Lancashire tells me that Liverpool Council needs to be far more open about its role in this affair. I am making no allegations about what is the ongoing police enquiry. Only time will tell us what, if anything that they found. What I am talking about is what I perceive to be a very open and honest approach by Labour controlled Lancashire County Council and an obfuscatory and laggardly approach by Labour controlled Liverpool. Liverpool’s behaviour as evidenced by the forensic study reported on last week by independent think tank – Exurbe – is to tell as little as possible as late as possible.

The story in so far as I can gather it is that in 2011 Liverpool agreed to share time of David McElhinney and other staff in the establishment of a second BT joint venture One Call Lancashire Ltd. There is no problem with this in principle. It could save money for both councils in a variety of ways and in particular lead to greater efficiencies. Indeed it might have done so. 2011 is an important point. Labour is trying to shy away from responsibility in this matter by claiming that the original agreement as established by the Liberal Democrats. True but at that time there was only LDL. How any member of staff seconded to the JV spent their time was irrelevant as all the work at that time was in or for Liverpool and its council.

The real problem is that no-one seems to know who agreed what, for what and when. Lancashire thought that they had a time and cost sharing agreement in place and have acted on it. Liverpool say there was no agreement. I am unsure how they released staff already seconded to one joint venture to a second joint venture unless there was at least a verbal agreement in place. Liverpool now seem to be saying that although David Mc is an employee of Liverpool they do not know how much work he did for us and how much for Lancashire during the three period of this quasi secondment thingy.

The matter was exacerbated when Labour took control of the County from the Tories last year and they stepped up their questioning of the One Call Lancashire scenario. At that point it appears that two payments were made to David Mc which their Director of Finance knew nothing about. The payments were mind bogglingly high and it is not clear from the report whether they were given to David Mc direct or to BT for his services.

I strongly suspect that everything that has happened is legal. But whether it is moral or justifiable to council taxpayers in Liverpool and Lancashire is another question.

The matter has been compounded in Liverpool by an insistence that how their employees’ time in Lancashire was spent and what he did was none of their business but solely Lancashire’s. When the Echo put in FOI requests they were told one thing by Liverpool – particularly that they had not been asked to help an enquiry by Lancashire. However papers revealed by Lancashire suggested that Liverpool officers knew by the time they replied to an FOI that there was an enquiry because they had already responded to Lancashire.

Liverpool then said they had told the Echo that they had no enquiries because the papers from Lancashire had been sent securely and in confidential terms. The requests and replies were sent by ordinary council e-mail systems and were not marked confidential in any way. It seems strange that Lancashire can release its own papers but that Liverpool refuses to because Lancashire would not like it!

Now it is possible that some of what I am saying is incorrect –so let me apologise in advance. But if someone with my access and experience cannot peer through the multi veils of this issue what hope does one of the long suffering taxpayers of Liverpool or Lancashire of so doing.

That is why today I asked the Chief Executive of Liverpool to work with the staff and politicians of both councils to examine in public what actually happened in the agreements or lack thereof between the two councils and the two BT subsidiaries.

What has happened must be flushed out. Large sums of public money have been spent. The only way to solve the deadlock between the two councils both politically and managerially is a cold, hard forensic and independent review of what happened either by a QC or senior external auditor. Let’s get on with it.

About richardkemp

Leader of the Liberal Democrats in Liverpool. Deputy Chair and Lib Dem Spokesperson on the LGA Community Wellbeing Board. Married to the lovely Cllr Erica Kemp CBE with three children and four grandchildren.
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8 Responses to Why we must open up the Liverpool Direct relationship with Lancashire

  1. Catherine says:

    Many of these questions have already been answered in the responses to a whole series of FOI requests on whatdotheyknow by various members of the public. There’s a list in the Ex Urbe report.
    For instance, on 9 January 2014, Lancashire released a copy of the agreement made in April 2011, on BT headed paper, signed by all the parties. Liverpool released their copy the next day, after having spent the previous 3 and a half months denying there was any agreement at all (in response to an earlier request).

    The link to the original document is here: https://www.whatdotheyknow.com/request/mcelhinney_secondment_to_ldl#incoming-468608
    This is the text:
    To: The Chief Executives of each of Lancashire County Council and Liverpool City Council (together the Councils), the Director of Liverpool Direct Limited, the Chairman of the Board of One Connect Limited and David McElhinney
    Date: 28th April 2011
    Re: Joint Working Arrangements
    Dear Sirs
    As you are aware BT has entered into strategic partnerships with each of the Councils to deliver lower cost and service excellence and as such we acknowledge that there are opportunities to strengthen the management arrangements in both partnerships and to develop closer working relationships for the benefit of all.
    We understand that the Councils’ joint proposal is to have a single Chief Executive managing both Liverpool Direct Limited (LDL) and One Connect Limited (OCL) reporting to separate Boards of these two companies. The Chief Executive Officer would manage both entities with a Chief Operating Officer and senior management team reporting to him / her with full P&L responsibility. We also understand that the newly appointed Chief Executive Officer would be an employee of both Councils, seconded to LDL and OCL. As such the Chief Executive Officer will have two contracts of employment (one with each Council). It is anticipated that the post of Chief Executive Officer will be split 50/50 over the course of year between each of LDL and OCL. The Chief Executive Officer will play an active part in the business of both local authorities, working closely with both Councils.
    As per our discussions we note that the Councils wish David McElhinney to undertake the role of Chief Executive Officer but that these arrangements may evolve over time with the agreement of the Councils, BT, and the joint venture companies. The terms of Mr McElhinney’s secondment to OCL, including his right to end his secondment with LDL upon 6 months’ notice and for Lancashire County Council to be his sole employer. It is expected one or two other postholders could have a similar employment status. Other senior officers may be employed by one organisation but encouraged to work across both to exploit synergies, learning, joint business and reduce costs.
    Due to the nature of this arrangement there is the potential for conflicts of interest, the Chief Executive Officer shall disclose to all parties to this Agreement at the earliest opportunity in the event that he reasonably perceives any conflict of interest or potential conflict of interest in carrying out his duties. Should any of the entities involved in this arrangement i.e. either of the Councils, BT, either of the joint venture companies or the Chief Executive Officer conclude that there is a conflict of interest
    or potential conflict of interest or that the joint working arrangements are no longer in its interests then all of the entities will come together to agree a way forward. This review can be triggered by any single party at any time.
    In order to acknowledge that this letter sets out the agreed employment model of the Chief Executive Officer of BT’s partnerships with each of the Councils, we should be grateful if you would sign below.
    This letter may be executed in any number of counterparts and by the different parties on separate counterparts (which may be fax or electronic transmission copies), but shall not take effect until each party has signed and delivered at least one counterpart. Each counterpart when signed and delivered shall constitute an original, but all the counterparts shall together constitute one and the same instrument.
    Followed by the five signatures.
    This is clear. There was an agreement. McElhinney was seconded to OCL at the instigation of the two councils, which are or were his employers. He clearly was never seconded to BT. It demonstrates beyond doubt that the Council’s repeated statements that this whole thing is nothing to do with them are total rubbish. As are most of the other statements they make about McElhinney and LDL.

  2. Catherine says:

    Richard, I’m only up to date on this because I’m a nerd with a particular interest in corporate governance/accountability, not a politician. Please, first of all, nail the lie about McElhinney’s employment status. Council officers and the Mayor have repeatedly stated that he is seconded to BT and paid by BT. In reality, as all the documentation makes clear (this agreement and the pay and bonus information released with the OCL contract – on wdtk), he is seconded to LDL (and previously also to OCL), and is paid by them through the respective Council payrolls. So the situation here in Liverpool is identical to that in Lancashire – salary plus bonus based on turnover, although the amounts here will be a lot higher than the amounts paid out in Lancashire because of the amount of 3rd party work LDL does (350+ clients).
    Since the government introduced the requirement to publish senior salary details, there have been loads of requests for his salary through whatdotheyknow alone, all refused.After the Information Commissioner intervened, they released some wholly inadequate information on the salaries of the rest of his senior management team (on a “salary band” of between 75k and 120k!!) Especially since they also get bonuses and were also being paid salary plus bonuses by Lancashire (similar sums, no doubt).
    Please challenge all this and get the information in the public domain. LDL run the Council payroll and control access. But the information belongs to the Council, i.e., to us, the people who pay for all this.

  3. new says:

    Thanks for sharing I love liverpool

  4. Anomia says:

    I see South Tyneside (HR & accounts) and Sandwell (inc HR & accounts) have terminated their arrangements early too. That just leaves Rotherham. ..err

    • Catherine says:

      Rotherham cancelled their joint venture (Rotherham Brought Together) in 2011, two years early. shortly after Ged Fitzgerald moved on to Lancashire. This was preceded by scare stories about penalty payments etc…. which didn’t work.
      The Suffolk JV Customer Services Direct was not renewed and ended last month.
      As for us, Liverpool Direct will be 100% council owned in just a few weeks time at the end of June, and they don’t seem to be planning any changes in the management team. The people who were paid twice for doing the same job (for Lancashire and for Liverpool) are all still in their jobs in Liverpool, and McElhinney has not been mentioned for a while, although when the BT pullout was first announced Joe Anderson said he would continue to run Liverpool Direct.
      Mind you, when making this announcement Anderson also said that Liverpool Direct would be taking over the lucrative Security Industry Authority contract (an operation run out of the basement of Millennium House employing almost 200 people) when it came back in house. When he said this, LDL had already lost the contract to Tata (announced in August last year)….. so there is nothing for them to take over. For a director of the company, he’s astonishingly ill-informed.

      • Catherine says:

        Correction: Anderson said that the new, Council-owned LDL would actually get some of the cash (£10 million a year) that the SIA pays for the services that LDL has actually been providing for years. Because it has never received a penny since the SIA arrangement started in 2006/7, although the value of this contract will have been included in the calculation of the bonuses received by McElhinney and his cohorts – paid for out of the income LDL receives from Liverpool City Council.

  5. Pam Smith says:

    Everyone who worked for Liverpool City Council in the last 15 yrs knew that David McElhinney and his pals had been ripping of Liverpool City Rate payers since they starte Liverpool Direct, the council was soooo tied into this melee that when the renewal date came up, the workforce eagerly awaited it’s demise ……but no Joe Anderson signed us all up again ….. And the £13 Nokia mobile phone from Tesco became o £100 from LDL ……they never learnt

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