This week I have taken the very unusual step of asking for two independent enquiries into activities of Liverpool City Council. The cases are related and refer to the tangled web of relationships which surround the Liverpool/Liverpool Direct Ltd/Lancashire/One Call Ltd/BT activities.
In the first instance I have asked that the Lancashire Police extend their Lancashire investigation into Liverpool. In the second I have asked the Information Commissioner to look at the appalling record of the council in responding to freedom of information requests about any matter relating to LDL.
I have called for these two enquiries for two main reasons:
Firstly, it is simply highly unlikely that the council can continue with its claim that they do not know what a senior member of staff is doing and what that member of staff gets paid.
Secondly, there is a clear disparity between the way that the council has been treating FOI requests regarding LDL and any other type of FOI request.
The replies to questions that I and many have asked have lacked clarity if they have been replied to at all. The recent report from EXURBE shows that the Council has an excellent record of replying to FOI requests but a terrible record when replying to FOI requests about LDL related activities. When I raised this with the Mayor at the Mayoral Select Committee I didn’t get any answers (nothing new there) but a string of abuse directed at former Labour MP Peter Kilfoyle who is a Trustee of EXURBE.
Within my own authority I have simply not got answers to many questions that I have asked. I find it absolutely unbelievable, for example, that I have not been notified as a Group Leader that the home of a senior council employee has been searched under warrant by the Police. I find it amazing that I have been told that no contract exists between Liverpool, Lancashire and BT only to find that there is a legal agreement! As a layman I am unclear as to what the difference is between these two positions!
We now need external scrutiny and investigation to examine these tangled relationships and work out not only who agreed what and when but also whether Liverpool and Lancashire tax payers are getting value for money for this deal. In a system where there is no internal scrutiny, Liverpool Labour Members have to ask permission to raise issues in the scrutiny process, I feel that I have no alternative but to ask for help in looking at these affairs outside the council.
In my career I have not only been a councillor for a long time but also asked to work in other councils which were in severe difficulties with their governance structures. Liverpool feels as bad as any council that I have worked in. There is no clear definition of Member and Officer roles. No effective challenges exist within the system and a centralised almost Stalinist decision making process pertains in which the only vote that counts in the City is that of the Mayor.
If the Audit Commission still existed I have no doubt that they would have used their powers to hold a Corporate Governance Inspection in Liverpool by now. This is not democracy but shamocracy. I hope that these external investigations will take place and then that they force change in this secretive and opaque council.
Cllr Kemp weren’t you the one who signed up the current LDL deal? I also remember Mayor Anderson when in opposition screaming his objections to LDL with many of his Labour Councillors……. both opportunist as ever. ”How many houses does Mr McElhinney own”
No we were in power when the original deal was done. The current sharing arrangement with Lancashire came in during 2011 when Labour controlled the council. The agreement with BT and Lancashire was signed by the current Chief executive, Ged Fitzgerald.
This is great start, thank you.
In the meantime, what has happened about McElhinney’s involvement with the budget – has this stopped? If it hasn’t, why on earth not?
And what about finally getting some proper financial information? There should be a proper audit of LDL’s accounts – by, ideally, a forensic accountant. This is something that the Council can ask for at any time – it’s a shareholder and owns 40% of the company. The Mayor and/or the Chief Exec cannot make this decision because they are directors, and so by law cannot make decisions reserved to the shareholders. Which this is. And the shareholder is the full Council.
I know that Labour has a majority, but the LDL scandal is not about politics and politicians – as stated elsewhere, the original agreement to establish LDL was and is a model document – the problem was how it was implemented, and the person appointed to run the company. For utterly incomprehensible reasons, the Mayor is happy with the status quo and will not allow any scrutiny of this whole mess, But surely this is the time for Labour councillors to actually remember that they are there to represent their constituents and vote to exercise our rights, and get this sorted.
Nothing new in Liverpool Council Politics I remember A Fire man A Mr Bradley or a head teacher who was never in school a Mr Storey what happened to him Oh yes he went to the LORDs getting £350 00p plus expense plus his retirement pension not bad because we are all in it together.
Correct me if I am wrong, but why did the Lib/Dems go into the contract with BT in the first place?
For its first 10 years LDL was a great innovation which was much admired and copied. The problems have arisen in the past 4 years with the joint/joint venture with Lancashire and a total failure of scrutiny and transparency. It should go in its present form and it’s main functions returned to the council.
Thank you for your reply.
You did not answer the question.
Because at the time Liverpool had 463 ‘front doors’, no IT systems outside finance, 5 different personnel departments and an appalling record for dealing with the public. Drastic action was needed at the time to provide a much better service for the public at much lower cost. For at least 8 years it succeeded in delivering both.
Richard, the problems didn’t just arise with the Lancashire venture. The failure of scrutiny and inadequate governance goes back a lot further. LDL has been doing lots of work for third party clients (using Council secondees). Senior managers in LDL earned bonuses for obtaining this work which were then paid by LDL, although LDL and its shareholders did not get the revenue (not a penny of income from anyone other than the Council ever, in 13 years). The Lancashire venture is an extension of this.
The LibDem administration recognised the problems in 2006, when they quite rightly commissioned the first of the external reviews from KMPG. This clearly recognised the conflicts of interest and absence of proper reporting that had developed, and proposed solutions. You must be aware that If they had been properly implemented we would not be where we are. But there was no appetite for making drastic changes, and further external reviews were also ignored. Your administration also set up a Scrutiny Panel, which of course was the right thing to do. But then it clearly was not given proper information and its meetings were endlessly postponed. This all needs to be explained.
You’re right, Labour under Joe Anderson have made things spectacularly worse, immediately reversing the changes that had been made by Hilton and giving carte blanche to McElhinney to do whatever he wants, etc. etc., but to suggest that this has only become a problem under them is disingenous.
You could be right but I think we both think it has got worse particularly since 2011
Are there any public documents that can be viewed in relation to LDL.
The accounts of LDL are all filed with Companies House. You can download them through their webcheck service for £1 each. Or sign up to companycheck.co.uk to get them for free.
Lots of other documentation is now in the public domain on whatdotheyknow – the joint venture agreement and contract were finally released in 2010, and the full refresh proposal, including the arrangements for bonuses for senior staff, including McElhinney was released in 2012. The agreement with Lancashire for McElhinney to run both companies was released a few weeks ago. In between, they have released some information on third party clients, senior salaries, payments made for the “investments” that BT might “make” but we certainly pay for. Much of this is contradictory and evasive where it isn’t downright untruthful, but still illuminating. There’s a list of many of the LDL requests in the latest report (on local FOI compliance) from ExUrbe, and there are more among the requests to Liverpool City Council submitted through LDL (search on McElhinney and BT, separately, as well as LDL, as ExUrbe did).
There is other information on LDL and its work for the Security Industry Authority in a report (on the SIA) on the National Audit Office website, as well as in Hansard and in the Leveson inquiry documentation. And in the corporate info sections of the websites of the SIA, the Liverpool Arena, the British Boxing Association and very probably other clients.
For context, there are useful documents on the HM Treasury websites on don’s and don’t’s for public sector bodies considering joint ventures with the private sector. And the BT website provides information on its corporate governance and its commitment to the Combined Code of CG. And,just to join the dots, the Institute of Directors’ website provides clear guides to directors’ duties and how they should be discharged..
Then there are the various leaked documents – the Cherie Booth opinion on McElhinney’s appointment as Chief Exec, and the possible conflict of interest this might represent, the IdEA report slamming LDL for opaque information, high costs, etc. and the never officially released 2010 report claiming massive overcharging that was prepared with the assistance of external consultants at massive cost.
Finally, the proceedings (or lack of) of the LDL Scrutiny Panel on the Liverpool City Council website are illuminating, and the documents they were actually provided with (as opposed to what you might reasonably expect them to have been provided with).
Thank you for the information, I have asked Liverpool City Council for a copy of LDL accounts, they say I can have a copy on their recent auditered accounts. My main interest in LDL, was what consideration did the Lid/Dem Council at the time give to small business’s? It would appear to me “none at all.” I have just looked at Liverpools list of spending over £500.00 and it would appear that Liverpool is giving over 70 million a year to LDL, can someone correct me if I am wrong, as I only looked at 3 months spending, averaging over 6 million a month.
Also, today I have noticed the comment on Liverpool Express in regards to LDL from the Mayor.
You’re not wrong about the spending – it has grown steadily and is now well over £70 million a year, and the only information in the public domain is the figure on the single monthly invoices – not the arrangements set out in the contract, as you will see.
As you will also see when you get the accounts (which have minimal information, as they are abbreviated, small-company accounts), LDL has only ever had one supplier, BT. So basically it has been a way for BT to circumvent tendering rules and also hoover up smaller stuff. They act as middle-men. Suppliers have to deal with BT, who then supply LDL, who then supply the Council – with markups all the way. And the Council itself changed its constitution to ensure that only LDL was used as a supplier.A captive market. Hence all the overcharging etc.
I doubt this was what was intended by the LibDems at the start. Their focus was to improve services and get investment in, None of the above was in the contract or the JVA. LDL certainly could have used small businesses, as the Council itself could have – but they never did..
You appear to know quite a lot about this Catherine.
If you ever want to drop me an email direct, my email address is firstname.lastname@example.org.
Whatever the intention of the Lib/Dems in setting up the contract they did and I hear very little feedback from them on it.
Pingback: Should Liverpool Council smile now it’s ending BT joint venture? | Campaign4Change
Given the other recent developments (announcement of BT pullout on 27 Feb, the police raid on LDL offices on 14 March, and this morning’s news of data being wiped from LDL laptops) has there been any progress on this request, or on your request to the Chief Exec referred to in your “Why we must open up……” on 20 February. Are the Police and the IC now involved in Liverpool? Is there going to be some kind of public examination of the relationship between LCC, LDL, OCL and Lancashire – and, of course, their exceedingly well-paid peripatetic employees?
There are things taking place behind the scenes in this regard!!
This is why there should be no public private joint ventures, boundaries get blurred, besides the cost.
…. “behind the scenes” sounds like an attempt to keep a lid on all this. I certainly hope not, because it won’t wash. The kindest interpretation of this is that they are attempting to limit the reputational damage to all involved. But it’s far more important to get the whole thing out in the open, once and for all. Not least because of the scale of wrongdoing that is now evident. Or do you perhaps think it is OK for McElhinney and his senior team to be paid bonuses for obtaining work that LDL then does for nothing – most people would consider this a kind of corporate gang-mastering. Tens of millions of pounds, according to their latest FOI response on this (£34.6 million, to be precise (https://www.whatdotheyknow.com/request/180009/response/490842/attach/3/300613%20Griffin%20FOI%20Response%20070314.pdf)
Lancashire suspended its Chief Exec immediately there was a suspicion of wrong doing. Immediately. Why haven’t we done the same with Mr, Fitzgerald – mate of McElhinney, architect of Lancashire’s LDL and signatory of the agreement whose existence they continued to deny repeatedly, until Lancashire acted properly and released it. The evidence has been in the public domain for weeks. He’s not the only one whose actions need investigation, but it would be a start – and would send a great message to the legions of decent people employed by LDL who would love to whistleblow.
I know that the Mayor does not understand what “accountability and transparency” means, but surely you do.
I agree with everything in this note but I do not want to jeopardise the police enquiry into the OCL/LDL situation which I am reasonably confident is digging for the right things in the right places. I also have to be aware of the laws of slander and libel. I regret that we have to rely on the Police but there is now no independent audit or regulatory function for councils who have the capacity to investigate matters such as these.
Richard, thank you for responding to my slightly intemperate post. You are at least engaging, which is more than can be said for our other elected representatives.
While this isn’t primarily a political issue (it’s about poor governance and officers whose actions can most charitably be described as gullible and incompetent), you surely recognise that there has been a total failure of scrutiny. Local politicians have failed and continue to fail to hold officers to account. The Mayoral Scrutiny committee in particular needs to up its game.
From a lay person’s perspective, the reluctance of politicians, of all parties, to do what should surely be their primary concern – protect the interests of their constituents, ensuring public money is spent properly – is infuriating. This should be everyone’s number one priority. You are all willing to raise other issues, but not this one. Or at least, not properly. Campaigners like me have spent time and effort, over months and months, asking a whole series of questions, and the overall picture is now pretty clear. And its far far worse than any of us thought at the start, to be honest. But now that all this appalling information is in the public domain, none of you appear to want to do anything with it. Or even talk about it.
On the question of libel and slander, by the way, my understanding of defamation law is that if something is “honest comment”, i.e.a statement of opinion, based on true facts, on a matter of public interest which a fair-minded person could honestly hold, then it is not libelous and proceedings cannot be brought. This is why I explicitly indicate the facts on which my comments are based – council documents, including minutes, policies, the constitution, contracts and, last but not least, responses to FOIA requests. Every single comment is based on this kind of stuff.
Finally, on the involvement of the police – this is great, and is clearly grinding away in the right direction. But this kind of investigation takes a long time (especially since Lancashire seem to be doing it on their own). In the meantime, we have someone who has been questioned by the police, whose property has been searched and whose computer equipment etc. seized, in charge of LDL at a time when the Council are about to take full ownership of the company. And Ged Fitzgerald, the person dealing with all this on behalf of the Council is an ex-director (allegedly, although he is still listed as a director with Companies House) of LDL and the person who set up the Lancashire clone that is currently under investigation. These people have very evident conflicts of interest, and the potential for maladministration is enormous. This cannot possibly continue, and doing something about it will not only not jeopardise the police investigation, but might actually make it easier and prevent any further attempts to destroy information. If the Mayor cannot be persuaded to rethink this (and that doesn’t look likely), then you surely have no alternative but to ask Eric Pickles to send in inspectors. Please do this. Yes, we all hate him, but in this instance, he’s all we’ve got.
I (and everyone else, I am certain) would be delighted to provide a list of links to all the information that we have obtained. It’s quite a list.
I utterly agree with Catherine on the need to get this out in the open. LDL has transacted £86 million of 3rd party business since it was founded – which should be agood news story – except that the £86 million doesn’t show up in the accounts of either LDL or the Council. So where the hell DOES it show? Who received the £86 million?
Add to this the £70 million+ pa spent directly with LDL by the Council, and you have a very major financial scandal. Richard – I’m not interested in party politics. The LibDems didn’t make a good job of running this; the current mob have done a much worse job. I don’t think that’s a party political observation, this whole mess is about a small number of individuals, all of them within David McElhinney’s orbit. I’d include Joe Anderson in that description, although what might have induced him to get involved I can’t imagine
One other point. This information has been in the public domain for years. Catherine, myself and others – ordinary citizens – have badgered the council with FOI requests, receiving nil support from councillors or MPs.
Richard, your engagement is very welcome. It’s also well overdue. Please step it up a gear and keep the pressure on. The more softly this is handled, the greater the opportunities for key documents to be ‘lost’.
Catherine’s suggestion of asking Eric Pickles to intervene is a sound one. As is pressing the IPCC further, to broaden the scope of the investigation. I would also involve the SFO – indeed, I tried to some time ago as a private citizen, and didn’t receive a reply. The sums of money involved are so large, and the business practices so strange, that this is a job for the SFO if ever I saw one.
A case in point. Officers and councillors attend LDL board meetings but aren’t allowed to retain any paper from these meetings – minutes, agendas etc – they are all shredded because these company ‘directors’ apparently aren’t trusted to respect confidentiality. The source information can be found here : https://www.whatdotheyknow.com/request/ldl_board_meetings
This is truly astonishing – analogous to a puppet government.
Thank you for asking some awkward questions. Please ask a lot more. Catherine and myself would be able to provide you with some further details, I’m sure – all of which are in the public domain.
Jenny, you’re singing my life with your words. Pls do get in touch (T: @1ewdan1s) or leave a reply to this.
Four months have passed, and nothing whatsoever seems to have happened. Worse, LDL is still majority-owned by BT (it was supposed to withdraw by 30 June, but now apparently won’t until later this year). And it is clearly withholding financial information from the Council. There is again no mention of McElhinney’s salary in the recently published draft annual accounts from Liverpool City Council, although they do mention the 2.4 million increase in the total remuneration of LCC secondees to LDL. You will have seen the article in today’s Echo article about Mr. McElhinney’s pay, including BT’s response (nothing to do with us, ask the council). Despite BT’s clear statement, they continue to peddle the rubbish about his being seconded to BT, and paid by them.. the same rubbish they repeated even when obtaining a legal opinion on his secondment to the Council (the Cherie Booth opinion). Please, can you at least complain to the auditor about the accounts?
Catherine, Lancashire Police have a significant team of people looking at LDL/OCL issues. They are taking this very seriously but we may not hear anything before Christmas.
Richard, I am aware of the Lancashire Police investigation, and hope something will come of it before it is wound up (at the end of the year, I believe). But investigating fraud is notoriously difficult, specialised, and labour-intensive, so their focus will be on possible criminal acts committed in Lancashire, not Liverpool. That’s what they are there to do. They already have mountains of OCL stuff to look through, and finding actual evidence of fraudulent intent etc. among all the dodgy but not actually criminal documents – both digital and paper – must be like looking for a needle in a haystack. So they won’t be actively looking at the much bigger mountain of Liverpool stuff. And if they do come across anything pertaining to LDL and Liverpool, they will pass it on to Merseyside Police, they won’t investigate it themselves, their resources are squeezed enough dealing with their own stuff, without going outside their area.
You will remember that this whole thing started because of the Lancashire County Council accounts, and the amendments they had to make to the declaration of senior officers’ remuneration. That is what triggered the investigation and led to the police being called in.
And that’s my point. Liverpool City Council’s accounts still do not report the remuneration received by McElhinney (and others in his senior management team who were working part time in both OCL and LDL and clearly earned over 150K). They are clearly hoping that if they stick to the lie that he is paid by BT, and that they know nothing about it, then it will all blow over and they can carry on regardless – as they did after all the negative reports about LDL in the past. Why change a winning strategy?
But we now have evidence that this is a lie, and by not complaining about it we are all facilitating this, and making it far more likely that no-one will be held to account. There are also all sorts of other discrepancies (misleading and/or untruthful statements and omissions), but this salary one is the most glaring.
This is why you (and as many other people as possible) need to make a formal complaint about this year’s accounts to Michael Thomas at Grant Thornton (who has clearly been lied to). There is a window of time in which this is possible – after that, it’s too late.
It will not jeopardise the Lancashire investigation (or any Merseyside Police investigation – if there is one by now), but will be the first step in the process to clean this whole thing out, just as in Lancashire. Waiting on someone else (the police, the government, etc.) to do something really doesn’t cut it.
I would echo Catherine’s points. The LDL scandal is much more ‘mature’ than the OCL one, and more blatant – the police should be focusing closely on Liverpool.
Specifically, they should be looking at the scam whereby the taxpayer paid the wages of people who were doing revenue-generating work for BT. This is an absolute scandal – and it’s been in the public domain for years.
Poloce should seize all records now, and LCC should suspend all relevant staff until the matter is completed.
Police should also investigate the assets held by elected members and certain officers to see if there is any evidence of unexpected assets.
The Council’s Mayoral Recommendation Paper says the following : “Since the inception of the partnership in 2001 the third party contracts won amount to £58.9m earning a 1.9% revenue share for the LCC of £1.54m in accordance with the partnership agreement”
However, what hasn’t been covered off is the cost of delivery. All of these contracts were provided by seconded LCC staff using LCC premises and facilities. None of the money earned from these contracts went to LDL or the Council (apart from the £1.54m) – it all went to BT.
So BT gets £58.9 million in cash, while a different company delivers the services. The costs of delivering that service come out of the £70 m pa which we, as taxpayers, paid to LDL. In return we get £1.54 m back, much of it in kind, so the actual value could be lower.
So BT gets £57.36 million for not actually delivering any services. They were all delivered by Council staff.
Hi, has there been any progress with regard to the police investigation or any investigation into the LCC/LDL contracts/payments. It’s just that I pay Council Tax to LCC and I’m a tax payer, sick of the fat cats lining their own pockets at a time when this city is on it’s knees.
There will be an announcement soon!!
There will be an announcement next week but some serious steps have been put in hand.
As an employee of Lancashire County Council who was involved in blowing the whistle on the Phil Halsall / David McElhinney deal with BT Fleet And having willingly given evidence to the police I would be very interested to know where this is going.
The Lancashire end is proceeding slowly but very thoroughly with 5 staff working in this for more than a year. I will shortly be announcing a review about the Liverpool end of this tangled affair.
I await with anticipation ………..
John……Well done to you……