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NLC Opaque Deals
A new report on North Lanarkshire Council's contract for housing repairs and maintenance has left key questions unanswered. While shedding some light on the decision to effectively write off £24.9m in potential savings, in order to prop up a failing contract with repairs company Mears Scotland, it leaves open very different interpretations of its findings.
The background is straightforward. The company, in which North Lanarkshire Council itself has a stake, inherited a £30m contract for repair and maintenance of housing and non-housing property in the local authority area when it bought out the previous contractor.
As the firm became mired in debt, it blamed the contract itself, which pledged it to deliver ongoing savings to the council - worth £973,000 in 2016 alone. The council was set to agree to ditch the savings and change the contract to help Mears Scotland out, until its own governance convener Tommy Morgan started querying the deal.
Thereafter matters become more opaque. Mr Morgan was sacked and earlier this year the council voted to go ahead and renegotiate the contract.
The council's auditors Scott-Moncrieff examined whether the decisions were justifiable. It concludes councillors behaved appropriately in deciding action was needed to prevent the contract from failing.
However a key issue is whether the contract should have been put out to tender again, to seek a better deal from other companies. Councillors were first asked to make this major decision, auditors say, on the basis of an inadequate report without any of the detailed analysis it demanded.
A second report in February provided more detailed financial information. But it's conclusion that re-tendering would be more expensive than renegotiating were speculative at best. The question of whether another company could have pitched in with a better offer was never tested. One suspects it now never can be.
This all matters because the cost of the lost savings will be passed on in rents, largely to the UK taxpayer, via the housing benefit bill.
The other reason it matters is because of the hidden web of relationships which is the backdrop for these decisions. Jim McCabe, North Lanarkshire's leader is a close personal friend - (as he has acknowledged previously) - of Willie Docherty, the head of Mears Scotland, for example, while the firm was set up partly by departing employees of City Building in Glasgow, some of whom also have personal and political connections to Mr McCabe.
North Lanarkshire council itself owns a third of loss-making Mears Scotland.
This may have had no bearing whatsoever on decisions about the housing repairs contract. The problem is we don't know and despite raising some difficult questions the auditors' report does little to lift the veil of confusion around this affair.
There is still no transparency about how and why decisions were made about the council's housing repairs contract. This is problematic in itself, but also raises questions about the way such complex arms-length structures are increasingly used by many councils. Neither fully private sector, nor in the public sector, they are difficult - one suspects, sometimes, deliberately so - for the public, the media and even other councillors to understand.
Such a situation is fundamentally undemocratic - especially when it means decisions worth millions of pounds are immune from public scrutiny.