The £20m question: Who will look after council homes, parks and streets?
PUBLISHED: 07:54 17 July 2018 | UPDATED: 08:22 17 July 2018
ARCHANT EASTERN DAILY PRESS (01603) 772434
Questions today hang over how £20m worth of services will be provided in Norwich - including who looks after thousands of council homes, sweeps our streets and tends our parks.
Street cleaning, parks and the maintenance of around 15,000 council homes depend on four contracts Norwich City Council has with Norse. Those contracts employ more than 400 people.
But city council chief executive Laura McGillivray has written to the boss of Norse telling him of the council’s “strong intention” to bring all four contracts in-house by April next year.
There are still more than three years left to run on the contracts, which are worth £20m a year, and it is understood there is no break clause.
That means it could cost the city council millions of pounds to end the contracts early.
Norse, which is owned by Norfolk County Council, said it will continue to provide the services as normal.
The city council confirmed it would bring the work back in-house so it would have “complete financial control”.
But it would not say how much it would cost or provide any business plan for doing it.
Norse took on the council homes’ contract after the collapse of Connaught in 2010.
It also has a second contract to repair other council-owned buildings, which was renewed in 2014, and has more than five years left to run.
Norse has a third contract through a company it owns with Norwich City Council called NPS Norwich to survey buildings. That has three and a half years left on it.
The council’s fourth contract is with Norse Environmental Services to keep the city’s streets and parks clean.
Seven councillors on the council’s cabinet discussed taking all the services in-house on June 13.
But the meeting was held in private and the city council refused to provide a business plan or any reports they have produced into the move.
The minutes from the council meeting have not been published because the council said that would “disclose information relating to the financial or business affairs” of the council or another party.
It is unclear what provision the council has made for taking on the 400 workers and equipment for the contracts.
Kevin O’Grady, Unison branch secretary at City Hall said the union would be working to ensure there were no redundancies as part of the move and added Unison supported taking services in-house.
Dean Wetteland, managing director of Norse Group, said the move came as a “complete shock”.
He said the city council had previously mentioned taking the NPS Norwich contract in-house but not any of the other services.
“There was no conversation with us before,” he said.
He said Norse had achieved an “exceptional turnaround” since taking on the contract in 2012 and sorted out the services after the collapse of contractors Connaught and Fountains which used to provide the work.
“All contracts are working well and we have managed to achieve a 20pc budget reduction and give an annual profit return to the city council of some £500,000,” he added.
Mr Wetteland said all four contracts were well managed, with three meant to run until 2022 and a fourth until 2024.
He added no formal termination notice had been received and as any discussions were likely to take months, it was “business as usual”.
The £21m which the contracts are worth to Norse each year is about 6.7pc of the company’s annual turnover.
“It is not going to destroy us and we have lots of growth coming up,” Mr Wetteland said. “But the biggest thing for us is the contracts are in Norwich and we are a Norwich-based business.”
He viewed the move of taking council services back in-house as a one-off rather than a trend against outsourcing.
“Councils have seen what happened to Carillion and think it is high risk but Norse is different,” he said.
The Labour-run council has not maintained its own homes since before 2000.
A firm called CityCare used to look after the council houses. But that was plagued with controversy.
Its 17,000 tenants and leaseholders were charged over the odds for building and maintenance work on their homes.
The council then gave the contract to Connaught in 2010 but that was hit by problems from the start and the company went into administration.
A Norwich City Council spokeswoman said: “We’ve had a productive 10-year relationship with Norse to deliver a number of services through our joint ventures – something which was the right solution at the time.
“But now we will be bringing this work back home so we have complete financial control.
“In recent years we’ve looked at every single aspect of the services we deliver to see how we can increase income and save money.
“Councils up and down the country are reviewing how they deliver services with many opting to bring them back in-house.”
The spokeswoman added: “We’re disappointed about how the details are emerging as we very much wanted to work with Norse so we could prioritise news to staff and assure them about their jobs as well as plan for a smooth transfer.”
The Conservatives, meanwhile, called on the council to publish its business case - and urged the opposition at City Hall to ‘call-in’ the decision to the scrutiny committee.
Andrew Wiltshire, Conservative spokesman for Norwich South, said: “The council says it can have better financial control but how can people be sure this isn’t a way of cutting the quality of service if they won’t publish a business case?
“If Labour want to bring services back in house - at huge potential cost to council tax payers - that is their decision. But they must be open about doing it and show us that they’ve done the maths.
“Opposition councillors must be tough at Thursday’s scrutiny committee and call-in this decision to demonstrate that someone at City Hall is on the side of local people”
•City council questions
Here are the main questions we asked of the city council.
-Why has the council decided now to notify Norse of its “strong intention” to take all contracts back in-house by March 2019?
-Please can you provide a copy of the business case to take services back in-house?
-How much does the council believe taking these services in-house will cost it each year?
-How much does it believe it will be able to save each year by doing this?
-Why is the council doing this now rather than waiting until the contracts expire?
-How much does it believe it will have to pay Norse in compensation for coming out of these contracts early?
-Taking on Norse contracts will mean an extra 430 staff being employed by the city council. What provisions does the council have in place for increasing its workforce?
-What has changed since 2010 when then council deputy leader and now leader Alan Waters said he was “delighted” to work with Norse on these contracts?
Norse was given the contract to maintain council homes in late 2011 after the collapse of Connaught.
The city council gave the contracts to Connaught in 2010 worth £125m, which was far below other bidders.
But there were problems from the start, including missed appointments and workers not being fully paid, which were initially blamed on teething troubles.
But Connaught’s share price later tumbled and a profit warning was issued.
Five months after getting the contract it went into administration.
It was then rebranded as Fountains and its assets and contracts were sold.
But the city council contract was not part of that.
It meant 300 Norwich workers were made redundant and Norse eventually took over the work.
Dean Wetteland, managing director of Norse, said the firm had achieved an “exceptional turnaround” from the days of CityCare, Connaught and Fountains.