Norwich City Council said it had to sign Connaught deal to save jobs
PUBLISHED: 13:00 16 October 2010
©Archant Photographic 2010
City Hall leaders in Norwich finally signed a deal with stricken contractor Connaught in August - days before the firm went into administration because they feared that hundreds more jobs would be lost if they did not put pen to paper.
Questions have been asked about Norwich City Council’s handling of the Connaught contract in the wake of the firm’s collapse, with calls for an independent inquiry into the whole tendering process that led to the authority signing a £17.5m deal with the firm to carry out housing maintenance and repair work for thousands of council homes in the city.
But in a response to a freedom of information request, the council revealed it had no other option but to conclude a deal on the main housing contract on August 27 as part of an active decision to “strengthen its position” with the firm when news began to emerge nationally of Connaught’s financial difficulties.
The council also revealed that it paid consultants Tribal Helm £722,000 to help draw up the tendering process, which ultimately led to Connaught being awarded the contract on February 10 this year.
And in a sign of how big the final bill could be for City Hall, the council said it faces a £810,000 pension liability for 65 Connaught staff, which it says it is able to meet over the next 20 years.
The authority is also liable for £140,000 of unpaid pension contributions, which it is confident it has “sufficient reserves” to meet in future years, though it has not made any provision for in this year’s budget.
But it still would not disclose how much it paid in a legal settlement with former contractors Morrison after the firm took the authority to court in the wake of the Connaught switch this year.
And it insisted it would not cave in to pressure from city MPs and opposition councillors for an independent inquiry- despite facing fresh calls last night to do so.
The council insisted that while pulling out of the contract would have been an option, walking away would have resulted in “massive disruption” to services and could have led to a further 200 workers being made redundant on top of the 300 staff employed by Connaught Partnerships who lost their jobs.
As it was the 200 jobs which were linked to waste and recycling, street cleaning, and grounds maintenance were successfully transferred to Connaught Environmental, following a successful deal with administrators to keep that wing of the firm afloat.
But no way forward could be found for the controversial housing repairs contract and the council is in the process of re-tendering the work after hopes that a firm could take on the work at the same price were dashed last month, amid suggestions that some of the firms brought in temporarily are bringing in staff from other parts of the country and putting them up in hotels in the city to carry out housing work.
The answers also show that the authority also took up references from three other public sector and three private sector organisations which already had contracts with Connaught during the pre-selection process, while the Audit Commission is expected to conclude in a report on October 26 that the way the council’s arrangements for procuring services were “adequate”.
Alan Waters, cabinet member for corporate resources and governance, and chairman of the contracts working party, said: “We always made clear that the re-letting of these important contracts was governed by the procurement rules and that we had every reason to award to Connaught based on the experiences of other organisations with which it held contracts.
“The decisions we made throughout were made in the best interests of our tenants and residents and the workforce. We are now focusing all our attention into letting the temporary contracts for the next nine to 12 months before putting in place a longer term solution.”
But Norwich North MP Chloe Smith said the council was not out yet out of the woods and was also critical of the decision for the authority’s scrutiny committee to consider the issue behind closed doors.
“There are still some extremely serious questions there,” Miss Smith said. “If you look at the point about references, it’s clear that Connaught would have put up their best ones. I don’t think what we have read is the end of the story, I think an inquiry is needed both locally and nationally, and they have to be independent, to be able to verify everything that’s being told to us.”