180924 To Highways CEO re Agreed Schedule of Rates

24/09/2019
To: Jim O’Sullivan @ highwaysengland.co.uk

Dear Mr O’Sullivan,

Thank you for your letter of 21/09/2018 which I received today. I should be grateful if you would pass to me a copy of Mr Reardon’s to contractors, the outcome to the area 9 investigation.

It is unfortunate that every day I still see claims made against third party motorists which contain grossly inflated rates, and made upon the purported authority of Highways England. You might be interested to hear that a Judge in Manchester County Court last month criticised Highways England for creating a system which resulted in numerous on-going disputes draining Court resources, and was completely opaque. I doubt that this has been brought to your attention, but it is potentially highly damaging to Highway England’s reputation. In South Wales, all claims brought on Highway England’s behalf have been stayed because of this issue.

It would be of great assistance to the Courts if Highways England were to co-operate and prepare
comparative data which summarised the typical costs of repair to their standard assets across the
network. CMA have been collating such information upon a piecemeal basis, which the Courts have
difficulty in accepting because of the failure of contractors, acting on Highways England’s authority, to cooperate in disclosing their actual costs and schedules of payments. This could well address the existing issue whereby contractors seek to recover excessive charges from third party motorists, hiding behind ‘commercial confidentiality’ as a reason to refuse to disclose the actual costs of repair of the asset.

In summary, were you aware that your contractors, such as BBMM, are seeking to recover rates which are approximately 400% greater than those which Highways England would seek to recover upon their own account for the same plant, staff and materials? BBMM advise the Courts they are entitled to seek a sum they choose to assess upon an arbitrary basis reflecting what they believe is the industry standard rate (called ‘CECA’).

An obvious example is where ‘below threshold’ claims of less than £10,000 as retained by the contractors, when presented in Court, are for sums which greatly exceed £10,000? I have an example my desk issued on 10 September which is for almost £14,000. Therefore you have a bizarre situation whereby your contractors are issuing claims in sums significantly greater than those which Highways England would seek to recover should they have pursued that same claim directly.

Another example concerns your contract for Area 9. Kier are supposed to charge the costs which would be charged to Highways England (defined costs) plus a modest uplift (Third Party Claims overhead). Kier ignore this, yet tell the Courts when presenting claims in the name of Highways england, they are complying with the process.

A very simple way in which to resolve all these matters would be to publish a statement which sets out an agreed schedule of rates for various items to which insurers can refer as being an appropriate reflection of the averaged costs of repair for damage to defined assets. That is what the Courts are calling for, and would be in line with the principles of accountability and transparency which Highways England Company should be applying in any event.

I look forward to hearing from you.