Project Verde Meeting – 15/11/2017
- Philip Swift (PS)
Meeting Agenda: KPMG have read and understood the “Statement/Evidence” document submitted by PS. The purpose of the call is to ascertain whether PS has any additional information or explanation he would like to add to his claim.
- Issue came to my attention in late 2014.
- In 2013 we would see a charge of £125 for emergency attendance at an incident.
- In 2014 this charge increased to £1,500.
- On 01/07/14 – EM Highways took over the contract from Amey and introduced AIWs (Asset
Incident Watchmen) (this was to replace ISU’s (Incident Support Units)). It was claimed (by Kier) that AIWs were highly trained and they would attend an incident in twos with a vehicle.
- In 2015 the charge levied for AIWs per incident attendance increased to £2,700.
- PS confirmed that these were one-off step changes to the charge.
- When questioned about this cost increase for attendance charges, Kier Highways Ltd (KHL) initially provided a lot of information. They provided a rate per incident for an AIW based on the total cost per annum divided by 1153. PS told that there were 38 AIWs for area 9 and 19 vehicles. Based on the 1153 calculation an AIW was charged at £2,385 per incident and the vehicle was charged at £381 per incident.
- KHL were charging third parties 100% of AIWs time. However, AIWs also filled pot holes, cut grass and collected debris which is paid by the Highways England (HE) lump sum.
- Based on PS’s calculation AIWs cost about £30 per hour – he therefore questions how at £30 per hour are they racking up a bill of £2,700 per incident. These under threshold claims are small incidents which he estimates usually take under 4 hours.
- KHL have subsequently provided limited information in response to his further queries.
- In late 2014 and on 21/08/205 KHL contacted CMA clients and stated that KHL would issue proceedings on all CMA claims. (check if stated this)
- In 2015 PS had meeting with Sophie Granville (SG) and Neil Pendlebury-Green (NPG) from KHL. In meeting stated that they were going to abandon 1153 calculation and try and put a new process in place.
- This led to some claims plummeting – PS thought all claims should have dropped by circa. £4,000.
- In October 2015 the 1153 calculation had been replaced.
- KHL had created an insurer’s guide – this was based on the defined cost process. PS was not aware of Appendix A to Annex 23 at this time and was not involved in the creation of the insurer’s guide. PS later learnt that Appendix A Annex 23 contains protection for third parties.
- Under this new process, KHL charged £70.32 per hour for an AIW in all areas except Area 9 and £73.05 per hour for an AIW in Area 9. PS challenged the different charge in Area 9, but KHL responded that it was due to Area 9 being in a shambles when they acquired it from Amey in 2014.
- SG confirmed that £70.32/£73.05 are the correct charges per hour. SG confirmed defined cost of £58.32 and uplift of £12.00 (20.58%).
- PS confused as to how costs have more than doubled.
- PS then discussed an incident at 9pm at the end of July 2016 in Area 9 that was over the threshold. The claim was presented by HE and included an AIW at a defined cost of £23.71 and uplift of 7.38%, bringing the total to around £25.
- PS questioned SG – asked why KHL are charging HE only £25 vs. ~£70 when KHL claim from third parties.
- On 31/03/2016 – sent a letter to SG which SG scanned to lawyers. (check this was stated) Since then PS has only dealt with KHL lawyers.
- Additional issue – Incident management form (IM form) showed that AIWs were already on M6 at 9pm, and were able to attend the incident within a few minutes, but third parties are being told multipliers are being applied to the charge when AIWs are called out of hours. KHL do not appear to charge multipliers are on over threshold claims made by HE.
- PS claim either HE have done a deal to get a cheaper AIW charge? Or HE are ignorant of what is going on?
- Another incident at 6am a week later in Area 9 that was below threshold. The claim was presented to the third party and included an AIW at a total cost of £73 plus a multiplier as it was out of hours.
- PS claims that out of hours should not incur a charge. AIW’s are shift works so out of hours should be built in. PS does not think AIW get an uplift for working on weekdays out of hours, but they may get an uplift for the weekend/bank holidays.
- Can look into AIW’s salary.
- SG stated that AIWs are on £42k a year – PS said generous even if it is shift work.
- Insurer’s guide states the core hours and multipliers that are applied, but these multipliers are not applied to HE claims.
- IM forms show that AIW’s are on the M6 at 9pm at night.
- PS tracked down an AIW who said they work shifts.
- SG at court stated that the out of hour’s multiplier is passed on to operative (this could be a gross misrepresentation / fraud if it is not being paid to AIWs).
- Tim Reardon (TR) from HE communicated with PS – this resulted in audit of the claims in the West Country.
- The audit did not identify the damage caused by 1153 and it appears that the auditors were directed to certain claims. Also, the audit does not state whether the audit complies with the contract.
- PS wrote to TR to ask how much HE were charged for an AIW. TR stated that HE were charged £70.32. PS asked when HE had been charged this amount. TR replied that the charge is correct at December 2015 and that the amount was supplied by KHL. PS believes that stating the amount was provided by KHL was just a get out, as PS believes TR should have asked the HE green claims team. PS believes this is an example of the General Counsel giving false information.
- PS believes HE is in cohorts with KHL, and that HE are supporting KHL to overclaim. PS stated that HE claims now include daily time costing sheets from KHL – there are timesheets from the operatives so we can see when AIW’s shifts are (further evidence of KHL misrepresentation in court). PS believes this shows the core hours idea re: AIWs is incorrect.
- End of 2016 KHL claims begun to be presented in court. PS paid for court transcript, attached was Appendix A Annex 23 (likely misunderstood by KPMG – incorrect)
- Appendix A Annex 23 sets out the principles to be followed when calculating the max amount that can be claimed against third parties. Breaks it down into defined costs and third party claims overhead. ASC does not set out values or have a schedule for defined costs that PS has seen.
- This means that the defined cost is £58 and a 20.58% overhead is applied.
- KHL in court stated that the defined cost for HE and Third Parties is the same.
- HE only charged an overhead of 7.38% and Third Parties charged an overhead of 20.58%.
- KHL not complying with the contract. If KHL were an AIW should cost £20 plus 20.58% overhead.
- In Jan 2016 audit, auditors were aware of Appendix A Annex 23 but they did not refer to it.
- KHL had one process at the outset and now have another – why is there no consistency?
- HE have been protecting KHL.
- KHL state that the current process has been agreed with the insurance industry – but this is not was is stated as acceptable in Appendix A. Also, PS has contacted Admiral, and they were not involved with the development of the insurer’s guide (despite KHL claiming they were).
- PS will document all of the above. PS will not say anything that he cannot evidence.
- PS asked do you have dealings with KHL?
- We as a firm complete work for both KHL and HE, but I am not involved. I am independent. This is a usual situation for us when completing independent reviews.
- PS asked for timescale?
- Timescale not decided yet.
- PS asked whether should the evidence suggest criminal offences, we would consider alerting relevant agencies?
- We would have to consider based on the findings of our work.