190628 Conversation re NSoRC

28/06/2019 Conversation with the NSoRC manager, Martyn Gannicott (HE/61)

Conversation following an email to HE bearing the footer:

Note: calls to or from CMA may be recorded and or monitored, pursuant to LBP Regulations 2000, to establish the existence of facts and / or to prevent and / or detect crime.

This transcript has also been presented in Tribunal EA/2021/0048, in respect of which the Authority was given the opportunity to challenge the evdeinced but has not done so.

Preamble redacted

  1. PS                    Are you aware of our involvement in claims?
  2. HE/61               Broadly I am, yes.
  3. PS                    Okay. Um, I’ve had a look at the online information that’s been provided, the um the new schedule of repair costs um…
  4. HE/61               Mm-hm.
  5. PS                    … and the rates. I’m particularly interested to understand how these um lump sums, these um, what appears maybe averaging have, have been arrived at.
  6. HE/61               Absolutely. So, if I just rewind a little bit and, and…
  7. PS                    Yeah.
  8. HE/61               … you probably know more about the history than I do, to be fair. Huh, um but the, the derivation of coming up with the national schedule of repair costs has resulted um from lot-lots of different, for lots of different reasons but primarily around some of the queries, many of which I think you’ve raised and, and quite rightly so, around um regional variations, differences in costs from different contractors, um confusion over what’s reasonable in one area isn’t reasonable in another, etc, etc. So it’s, it’s trying to pull all of those strands together to come up with a, a Highways England’s view, as opposed to a contractor’s view, as to what is the fair and reasonable costs for carrying out the repairs.
  9. PS                    Okay.
  10. HE/61               Um, so that’s the, the starting point, if you, if you will. Is that a fair [cough] summary?
  11. PS                    Yeah. Well, I understand, I, I can see how that, that’s arisen that, and certainly that it err, it’s more of a HE view as opposed to the contractor view, and I’ve always thought that that was the correct approach because ultimately the roads are a, an asset, they’re a national asset, they’re a public arguably um asset, they belong to the people, and effectively privatising their maintenance or upkeep and having people who err report to shareholders… I, I was going to say profit, I don’t have anything against reasonable profit, um I, I draw the line when it becomes profiteering but…
  12. HE/61               Well, sh-shall we call it commercial gain [unclear 0:03:10]? [Laugh]
  13. PS                    Yeah, yes. There is a difference between a public authority, which you tend to think of as ultimately breaking even almost like a non-profit organisation, and then putting it in the hands of a contractor who has to report to shareholders and has all sorts of other pressures which result in um income quite often taking a very high priority, um and, and causing information to become distorted, shall we say?
  14. HE/61               Yeah.
  15. PS                    So that’s, that’s where I come from it.
  16. HE/61               Yeah, and so, so this is um our view as, as, as to what this looks like. We-we’ve been through quite a lengthy internal exercise looking at all sorts of different data sets, um, whether that’s [CECA 0:04:03] and the rights of wrong on CECAr we could probably have an af- a whole afternoon discussing that.
  17. PS                    [Laugh]
  18. HE/61               [Laugh] Um, but we’ve referenced obviously CECA, we’ve referenced um, other documents such as the working rule, national working rule agreements and so on and so forth um for labour rates, um and we’ve also looked at some of the claims history and the claims that have been settled, um and we’ve also looked at some history and, and information around the um tendered rates for those work elements from our contractors.
  19. PS                    Is that tendered rates for damage to crown property?
  20. HE/61               Not, not, not damage to crown property but for, for, for works that are of a similar nature, so the cost of repairing a barrier for example, or, or replacing a barrier.
  21. PS                    Okay.
  22. HE/61               Um, and we’ve looked at our, our M and R contracts and um, and worked through with all of that information, and we’ve looked at, you know, what’s the absolute minimum? What’s the absolute maximum? And we’ve done a lot of analysis work around this and err, it’s um led us to these, these, I’m going to call them composite rates, um ’cause that’s exactly what they are, err and sitting behind that composite rate we have a breakdown of labour and plant, ’cause you’ll see that materials are a separate schedule.
  23. PS                    Yeah.
  24. HE/61               Um, so that we, we understand what the, the, the build-up of the labour and plant is, and then that’s how we’ve, how we’ve derived it. So it, it, it’s taking a very broad set of data and lots of information, understanding it from a, err through my cost planning team, um and then err applying some estimating principles to it and coming out with, with the answers. Um we’ve done quite a bit of this um in association with the ABI, um so we’ve shared it with the ABI members, um and what was… We have gone live with this schedule, um but I think um what we’re saying here is that this is the first step on, on a journey for us all um and we’ll happily receive feedback on what we’ve put out there, we’ll respond to um issues and challenges that arise from the schedule so, you know, if for exam- I, I’m going to pick something completely fictitious and random…
  25. PS                    Mm-hm.
  26. HE/61               … if we’ve got a labour rate of £17 an hour for a labourer and actually we all agree that actually it should only be £15.50, well let’s make the adjustment. Huh. Um…
  27. PS                    Yeah.
  28. HE/61               We’re not, we’re not too, too precious about, about the… Err, well we are precious, but in terms of the, the process this is about getting a schedule out there that we believe is a fair and reasonable cost…
  29. PS                    Mm-hm.
  30. HE/61               … for carrying out that element of work. If we need to adjust going forward then we will, we’ll look, we, we’ve err set in place internally some, some internal processes to carry out some um ongoing analysis work, so um as and when we are repairing damage to the network what is the actual costs of that repair? Clearly, we’ve got some of that from our historic records, but we’re also measuring it going forwards specifically in line with the national schedule, um so that we can do some, some future analysis work that says, you know, ‘II-is, are these rates in the right ballpark?’ And I think, as you know, there’s, there’s no right or wrong answer to these rates. Um…
  31. PS                    [Laugh]
  32. HE/61               Th-ther-there, there is a range, and you could argue it could be at the lower end of the range or the top end of the range or the middle of the range, and I think it’s just we’ve tried to put a sensible hat on to say, ‘Well we think this is a fair and reasonable cost.’ Does that make logical sense to you?
  33. PS                    But presumably at some stage you’ve looked at, and I, I generally refer to Area 9 because it’s the one that we have the most problems with, we’ve looked at Area 9 contract and looked at their damage to crown property rates, their defined costs, and you have a schedule of rates?
  34. HE/61               We do.
  35. PS                    So why, why not just use those?
  36. HE/61               Um because Area 9, err versus all the other areas in the country, um are all different because they’re all, they’re all competitively tendered at a particular point in time, um and what we were looking at was to try and come up with a standardised cost on a national basis for, for a whole myriad of reasons. So, I think taking one set in isolation…
  37. PS                    Hmm.
  38. HE/61               … is not necessarily the an-answer for a, a national challenge.
  39. PS                    The reason I, I mention them in particular, they’re, they’re a Kier Highways, Kier have a number of contracts so they’re sort of southwest…
  40. HE/61               They do.
  41. PS                    … they’re north, blah blah blah, so they’re, they’re pretty, pretty across the country, and when I spoke to their claims manager some while ago we were told that they were the most expensive because of some problems in the area, so I, I’d thought that that might be a good starting point. I… What I’m trying to get at ultimately is this schedule of rates, we’ve, we’ve come from, I’ve been involved in this for over 10 years and I’ve seen the use of um composites of a fixed fee for attendance for example, um and then the concerns being raised, Kier Highways in particular saying, ‘Look, insurers don’t like that, so we’re now breaking it down and we’re doing it per hour per item.’ We now seem to be going full circle and coming back to composites. The problem that originated with composites years ago was that somebody said, ‘Well, you know, how did you get to this? How much of this um management or supervision or in fact the um the make safe and restore traffic flow…’ which I’m assuming is attendance, initial emergency attendance…
  42. HE/61               Right, yeah.
  43. PS                    So, £1,474, how, how is that made up? Because we know attendance involves um a vehicle, generally something like a Ford Ranger, couple of operatives, and that they will be um at a scene for less than four hours. Now, if I look at £1,474 and I compare that with Kier’s presentation to me, um that is quite substantial, so I’m, I’m…
  44. HE/61               Um, yes, that, that, and, and in the half hour that we have err I, I don’t propose that we get into the nitty gritty of…
  45. PS                    No, no.
  46. HE/61               … of, of, of the breakdowns, um but in terms…
  47. PS                    But there is a breakdown somewhere?
  48. HE/61               There is a breakdown, and the, the um, that is… So the, so the composite rates are for an entire shift, so it, so it’s not for the hour um…
  49. PS                    Wow!
  50. HE/61               So that, but there is a, um the actual claims pack itself allows that to be broken down, so it doesn’t necessarily mean to say we’re going to charge £1,000…
  51. PS                    Right.
  52. HE/61               … every time there is an incident, it might be a, it might be, it might be a tenth of that…
  53. PS                    Right.
  54. HE/61               … for argument’s sake, since… 
  55. PS                    Good, Mar-HE/61, that’s, that’s, that’s my, my [laughing] that was my, my, my big starred question about proportionality, I’ve got some on paper here.
  56. HE/61               Right. [Laugh]
  57. PS                    And I’m sort of…
  58. HE/61               No, absolutely, we…
  59. PS                    You know, the relief.
  60. HE/61               Yes, we recognise the proportionality err issue and…
  61. PS                    [Laugh]
  62. HE/61               … it, it, it… You know, it’s all about um being fair and reasonable err in, in my view. And we, we did quite a bit of analysis on um, we took a sample of claims…
  63. PS                    Right.
  64. HE/61               … um I, I think off… It was around 100 claims um…
  65. PS                    Okay.
  66. HE/61               … that we took, um and we did some analysis around those, um and by applying the national schedule of repair costs compared… So, so we had all the data from actual claims and pay- actual claims, actual paid…
  67. PS                    Yes.
  68. HE/61               … etc, etc. So, these were completed claims, if you like, so, which we were able to track through their entire journey, and we took a mixture of types of claims um that were proportionate to, um to the, to the mix of claims that we have, so whether it’s um, I don’t know, err fencing damage, barrier damage, lighting damage, um re-repair of um road surface, um all, all of those different types of categories we, we try to get a fair mix of claims within the 100 so that…
  69. PS                    Yeah.
  70. HE/61               … and working on a percentage basis, huh, usually it helps, doesn’t it? Um it, it um, it was representative as, as much as we could do in that sample of the work mix that’s carried out and so, in this arena.
  71. PS                    And was that above and below threshold?
  72. HE/61               Yes it was.
  73. PS                    Right.
  74. HE/61               Um, and the, the element for, for me that, that, that came out of this was that, as you would expect, on an individual claim by claim basis there wasn’t a, you know, some of it correlates, some of it didn’t, there were some ups and there were some downs when you applied the national schedule.
  75. PS                    Yeah.
  76. HE/61               In the round, it comes out at less… Err in, in, well in the round it comes up around about what was paid.
  77. PS                    Okay.
  78. HE/61               So, in terms of the, um and that’s post-negotiation with people like yourselves and the insurers.
  79. PS                    Yeah.
  80. HE/61               So, so in terms of where the national schedule gets us to, I, I think it’s in or around the right ballpark without having to go through um, lots and lots and lots of negotiation. I, I think the real challenge with all of this, um and this, this is easiest for me to say [laugh] um…
  81. PS                    [Laugh]
  82. HE/61               … um I think the rates are, are reasonable rates, um when, when you boil it down and you look behind it and compare and contrast etc, on a national basis. I think, I think the debate is, is um probably as always on quantum. So, was A on site for half a shift, a full shift? Um, was it six cube of concrete or three cube of concrete? And I think that’s the, um more of the contentious element of this. It’s not actually…
  83. PS                    Interesting.
  84. HE/61               … the actual repair costs, I don’t think is, is going to be the challenge moving forward, which it will be a challenge because there’s a, there’s a lot of engagement we’ve got to do, and we accept the fact that we’re going to get a lot of feedback and we need to take this into account and etc, etc. So, you know, it’s, this isn’t something that’s cast in stone forever, this is, you know…
  85. PS                    Yeah.
  86. HE/61               … we need to do something, this is a step on the, the first step on the road to doing something proactive err and hopefully engaging with the insurance industry as a whole to get us to a, a more sensible position where we’ve got um less litigious issues that we can… You know, we don’t always want to be stood in front of the, the man with the wig resolving these things um…
  87. PS                    Mm.
  88. HE/61               And also, you know, processing time. People like yourselves, um I’ve spoken to another loss adjuster this morning um on exactly this topic and it, it’s… There’s a lot of inefficiency in the whole process, not just for Highways England but for everybody, um and so it’s hopefully going to streamline it, um but it’s not going to happen overnight.
  89. PS                    No, no. Um what I’m… Huh, you know, for a company that is perceived as being somewhat um forthright um, you know, CMA, um of which I’m a director, we are pretty punchy…
  90. HE/61               Mm-hm.
  91. PS                    … um and we, we, we have a reputation of, of picking up on stuff and, you know, once, once we’ve got that bone we do tend to, to chew on it.
  92. HE/61               Mm-hm.
  93. PS                    Um what I’m hearing I like and I, as I say, I mean the, the fact that these, the proportion will click in, that’s a great relief. There are, there are some bits that I think will need tweaking, but what I want to be seen as being is someone here to help. Um we… Because we’ve been, I don’t like the word ‘aggressive’ because that’s what, that’s the conduct that’s been used against us, um but having been sort of in the face of Highways England, I think sometimes they  lose track of the fact that, just as you’ve said, there is a process to be had here, it’s not in our interest for this to be, um for there to be friction…
  94. HE/61               Mm-hm.
  95. PS                    … and anything we can do to help, to help a process get into place that works. So, I have some notes. You know, for us, shifts, times, generally when we’re dealing with Highways England staff, your green claims staff, they are reasonable people. We much prefer to be dealing with Highways England than we do with contractors, because it probably comes down to um, you know, the shareholders and profit sharing, etc at the end of the day that Highways England are more pragmatic and understand that this is, you know, a public asset that they’re looking at and they’re working for the public, in the interests of the public that they serve.
  96. HE/61               Mm-hm.
  97. PS                    Um so, we enjoy dealing with your greens claims staff. They don’t always enjoy dealing with us because we…
  98. HE/61               [Laugh]
  99. PS                    … we can be a little blunt.
  100. HE/61               That’s fine.
  101. PS                    Um but I think, certainly with regard to the hours, we always find Highways England, who are going to be taking all these matters on under the AD contracts, to be straightforward. So, I, I don’t think we’re going to have too much of an issue there. Documentation is something that is a problem, um and this is more often a problem for Highways England. I think you need to be a little bit more um pushy with your contractors, certainly with the TR430 over £10,000, the forms that come in…
  102. HE/61               [Slight cough] Yeah.
  103. PS                    … you get, you get good support, um the corroboration of rates and hours is good. Quite often it’s contradictory, but that’s something I think I’ll, I’ll come onto, but I think if you can get that at day 1, you are going to help your green claim-claims staff out significantly. You know, but I can’t re-…
  104. HE/61               [Inaudible 0:20:06].
  105. PS                    … I can’t recall a matter where we haven’t had to go back. And bless him, I can see Stephen Jackson’s got an email from me today saying, ‘Look,’ you know? And, and bless, he’s come back to me and said, ‘I’ve chased them again.’ And we don’t like to keep chasing them but, you know…
  106. HE/61               No, no.
  107. PS                    … we’ve got service level agreements. So, I think…
  108. HE/61               So, so what…
  109. PS                    Mm?
  110. HE/61               So actually, just, just to pick up on that point, because I think it is really important, what we haven’t done here is just created a national schedule in isolation.
  111. PS                    No.
  112. HE/61               Um there’s actually been a process review as well. So in terms…
  113. PS                    Yeah. No, no, no.
  114. HE/61               So in terms of collation of information that supports the claim, that is equally, well, so if not more important than the actual rates, [and clearly that’s 0:20:49] the rates, I think the rates will be the rates, and you might argue one’s a little bit high, one’s a little bit low or could be to the left or could be to the right a little bit.
  115. PS                    Yeah.
  116. HE/61               It…
  117. PS                    No, I agree, and certainly I mean we, we looked at…
  118. HE/61               Which is [a lot of this 0:21:02] issue.
  119. PS                    No, before talking to you I looked at an Area 13 claim where they’ve got the AD contract, um and I’ve written to Ollie at um Highways England Green Claims today um and explained to him, ‘Look you…’ In fact, no, it wasn’t, it was um one of my handlers sent it to me and just asked me to review it because they were concerned from that, err from your perspective about writing to, to Ollie because there was no, um there were no timesheets, there was no initial attendance report, no [heat 0:21:35], it just lacked documentation. But alright, it was just over three grand, but to be missing so much and to have to go back to Ollie on a min- relatively minor claim and say, ‘Look, here’s, err here’s what we want,’ if this is going to happen on everyone, you know, the, it’s just going to cause problems.
  120. HE/61               Yeah.
  121. PS                    Do you know how many claims you see a year overall or you, you will see?
  122. HE/61               Well, um off the top of my head, no. [Laugh]
  123. PS                    Yeah. No, I know…
  124. HE/61               I don’t have the data in front of me [inaudible 0:22:03]…
  125. PS                    Kier, Kier wrote in October 2015 that it was, they alone dealt with 5,400.
  126. HE/61               Yeah [inaudible 0:22:11] quite substantial.
  127. PS                    So if, if Highways England are taking this lot… Yeah, if Highways England are taking this lot on, I mean that, that is…
  128. HE/61               Yeah.
  129. PS                    Ultimately, it’s, it’s going to be a real headache. Um…
  130. HE/61               Um, well, it will, it will be, but of a… Again, this is all about process, isn’t it, and um…
  131. PS                    Yeah.
  132. HE/61               … you know, we’re moving… So, um ob-obviously um, and you’re well versed with and knowledgeable about all of the, all of our operations but as you know ASC um hasn’t got that much longer to, to run in reality, um it’s all moving over to asset delivery contracts.
  133. PS                    Yeah.
  134. HE/61               Um I think it’s, I, I personally think it’s good news that we’re taking back control um and, and running that process. And so, really the, the above and below threshold um element doesn’t really exist going forwards. It, err our, our new thresholds, if you like, um are ones that we’ve set at a much higher limit, so I think we’ve um…
  135. PS                    Yes, 20 and 50, yes. 
  136. HE/61               20 and 50; 50 on the pavements just purely and simply that when we’re doing that type of work just inherently paving machines, planers, tarmac, it’s all expensive stuff um…
  137. PS                    Do you lump, do you lump paving in as resurfacing of a motorway?
  138. HE/61               Yes.
  139. PS                    Right. I was looking, I was thinking, ‘Paving? That’s, that’s a bit odd, I’ve never seen a paving.’ But yes, no, it’s, it’s the resurfacing.
  140. HE/61               Yes, so resurfacing, yeah. Um, um…
  141. PS                    Right, so phraseology.
  142. HE/61               … it’s just that we call it pa-pavement. Yeah, it’s a bit…
  143. PS                    Yeah.
  144. HE/61               You know? [Cough] excuse me. um…
  145. PS                    Yeah, I’ve not seen that.
  146. HE/61               Yeah.
  147. PS                    No, I’m thinking as well for the documentation, it… At the moment there is very little prepayment err of contractor err consideration of the claim. Um in recent correspondence um Highways England have, for want of a better word, admitted that below 25,000 they effectively get rubber stamped, paid, it goes to green claims and green claims are expected to then demand recovery, um obtain recovery. The problem we’re seeing is that, in fact we haven’t seen one that has come through correctly, um and they’ve been paid. We, and we, we have a, quite a history of these whereby we go back to Highways England and say, ‘Look, look guys, you shouldn’t have, you shouldn’t have paid this, um this is an overstatement.’ I mean the, the big one that comes to mind was the £46,000 where the contractor had charged um 70-odd metres of barrier repair, it should have been 70 feet, and it was reduced to £11,000. And we, you know, it… And these things go through regularly. We have not seen one above threshold claim that has been correctly priced, and yet they’ve all been paid. So, I think that might be something to look at. Um…
  148. HE/61               Absolutely. So, so, you know, there’s… Um I’ve, I’ve made a very clear distinct… So, my role within the business is, um so I do all the cost planning, cost estimating, dispute resolution…
  149. PS                   
  150. Right.
  151. HE/61               … um all sorts of interesting things.
  152. PS                    So, presumably you, you have a copy of the Area 9 damage to Crown property schedule of rates?
  153. HE/61               My, my team will have somewhere, yes. [Slight laugh]
  154. PS                    Right.
  155. HE/61               I, I [inaudible 0:25:31].
  156. PS                    Could I have that?
  157. HE/61               Um I… So, the question is I’m not sure. I just need to cross check and make sure, ’cause they, they, they do get a little bit tetchy over confidentiality, um…
  158. PS                    Well I, I, I com-
  159. HE/61               … [inaudible 0:25:46] speaking with Mr [inaudible 0:25:47] who you know and love.
  160. PS                    Well, he and I have a love/hate relationship. Um…
  161. HE/61               [Laugh] And that’s fine.
  162. PS                    [Laugh]
  163. HE/61               Um so I, I, I just need to just double check on that but in, in principle, um assuming our legal team say yes, then that’s fine, then no reason why we can’t do that.
  164. PS                    Yeah, it’s, it’s… What happened…
  165. HE/61               Area, Area 9?
  166. PS                    It’s Area 9. July 2014 the contract commenced, there was a schedule of… Well, it’s the schedule you-you’ve reviewed, the um damage to crown property rates for the contract that are used to charge above and below threshold. Um…
  167. HE/61               [Inaudible 0:26:30] with me.
  168. PS                    Lovely. Liability as well, I think ultimately, let’s get, let’s get this to bed in, um but liability I think we can help you with. We did a deal… I say… No, deal’s not the right word, we, we reached um a gentlemen’s arrangement with regard to liability um with some contractor, with a particular contractor, I dealt with a lovely gentleman some years ago. Um there is a lot going on at the moment, we are being asked more and more to look at liability, um and that might be worth bearing in mind for insurers and how you deal with them. I note the recovery is 20%, it’s very difficult to make a meaningful sort of balance on that when um the proportion of 20% is going to be over threshold and the, the sums involved and the number of claims, but liability is, is becoming more and more um important.
  169. HE/61               Absolutely. So, I think, I think for me, um our… The process that we have and the, and the rates that we have um are absolutely irrelevant if we can’t establish liability in the first instance.
  170. PS                    Yes, yes but at the same time I think, I think you can… There is a lot that can be done to remove the friction there, but I think that’s, that’s a conversation for later, once, once we’ve got the basics in. And, as I say, I, I’ve done a lot of work on this and I don’t want you to have to go all over it, I’m quite happy to disclose what we’ve got, um because I think it will help ultimately.
  171. HE/61               [inaudible 0:28:01].
  172. PS                    The last point I have that I thought just worthy of note and to bear in mind is temporary vehicle restraint system.
  173. HE/61               Mm-hm.
  174. PS                    Um, now I cannot see how this is covered at the moment within your schedule, but it is becoming, um well it has become quite a bugbear, um and I’ve got a couple of insurers who are far from happy, and in part I think this could ultimately reflect upon Highways England. To give you an idea, and to give you an actual example, we have an Area 10 Balfour Beatty matter, and I think it was 2017, err to parapet damage and an area of vehicle restraint system, temporary, has to be installed. So, it comes from Hill and Smith, they install it, there’s a cost for that, it gets removed, there’s a cost for that. Once it’s in situ, let’s say it’s 80 metres, it’s charged at 40 metres per day, and the claim initially was going to be retained by the contractor, ergo Balfour Beatty, it was under 10k. It then came to Highways England at just about 26k, and currently it stands at £230,000, which I think Highways England have paid and are now seeking. [Slight laugh] Staggering!
  175. HE/61               And that’s because there’s a, a temporary vehicle restraint system sat on our network and nobody’s actually done anything to sort out the root cause, I’m guessing?
  176. PS                    The answer is I haven’t got the information, and, and it would be unfair for me to, to point finger, to blame anybody.
  177. HE/61               [Inaudible 0:29:45] Yeah.
  178. PS                    And, and no matter what you’ve heard about me, I’m extremely fair and, and I try to put an, an accurate picture across. What’s happened is, a parapet’s been damaged, which means that possibly this is a bespoke item that needs to be manufactured and put into place, obtained and then…
  179. HE/61               Quite possibly.
  180. PS                    … installed. So, I get there, there might be a three-month delay. What I don’t know at the moment, I’m trying to get to, is what has caused… What your service level agreement is such that the contractor should have been telling you every month, every week, ‘Look, we’re doing this, we’re at this stage, by the way the costs are accumulating,’ the mitigation of it. And I’m also asking whether or not you’ve actually paid it, because although the… And, and I would expect so because the bill’s come into us at £230,000, um but somebody at Highways England must surely have looked at this and gone, ‘What?! Why?’ And I would have expected that what and why to have been presented to me with the claim to say, ‘Look, yeah, it’s a big claim, guys but…’ The lack of justification worries me, and I have a database now, and this is only small, it’s about five of these things where I’m seeing vehicle restraint systems, and I refer to it in the office as ‘the new credit hire,’ the sort of put a guy in a, in a hire car and just sit back and let him get paid every, well accumulate a charge every day.
  181. HE/61               Mm.
  182. PS                    Um so, I think that’s something that you might want to think about. It, it didn’t appear in the system, I didn’t see it.
  183. HE/61               No, and there are going to be um some oddities, um and when you look at um the actual individual claims packs themselves, there’s um, um a costing template, so the costing template… So, the national schedule is based on, most of it’s done on the 80/20 rule – 80% of what we do is covered by the rates um as is, and, and hence those thresholds of 20,000 and 50,000 as well, so 80% of the claims that we, we will deal with will be under those thresholds. So…
  184. PS                    Yes.
  185. HE/61               … the majority of the work will be under those thresholds and covered by those rates. There are going to be times when it’s either, a) over threshold or, b) not covered by those err schedules, just by the very nature and virtue of it’s a national asset and there’s stuff out there that you just can’t legislate for um in the round. And, and therefore we’ve put some um, um, um some freelancing lines in there, if you will, huh, to, to allow the capture of things like that that um don’t naturally sit within the schedules.
  186. PS                    Yes. And the, the last point that I’ve, I’ve made a note to myself, ’cause it’s the biggie, is, is the resurfacing.
  187. HE/61               Mm-hm.
  188. PS                    Um there appear to be varying approaches within the areas, and, and I think this requires some sort of national guidance um to the contractors to say, ‘Look, you know, this… When…’ A fire generally results in resurfacing being necessary.
  189. HE/61               [Inaudible 0:33:02] yeah.
  190. PS                    A fuel spill is the one that gets contentious…
  191. HE/61               Often.
  192. PS                    … because…
  193. HE/61               Yeah, it depends on what’s been spilt and how quickly they mop it up. 
  194. PS                    Yeah, and often that’s how quickly they get to, get to the location, but there does seem to be a kneejerk reaction with some which is, ‘There’s a spill, we’re going to resurface,’ and I think that needs, that’s a culture that needs to…
  195. HE/61               Mm-hm.
  196. PS                    … um to be addressed. Um possibly it will be. I mean, you know, you mentioned Tim, he’ll be very aware of my concerns about the, the rates and the profiteering that I’ve seen over the years, um it could be that this process um removes the ability to, to abuse the system. Um and I’m not expecting you to comment on that, um but it simply, it, it could remove um the, the means…
  197. HE/61               [Inaudible 0:33:55] off, off the record and, and sort of in principle I, I’m, I’ve worked in civil engineering for 30 years um as a professional quantity surveyor, both client side and contractor side, um so I, I, I see how things operate and, and on occasions you um sort of raise the odd eyebrow now and again. Um in, in terms of our, in terms of my approach at Highways England, what I’ve tried to do here is it, there isn’t… I’ve tried to put a bit of a disconnect in this between Highways England’s fair and reasonable costs for carrying out these repairs versus um contractor’s position.
  198. PS                    Yeah.
  199. HE/61               And if I, and I need to have a, an argument with a contractor over the fair and reasonableness of their costs because it’s way in excess of what we’re recovering under our new schedule, then I’m prepared to have that battle. So, I think some of it, some of the battling that you’re doing and facing you may well find that you’re not having to do that any longer ’cause actually we’re internalising that.
  200. PS                    Yes, I, I think you’re right. I, as I say, I mean I’ve, I’ve taken a glass-half-full err approach to this, and I have intentionally today made sure that I don’t raise any of my spectres, my concerns, arguments with you, because this isn’t the place for it. You know, this, the new process is a new process, I’ll deal with the historical matters with others, but let’s you and I try and get this moving forward err and make it work.
  201. HE/61               Absolutely.
  202. PS                    Yeah.
  203. HE/61               So, I, I am engaged with another, another large loss adjuster.
  204. PS                    You’ve got to go, yeah.
  205. HE/61               Um I… Yeah, um so that, that’s absolutely fine.
  206. PS                    How, how is Alan? [Laugh]
  207. HE/61               It, well, well Alan’s one of them, but also Stuart McNeil as well, so…?
  208. PS                    Ah, yes, I think I know Stuart. Yeah, I know, I, I tend to know Alan, we, we used to meet up quite a lot.
  209. HE/61               Okay, and, and also with the ABI as well, so we’re doing quite a bit with the ABI and [Lawrence Gurger 0:36:02] at, at the ABI who’s sort of err corralling it for us and sort of being that central point of contact there. And, you know, what I’d like to do is to try… Yeah, everybody’s going to have slightly different views, um…
  210. PS                    Yes.
  211. HE/61               … it doesn’t matter who you are, between you as loss adjusters you might have slightly different views on matters, let alone what Highways England think or individual insurers think, so this is going to be a, um an interesting period where there’s going to be a lot of opposing opinions or slightly differing opinions that we’re going to have to corral and um sort of come to some common understanding on [inaudible 0:36:39].
  212. PS                    I don’t think, I don’t think the rates ultimately, um so long as we… As I say, I mean I’m, I’m particularly keen to have the breakdown of, of, the make-up of these um reactive rates, the composites, and by means to compare them, um those DCP rates from Area 9, um the ones that were agreed to be used above and below threshold. Um I, I think once I’ve got those… To an ex- I have some of them, obviously I’ve seen claims below and above threshold over the years so I can see what Highways England are being charged, and I can see um what third parties are being charged, the insurers directly by the contractor, so I do see them. What I don’t have is them… Do you know, with these DCP rates, are, are they, do they change annually? Are they reviewed annually?
  213. HE/61               So, the idea is that we, what we will do is in the short-term, which is…
  214. PS                    Sorry, I meant the Area 9 ones that…?
  215. HE/61               Oh, the Area 9 ones? No, I think they’re fixed for the contract period. I think there might, might well be some inflationary adjustments and things, I’ll have to check in the individual contracts. Um but…
  216. PS                    Yeah, no, I’d be, I’d be interest- No, as I say, I mean once, once I’ve got that Area 9 DCP rates um it…
  217. HE/61               It will help, hm?
  218. PS                    Yeah, so I can then, I can then sort of apply those to, for example, and now I understand that it’s a shift, the 1474, that’s, that’ll, that’ll help no end. Um I’ll drop you a brief line, I’m not going to be in a rush, and I won’t do it today because you’re about to go on holiday, is it, it’s a week or fortnight or…?
  219. HE/61               Err 10 days.
  220. PS                    Oh lovely. Lovely, lovely.
  221. HE/61               It’s a nice period of time. Um I’m, um I’m back on the 10th of July, um 10th and 11th is already rather full [laughing]. Um I’m happy to have a conversation on the 12th, um so I’ve got some time…
  222. PS                    Well, let me get something in writing to you so that you, you can sort of see where I’m coming from. I’m going to… Now that I’ve, I’ve got a bet-
  223. HE/61               Well shall we do that then, perhaps do it mid-July um…
  224. PS                    Yeah.
  225. HE/61               … perhaps sort of week commencing the 15th
  226. PS                    Yeah, that’s good for me.
  227. HE/61               … is what I’m thinking.
  228. PS                    Yeah.
  229. HE/61               Um I may well be… Um I don’t know how you’re fixed with being in London at all but I’m, I’m in London on Friday the 19th, looking at my diary.
  230. PS                    Well if I’m not my co-director can be, Fergus is, is probably going to be about.
  231. HE/61               Okay, so we might be able to do something Friday the 19th. I’ve just, um there’s a couple of, there’s something in my diary in the afternoon, it’s a [key VC 0:39:15] so I’m happy to [inaudible 0:39:16] that.
  232. PS                    Yeah.
  233. HE/61               But I think, you know, I can get my, um I’ve got two, I’ve got my um head estimator, chief estimator, and also um, um a, a senior estimator in the team who’s working for, specifically through our operations directorate…
  234. PS                    Okay.
  235. HE/61               … um who was very close to these, the, the actual nuts and bolts of the err, you know, the real detail beneath, behind it all.
  236. PS                    Yeah, excellent.
  237. HE/61               Um, so if, if I aim [inaudible 0:39:48] sometime on the 19th, just tentatively at the moment…
  238. PS                    Alrighty, yeah.
  239. HE/61               … um I could get them to bring a file along and we could sit down and sort of turn the pages and show you [inaudible 0:39:58].
  240. PS                    Is there any, is there any chance, so that I can get a, a meaningful letter off, that somebody can get those DCP rates to me in the next week or so?
  241. HE/61               Um the simple answer is I don’t know…
  242. PS                    Okay.
  243. HE/61               … but I will ask the question.
  244. PS                    Lovely.
  245. HE/61               Um and leave that one with me.
  246. PS                    That’s great.
  247. HE/61               Lovely to talk, thank you for your time.
  248. PS                    And yourself HE/61, thanks, thanks to you as well.
  249. HE/61               Take care.
  250. PS                    You have a good break.  All the best.
  251. HE/61               Thank you, bye bye.
  252. PS                    Cheers, bye.