191204 Parliamentary and Health Service Ombudsman

4 December 2019

Your complaint about Highways England

We are writing further to our letter dated 21 June 2019. In this letter we explained we proposed to investigate your complaint and gave you an opportunity to comment on what we proposed to investigate. The scope set out how you said the issues you had raised had impacted on you, and what outcomes you would like us to achieve. We also asked Highways England for their comments on our proposal to investigate, in accordance with Section 7 of the Parliamentary Commissioner Act 1967.
We have considered the comments you and Highways England sent to us. Taking into account that further information, we may not go ahead with an investigation. This is because we believe that Highways England have already taken steps to put matters right.

Reasons for our decision

You complained about the way in which Highways England responded to concerns about its contractors overcharging drivers, and their insurance companies, for costs arising from damage to crown property. You complained specifically about an earlier approach, called the 1153 process, and the approach that replaced it. You said that Highways England had dismissed your complaint and had allowed the overcharging to continue. You said that you were outraged by the systematic overcharging by contractors and wanted Highways England to ensure that motorists and insurers were charged fairly.
Highways England’s responses to your concerns.

In relation to your complaint that Highways England have failed to adequately address your concerns, Highways England say that they have actively engaged with and responded to you by email, in correspondence, over the phone and in person. They have co-operated with the National Audit Office in connection with a complaint you made. The NAO decided to take no further action. While we acknowledge that you are not happy with some of the responses you have received from Highways England, it appears that they took reasonable steps to respond to the concerns you raised.

The 1153 process

In their comments on the proposed scope Highways England explained that the ‘1153 process’ was a charging mechanism used by Kier. 1,153 was an estimate of the number of anticipated claims, used at the time of tender, in one particular area of the country for which Highways England is responsible, and was used by Kier to attribute non-claim specific costs on an average basis. Once the contract had been operational for a while, the actual number of incidents provided a more accurate basis for distributing costs. Highways England have said that the 1153 process was not used after 2015, partly as a result of the concerns raised you raised.

Highways England’s comments do not address whether there may have been flaws in the 1 1 53 process, however, changes have already been made, partly as a result of the concerns you raised and so it appears that aspect of your complaint has already been resolved. In our view, any outrage caused to you by flaws in the 1153 process would have been remedied by Highways England making appropriate changes to that process.

Differences in charges

You also complained that overcharging continued even after the 1153 process was abandoned and have provided evidence that costs charged differed between claims. You said that actual costs are misrepresented, and that claims under €10,000, which Kier deals with directly, are charged at a higher rate than claims over E 10,000 which are charged to Highways England who then deal with seeking reimbursement from the insurers.

Highways England say that repairs totalling in excess of €10,000 are likely to cost less per unit, because they are often carried out as part of a larger programme of planned work, with the associated economies of scale and the ability to better utilise labour, plant and materials. They also said that in the case of emergency repairs, the actual costs charged to Highways England might reflect the wider commercial relationship between the parties, making those costs lower than they might otherwise be. Highways England said that, in those situations, those savings are passed onto the insurance company. Highways England also said that, as a public body, they do not charge for administration and claims handling, and the initial response by traffic officers to the scene of the accident. They said that does not mean that higher charges which might be sought by contractors from an insurer amount to over-charging.

Highways England said the work involved in an emergency response is largely determined by the nature, scale and urgency of the incident. They say that contractors do not have labour and equipment on standby and so will divert resources away from scheduled works.

Highways England said that, in reality, actual costs for similar repairs might vary significantly depending on factors such as time of day, weather, availability of resources etc. For that reason the courts consider the overall cost of the repair, rather than individual unit costs, in deciding what is reasonable. They say that, in almost all cases, there will be a range of what could be regarded as reasonable costs for a repair and that, ultimately, it would be for the courts to determine what is reasonable.

Highways England have provided what appears to be a reasonable explanation for the different unit costs between claims pursued by Kier and those which go through Highways England. In particular, the economies of scale argument, and the lower overheads, in terms of administration, appear persuasive where costs do differ. The different costs are not, in themselves, evidence of maladministration and Highways England have provided details of variables that may explain those differences.

Highways England say that they are conscious that a lack of specified rates for equipment and labour can result in a lack of transparency in relation to the costs of repairs. In recognition of that, they have introduced a National Schedule of Repair Costs as a means of increasing transparency relating to charges for third party repairs. Highways England say that they have engaged with you on the introduction of the Schedule.

Changes being made by Highways England

Highways England have explained that they are in the process of moving all areas from Asset Support contracts to Asset Delivery contracts. That means that all claims will be handled in-house by Highways England going forward. Highways England said that, at present, eight of the 12 areas had been brought in-house. The remaining four areas, including the two areas contracted to Kier, will move in-house from January 2020. We believe that the inconsistency in charging about which you complain will be resolved when Highways England become responsible for all claims.

As the systems giving rise to your complaint are in the process of being replaced, we believe that the action already being taken by Highways England resolves the concerns you have raised and provides you with the outcome you were seeking. We do not think that an investigation would achieve anything further for you.

Next steps

If you have any comments on our proposal not to proceed with an investigation, or believe that we have overlooked anything of significance, please let me have them by 17 December 2019. We will consider carefully any comments you do provide before reaching a final decision on your complaint. If we do not hear from you by that date, we will assume that you have no comments to make and will write to you and Highways England to confirm that we have closed the complaint.

  • our response can be read here