Birmingham City Council / Highways Claims

Kier Highways Ltd are providing services to Birmingham Council (BCC)

We have reported that  Kier Highways have been misrepresenting claim costs and recoveries.  Kier’s claim costs have also come in for criticism from a Judge, para 36[1]:

    • Furthermore, for the purposes of assessing the extent of Kier’s authority within Area 9 (Area 6/8) the court cannot ignore the evidence given on behalf of the claimant by Mr Cairns.
    • In summary, on this issue his evidence was to the effect that the costs calculated for the purposes of the claim did include uplifts for which he was unable to find authority within the contract

Astoundingly, it was Kier’s own employee, Mr Cairns (above) admitting to unauthorised uplifts … present on 1,000’s of claims since 01/07/2014, in Area 9 at least; the West Midlands. The above statement supports the arguments we have been presenting for years and has seen a whole raft of claims reduce in value. BCC attendance & repair claims have moved from Amey to Kier Highways.

We have no issue with a business making a reasonable profit, this is expected.  We take issue with misleading and profiteering which it appears is occurring in the Council’s name.

  • Kier’s ‘KSoR’ rates, used when billing those who damage Birmingham Council property can be found here.
  • An explanation of the process, provided by the Council, can be found in response to a FoIA request here or on this site, here.

FoIA Responses

To better understand Kier’s claim process for Birmingham, we made a FoIA request about the DCP (Damage to Crown/Council Property) claims handling/costs process. The responses (which can also be read here) convey:

  • there is transparency,
  • cost’ is being utilised as the basis of charging
  • costs were agreed on, pre-contract commencement
  • profit stems from a managerial fee or fixed percentage uplift

But this does not appear to be the process Kier is using, rather they are utilising the same process we see throughout their England.  For example,  Kier Highways are not handling claims but immediately placing them with lawyers.  This likely gives rise to increased claim costs.  What are the actual costs presented to drivers, fleets and hauliers in Birmingham and what is the council receiving?  Does the council know what is being charged and how?

Claims currently include the following costs as a matter of routine:

  • Legal fees – ‘to be advised’
  • Interest – from the date of the loss to the date the lawyers first write.

Seeking interest does not appear to encourage Kier/Corclaim to act promptly. But the FoIA response from BCC is specific:

  • Kier Highways applies for payment against actual costs incurred for staff, labour, plant, materials and subcontractors (or Third Parties) in delivering the works.

Kier is pursuing Third parties for more than ‘cost’

  • Any costs recovered are returned to Birmingham Highways and not held by Kier.

In which case, the council is profiting? Or is that the Council do not know how Kier is charging, managing these claims and what they are charging?

  • The process and costs are fully transparent to the Council and Birmingham Highways.

They are not transparent to Third Parties, those who require transparency!

The process utilised by Kier does not accord with the description above.  The response continues;

  • There is full transparency with the Kier contract and the way Third Parties and subcontractors are being dealt with.

There is a lack of transparency; information and evidence is withheld

  • There is not an opportunity for Kier to generate a profit from claims.

We would expect Kier to make a reasonable profit. It appears Kier’s profit is from the ‘management fee’.  But, Kier is applying uplifts to costs, these are not ‘actual cost’.


Kier highways Cost/Claim process

Kier is utilising the same process for pricing and administering Birmingham claims as in other contracts by:

  • Applying the ‘Kier Schedule of Rates’ (KSoR)
  • Appointing solicitors to handle the claims from the outset giving rise to additional costs to Third Parties:
    • Legal costs (often ‘to be advised’) and
    • Interest from the date of loss to the date of 1st writing to a TP

The rates involve CECA, contrary to the FoIA response:


KSoR & CECA

The KSoR (Kier Schedule of Rates) process is unique to Kier Highways and sees an unnecessarily complex pricing arrangement set out in an 18-page document – KSOR Annex – with planning which accompanies Birmingham claims presented by Shakespeare Martineau solicitors (Corclaim). The rates presented are being used in other Areas of England, to other Authorities. The rates are explained with reference to CECA as can be seen on page 2 of the ‘KSOR Annex’:

 

This appears at odds with the council’s understanding that CECA is not being utilised, for example, at FoIA response 19883085, page 1, point ‘2’:

Kier Highways do not use CECA rates and the costs for staff and labour are predominantly those of the TUPE workforce.

 The ‘KSoR Annex’ document, contains multiple references to CECA, a further example can be found on page 6 of 18, which displays the plant rates ‘derived from CECA’:

The CECA TM pickup truck rate (above) is £23.73/hour.  Claim costs on a matter display a vehicle charge of £284.76 for a 12-hour shift.  This equates to £23.73/hour (284.76/12).  The use of CECA is further evidence by pages 11 to 18 (of 18) which initially display the CECA logo and subsequently (on page 12) are ‘CECA plant rates’.


Agreed Rates

The council further explained (at para 5c):

The rates and costs agreed with Kier at the outset originated from those presented and submitted as part of the competitive tender in late 2019 and early 2020.

We began to see the KSoR utilised by Kier in 2020 on other contracts.  We question whether the rates presented to the Council at tender are in fact those being used now or whether (as with Highways England) a different schedule of rates/methodology is being utilised. Given the Council’s reference to rates being charged are ‘cost’ and that there is no involvement of CECA,

With regard to highways England, it appears the Authority was aware of Kier’s failure to comply with the contract from day one of the agreement but enabled and permitted the conduct.

  • Is this the way such contracts are negotiated; with an agreement costs & process is to be kept from Third Parties, hidden, not referred to, enabling a contractor to profit (profiteer) from the claims process by exaggerating claims to those unfortunate enough to cause damage to property?

Please note our comments under ‘commercial sensitivity‘ below.


Claims handling charge of 10%

Kier is apparently to charge cost and profit by way of uplift or the management fee the council pay (FoIA response 2 at para 5b):

It is understood that any profit Kier will achieve from this project is included as part of their Management Fee or percentage uplift.

But Kier does not charge ‘cost’ and to the rates adds uplifts (for example CECA) and on top of this we have seen a ‘claims handling charge’. This charge immediately caused concern and appeared at odds with the FoIA response regarding profit and payment. The 10% uplift is inappropriate as is known to Kier/Corlaim, dismissed by HHJ Godsmark[6]:

Whilst I can see the basis for using CECA Dayworks rates in arriving at a repair cost I can see no basis for immediately then departing from those rates by adding an additional 10%.
The additional 10% Administration Charge is not a reasonable addition to the CECA rates and would thus lead to an unreasonable repair total. It is disallowed.

In fact, there is no basis for CECA; the judge was misled about alternative rates.  However, Kier has more recently removed the 10% and replaced it with a charge that, in many cases sees higher costs applied! This new charge is for:


Planning & Permanent Repair (Fixed Cost)

Each claim is now accompanied by a cost for ‘Planning & Permanent Repair (Fixed Cost)’ of £822.37.  It will be understood that this charge is higher than the 10% uplift on all claims for which costs reach or exceed £8,223.70.  It is as yet unknown how this is justified or conforms with the Council contract.


Other Matters

There are further areas of concern arising from claims that it appears the Council may not have considered but which present Kier opportunities to profiteer.  For example:

  • Incident and repair attendance/departure hours – duplication of charges
  • Planned works – the completion of repairs under planned, already paid for, activities

Commercially Sensitive

We sought additional clarification/information about the process from BCC and received a second response which can be read here.  The Council declined to provide the ‘damage to Crown property’ rates writing (at para 2a 14/01/2021):

These rates have been confirmed by the First Tier Tribunal (EA/2018/0104) to be commercially sensitive and therefore under section 43 FOIA will not be disclosed for the reasons stated below

This is incorrect. We instigated the above appeal (EA/2018/0104).  The Tribunal did not make a decision with regard to damage to property rates as these were not provided.  Furthermore, the Authority (Highways England) has, since 12/2018, stated they did not exist, had been overlooked i.e. the Tribunal could not consider them and would not comment upon non-existent information!  It appears either the Council failed to consider the EA/2018/0104 decision correctly or was poorly advised.

The appropriate decision (ignored or kept from them?) is Appeal No: EA/2019/0119 Decision in which:

Mr Carney explained that he had referred to there being DCP rates as the Appellant himself had produced information from Keir, given to him voluntarily, which clearly related to DCP. Mr Carney maintained that this was all he was referring to, including that these could not be commercially sensitive as, self-evidently, Keir did not see the information that way, as they had given it to the Appellant

The information produced, to which Mr Carney was referring, was Kier claim correspondence, damage to property rates.  These are not commercially sensitive.

  • So why are Birmingham Council, Kier highways or their lawyers keen to keep them from us?

[1] https://www.englandhighways.co.uk/200821-judgement-re-kier-rates/

[2] Note the date is that of claim Z03A627 (below)

[3] https://www.englandhighways.co.uk/false-information-supplied-to-highways-england/

[4] Source – Highways England reconciliation 2019/20 – agreed 01/2020

[5] https://www.englandhighways.co.uk/nsorc-time-line/

[6] https://www.englandhighways.co.uk/15-02-2018-derby-county-court-bbmm-for-highways-england/


Associated Pages:

FoIA Request / Response (1)

FoIA Request / Response (2)

FoIA Damage to Street Furniture Claim Costs & Recoveries