Plundering the Public Purse?

According to a Highways England FoIA response FOI 74353

‘Incident response is paid for by Highways England as part of a fixed ‘Lump Sum’ payment to the service provider, on a monthly basis. However, under the ASC this payment is calculated based upon the predicted split of identified culprit claims so it is designed to cover the proportion of claims that are not traced to a specific driver.

All contractors reconcile their costs annually against their recoveries.

If the proportion of traced incidents exceeds expectations an assessment would be made and the Lump Sum payment would be reduced. However, no contractor has ever been in the position where the proportion of traced claims exceeds these assessments and there are various factors for this. The main one being not all damage linked to a driver is reported by the driver.’


  • Is it the number of incidents that affects the lump-sum payment or the amount recovered?
  • How is the cost vs. recoveries reconciled and by whom given  Kier are using a secret set of rates?

If I tell you something cost me £50 but I sold it for (recovered) £45, I have lost £5.  But if, in fact, it cost me £35, I have just made £10.  But I may not want to tell you that I profited because if I do, you might be entitled to a percentage of my profit, or pay me less for other services.

This appears to be the situation with Kier Highways – they claim to use ‘mates- rates’ agreed with Highways England that show at best a recovery of that sum, but occasionally (regularly?) a loss. However, they are not using the agreed rates but their own higher-rated schedule.  Therefore, when they submit figures to Highways England these are inaccurate and distort the situation.

  • Why do this unless there is a gain being made?

Contractually, Kier are to report their recoveries to Highways England.  For years Highways England told us they hold no information relating to these incident.  But they do!

A Highways England witness advised a Court the supply of information occurs regularly and the contract states:

Third Party Claims handled by the Provider Service Information Chapter 1.9 & Annex 23 Report detailing, for each claim:

  • the amount claimed from third parties,
  • a calculation of Defined Cost and resulting Third Party Claims Overhead,
  • the amount recovered,
  • an explanation of any differences between any of these amounts, and
  • explanation of why any loss greater than Defined Cost has been claimed’.

But since 07/2014 to this day, Kier has charged more than ‘Defined Cost’. Blatantly so between 07/2014 to 10/2015 when their process (1153) bore no relationship to the agreed process.

  • What are Kier telling Highways England and
  • what are the Authority doing about it?

In one instance where Kier Highways reported their recovery to Highways England, the information was as per the above requirement, as follows (FoIA request disclosure): 

What is presented above as ‘defined costs’ (£4,369.62) for the incident is NOT. Instead ‘defined cost’ (above) is the total of a secret set of rates, used to bill Third Parties as though in accordance with the Defined Costs process, seemingly consistent with Appendix A to Annex 23 of the contract the contract that states:

Defined cost (£) + TP Claims Overhead (%) = MAXIMUM (£)

We know reference GC27509 (above) we have reviewed the claim. The ‘defined costs’ and TPCO  (25.29%) are not set out in the claim presented to our client. A Third Party is provided hourly rates or charges for each element and the total, as displayed above of £5,474.70.

Taking 2 elements, the emergency attendance operatives, AIW;’s (asset inspection watchmen), these are charged in respct of GC27509 to the Third Party 20/11/2016 as:

AIW  Operative (each) £73.05 / hour
AIW vehicle £36.91 / hour

But the ‘Defined Cost’ of an AIW, the ‘base rate’ common to bills presented to Third Parties and Highways England was, in 2016, less than £25 / hour, the vehicle less than £17 / hour The charge to a Third Party should have been approximately:

Defined Cost + TPCO (25%) Total / hour
AIW Operative £25 £6.25 £31.25
AIW Vehicle £17 £4.25 £21.25

But Third Parties are subjected to a further exaggeration, a multiplier.  After 5pm of a weekday Kier say they pay AIW’s 1.5x, or a weekend 2x their wage.  This being a weekend, the charge was not the defined cost of about £31.25 / hour but £146.11 / hour:

Simple math’ … you only have to look at the 1153 figures supplied to understand the hour rate should be about £32 / hour.  Until 10/2015 Kier were happy to provide very detailed (1153) information about their costs – using the AIW figures, that the AIW works a 9-hour day, it is possible to determine the £32-ish / hour charge.  Yet overnight, 10/2015, this became £70+ an hour … the 1153 overstatement gave way to exaggeration in another guise.

Kier say their AIW’s do nto work shifts and are paid the uplift of 1.5x and 2x

AIW’s say they work shifts (and documents we possess support this) are are not paid the multiplier, that even overtime is flat-rate.

  • So who is telling the truth … are Kier fraudulently claiming these uplifts on top of exaggerated rates?

Then there is ‘planning’.  The TPCO, a percentage uplift, is designed to cover items such as ‘planning’, it is a cost incorporated in the uplift.  Yet Kier make a separate charge, of over £700 on a claim: 

  • Just what are ‘defined costs’ + TPCO for this claim and
  • why can we not determine them?

It is possible the invoice (total) for GC27509 should have been about £3,500. In which case Kier recovered more than the invoice. Is the contract miss-reporting of the figures to protect their monthly lump-sum, is the public purse being fleeced or is there a rebate due to the Authority?

  • What is gained from this incorrect accounting?

As for the defined costs and what they should be … for years Kier and Highways England have sought to keep them from us.  The Public Authority claim to have received 175 Freedom of Information Act requests & reviews about the subject of contractor rates between 2013 and 2018.  They cited ‘commercially sensitive’ subsequently, ‘vexatious’.  But in 11/2018 a Highway England employee said ‘the rates are NOT commercially sensitive’ so we made a further request only to learn … they are mythical – read more here.

The situation is not to dissimilar to their claim not to hold sub-threshold claim data a few years ago; not held … but it is.


Note:

The amount paid to Corclaim / Shakespeare Martineau solicitors, acting for Kier Highways / Highways England was £5,870.91. The claim being for:

  • £5,474.70 – sum invoiced / claimed (above)
  • £  455.00 – Court fee
  • £  100.00 – solicitor’s costs

£6,029.70 total

Less Court fee and solicitor’s costs, the amount recovered was £5,315.91.

Highways England were informed that the recovery was £4,454.79 … so where did the other £861.12 go, the recovery after costs (above)  of £5,315.91 less the amount stated to have been recovered (£4,454.79)?