Minutes:
The Director of Resources and Housing submitted a report that provided an update on the position between the Council and the various Carillion group companies, following a number of Carillion Group companies entering into a ‘compulsory liquidation’ insolvency process on 15 January 2018.
An extract from the draft minutes of the Scrutiny Board (Infrastructure and Investment) meeting held on 24 January 2018 was also presented to the meeting for consideration by the Board.
The following were in attendance to present the report and address any questions from members of the Scrutiny Board.
· Councillor James Lewis – Executive Member for Strategy and Resources
· David Outram – Chief Officer (Projects, Programmes and Procurement Unit)
· Neil Evans – Director, Resources and Housing
The Chief Officer (Projects, Programmes and Procurement Unit) presented the report, highlighting a number of matters, including:
· The seven Private Finance Initiatives (PFI) contracts between Leeds’ schools and Carillion – which involved 110 staff.
· Confirmation that facilities management services to those affected schools continued to operate, with no drop in service through what was currently a temporary transfer of services and resources to an alternative contractor (Mitie)
· The 2 highway contracts involving Carillion – as previously reported to the Scrutiny Board (Infrastructure and Investment) on 24 January 2018.
· An outline of the Councils procurement processes, including the use of procurement searches, credit checks and the use of insolvency bonds.
The Scrutiny Board considered and discussed the report presented at the meeting; raising a number of matters, including:
· Details of any direct Council loses as a result of the Carillion Group companies’ compulsory liquidation insolvency processes. It was confirmed there had not been any direct losses as a result of the insolvency. It was also confirmed there was no debt to be written off by the Council.
· A request for details of any opportunity costs, for example officer time, in dealing with matters as they related to the East Leeds Orbital Road (ELOR) scheme. The request would be shared with relevant officers outside of the meeting.
· The Council’s pre-contract procedures and risk assessment for companies – prior to entering into a formal contractual agreement. Reference was again made to the Councils procurement processes, including the use of procurement searches, credit checks and the use of insolvency bonds where any financial risks were identified. It was also reported that a significant factor had been the non-reporting of the financial position of the Carillion Group of Companies.
· Concerns around the potential impact on small and medium sized businesses following Carillion’s insolvency; and the associated impact this could have on local communities.
· Concerns around the competency of Mitie following a recent incident at a local school. It was confirmed the specific issue raised would be investigated and reported outside of the meeting.
It was noted that the collapse of the Carillion Group, and the associated circumstances, was the subject of an ongoing parliamentary select committee inquiry, the outcome of which was currently unknown.
RESOLVED –
(a) That the report and details discussed at the meeting, including the temporary arrangements for the continuation of existing school-based contracts, be noted.
(b) That a further report on the insolvency of Carillion Group companies, including the longer-term implications of the compulsory liquidation and any relevant outcomes from the parliamentary select committee inquiry, be presented to the Board at a future meeting.