29 November 2002
The contract is the biggest of its kind in local government history. But amid the euphoria surrounding the flagship Tory borough's announcement of the deal, minority parties at the council told Public Finance they abstained from any scrutiny of the contract after it became clear the authority was 'determined to outsource at all costs'.
Members of the council's overview and scrutiny committee, which assesses all major contracts before they are passed to full council, wiped their hands of the matter and claimed the council was wasting taxpayers' cash because it was too proud to bring the service back in-house.
Simon Stockill, Labour group leader at the borough, said the projected cost of running the service internally was £28m per year, but the cost of the new seven-year contract, won by existing contractor Onyx, is £32m annually.
'The council entered negotiations thinking it would be more expensive to run in-house and found it would cost much less than tendering privately,' said Stockill. 'But they were so embarrassed by the thought of bringing it back within the council that they went ahead with the Onyx contract regardless of the cost to taxpayers. That's not value for money. Our residents will now have to foot a £28m additional tax bill – which will have huge implications on council tax.'
But Leith Penny, Westminster's director of street cleaning, countered: 'It was never our intention to run the service in-house. We simply made rough estimations of how much it would cost to run internally to aid the outsourcing negotiation process.
'Those estimates, we found, were on the low side and did not include, for example, accurate wage rises over the seven-year life of the contract.'
Penny said that Onyx's 'accurate' projections estimated seven-year wage increases for street cleaners at 15–20% but he was unable to name any services outsourced by the council over the past 20 years that had seen 'frontline' wage rises anywhere near that level.
The new contract, the council claims, will allow Onyx to 'step up the war on waste' in the borough as part of its civic renewal programme.
PFnov2002
