Liverpool and Lancashire Outsourcing Investigation Rolls On

This is a complex story that has been reported for some time. But it still hasn’t become clear really to the external observer just what it is all about at its core. However, procurement, suppliers and contracts seem to sit at the heart of it, hence our interest.

The recent news from the Guardian was that Ged Fitzgerald, the chief executive of Liverpool city council, has been suspended on full pay five months after he was arrested as part of a fraud investigation.  He was arrested in May by police investigating alleged financial irregularities at Lancashire county council when he was in charge there.

Lancashire police launched an investigation in 2013 into allegations of fraud over a £5m contract with One Connect Ltd, a joint venture between Lancashire county council and BT to run various outsourced services for the council. Some of the allegations surrounded the tender process when BT won a contract for fleet maintenance services.

Three other people arrested in May were former Lancashire chief executive Phil Halsall, David McElhinney, who was chief executive of the now defunct One Connect and its sister organisation Liverpool Connect, and Geoff Driver, leader of the Tories on Lancashire County Council.

But these arrests don’t seem to relate to the original alleged contract-related fraud that was or is being investigated. Rather, a police spokesman said they had been arrested “on suspicion of conspiracy to pervert the course of justice and witness intimidation.”

“The arrests are part of a wider long-running investigation into allegations of fraud, although none of these men have been arrested on suspicion of fraud.”

Salary payments to Mr McElhinney of more than £500,000 from Lancashire were also the subject of a council investigation and a complaint to the police in 2013. Most of the council executives and members were apparently not aware of the scale of these payments.  One Connect was scrapped in 2014 as was the Liverpool deal, and the police have spent the past three years embroiled in a “complex” investigation into allegations of financial irregularities.

This does seem to have dragged on a long time – four years now - and cost a lot of police time and money. All for something that, while it obviously needed investigation, at the end of the day doesn’t seem to be about a huge amount of money. We also wonder how much the police understand about public procurement, aside from anything else they might be struggling with.

But it is another bad news story for local government outsourcing, after a whole string of failures and controversies in the UK – Southwest One, BT in Cornwall, Capita in Birmingham and Barnet (the latter brewing up into another disaster, we suspect) and more. It is no surprise that we see the tide turning in the UK public sector away from mega-outsourcing deals, both in IT but also in these more general business service areas.

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