The award of a contract for the Churchill Way Flyover demolition to a company linked to former mayor Joe Anderson’s son, and the sale of 68 Falkner Street to Elliot Group to house a charity, are cited in a report as examples of poor-quality deals overseen by the city council.
The Government-commissioned inspection report of Liverpool City Council, led by strategic advisor Max Caller and published this week, identified evidence of numerous management failings and a “rotten” internal culture.
Among the evidence it lists is that Safety Support Consultants, a safety services company whose director is listed on Companies House as David Anderson, the son of the mayor of Liverpool, was handed a subcontract on the £6.75m highways dismantling job in mid-2019 without a proper procurement process taking place.
The report states that officers within Liverpool City Council’s highways directorate “gave a direct instruction” to construction group Amey, which at the time was providing a range of highways services to council, to appoint SSC to provide health and safety support on the project. However, at that time, SSC had limited related experience, “had never undertaken any work directly for [the council] and was not on any approved list”.
Caller’s report explains: “For the council to use SSC’s services, unless [the contact value] was below the exemption limit, would require a waiver of contract standing orders [the rules by which the local authority allocates public money].”
It continues: “Amey asked why the council would not procure the service direct and why SSC as they had no published highways experience? It would also have been possible for Amey, given notice, to deploy their in-house resource or use consultants already known to them.”
The arrangement came to an end after four months at a cost of around £250,000 – having originally been intended to last up to six weeks – after the council’s central processing unit became aware and pointed out the availability of framework contractors providing the same service at a lower cost.
Not only was this in contravention of the construction design management regulation but it also exposed the site teams to considerable health and safety risk and increased the commercial risk to the council’s budget, the report added.
“From the evidence available on file, the quality and content of the output provided to the client-side did not justify the scale of contract payments. This episode is an example of the approach taken by officers to circumvent the control systems,” it said.
David Anderson was quoted as telling the Liverpool Echo in response that the Caller report was “factually incorrect and damaging to [his] company”.
Anderson was arrested along with his father Joe and three other individuals in December as part of the ongoing Merseyside Police corruption into building contracts across Liverpool that prompted the Government-commissioned Caller inspection. Both men were released without charge and deny any wrongdoing.
Meanwhile, confusion over liability for design and build costs, resulting in significant cost overruns, at a scheme to redevelop the former Toxteth Community College at 68 Falkner Street into a mixed-use block for women’s charity Blackburne House is another example of a poorly worked-up deal negotiated by the council, according to the report.
After an initial agreement in 2012 to lease the council-owned property to Blackburne House for a period of 10 years stalled, the council received an unsolicited offer from local developer Elliot Group to acquire the building for £425,000 and with the council develop a multistorey block providing around 8,000 sq ft of commercial space on the ground floor to be leased back to the charity, together with 132 apartments.
As Elliot did not express an interest at the time of the 2012 marketing competition, it would be required to demonstrate best value compliance, the report noted.
A scheme was worked up on this basis, and Blackburne House is noted by Caller to have understood that Elliot would fit out a unit for it to carry out its work as part of the main construction of the block.
But this was not the basis of the council’s proposed deal with Elliot, the report said. Instead, the deal was to be a straightforward sale of freehold with a leaseback of ground floor space that could be passed on. The costs of the actual development had apparently not been properly worked out.
“One could criticise Blackburne House for being naïve, and not getting, at least, an exchange of letters to confirm its understanding, but it is also true that nothing was done to disabuse them of that understanding,” the report said. It noted that following a period of misunderstanding, the council had to stump up £1.6m to finalise the construction of the block.
Place North West reported in 2019 that the then council-owned housing company Foundations funded the fit-out of the ground floor unit after Blackburne House found the costs to be “higher than expected”, while Elliot build 109 flats above.
Elliot Group founder Elliot Lawless said in a statement: “The case study seems to be missing [information]. A review of the contract for sale clearly shows in the development agreement that Liverpool City Council was responsible for the fit-out of the unit for Blackburne House.
“We could not complete on the acquisition of the site until this had been agreed so it was never our responsibility nor our intention. Indeed, as the report does go on to note, we had never entered into any correspondence with Blackburne House to that effect.
“We fulfilled our contractual obligation, at a cost to us of £800,000, to provide a shell unit for the council to fit out as they wished.”