Category Archives: privatisation

Another pension scandal: Incompetent financial advisers rip off steelworkers in the wake of the collapse of Tata Steel

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Scunthorpe Steelworks Pic credit: Alan Murray-Rust

It is not just the DWP that can make a fine mess of pensions. A report just out from the National Audit Office reveals how thousands of steel workers have been swindled out of their their company pensions by incompetent and in some cases dodgy financial advisers.

Rocked by the sudden collapse of Tata in 2016 – brought out for a £1 by private equity group Greybull only to collapse again and be taken over by a Chinese firm, this uncertainty led to the government separating out British Steel’s pension scheme from the company to protect people who still had a final salary scheme.

But unfortunately some were offered to swap their pension for a far more risky package that no longer guaranteed a final salary pension.. The scheme now closed allowed steelworkers to retire on a final salary at 60 or 55 if they were made redundant. Who today would not welcome such a good deal.

But some 8000 steelworkers chose to use their right to transfer out of the pension scheme. Some 95 per cent of them were advised by independent financial advisers. Nearly half the steelworkers were given dud advice.

The workers were given only a short window to transfer by companies that had little experience in dealing with such a large number of people. The companies also made a shed load of commission for themselves in handling the deals.

The report concludes that the workers in places like Teesside and Scunthorpe were vulnerable to pension mis selling by financial advisers. Already spooked by whether they would keep a job, they thought it was a good idea to opt for a private pension. They have now lost an average of £82,600 – with some losing up to £489,000. The maximum claim they can make is £85,000 or £50,000 of the firm collapsed earlier. The total amount lost comes to £18m.

Industrial scale of the rip offs

The industrial scale of the rip offs can be shown by how many firms have been fined . The Financial Conduct Authority (FCA) has issued  £1.3 million of fines and has 30 more enforcement investigations ongoing. It has also changed its approach to regulating the pensions advice market in response. Many of the advisers at the time were one horse businesses -too small then to be regulated.

The investigation has also revealed how badly bodies supposed to protect ordinary people can cope with the problem – The FCA and the Pension Ombudsman- do not come out well – just as the DWP and Parliamentary Ombudsman don’t do a good job in rectifying complaints. The FCA has now sharpened up its act as a result of this – and not before time.

Just like the Parliamentary Ombudsman the process to get redress is complex and difficult to understand, Perhaps it is no wonder that only only 25% (1,878) of members who transferred out of the BSPS [ British Steel Pension Scheme] have sought redress through complaints. The FCA is yet to decide whether to implement a consumer redress scheme for BSPS members, in which all firms involved would have to review their advice and potentially offer compensation.

The report reveals that many don’t even realise they can get redress – so bad have the authorities been in not telling them. Many of them won’t be able to recover all the money because the firms have gone bust and will have to rely on a national compensation scheme.

Meg Hillier chair of the Public Accounts Committee

Meg Hillier, chair of the Commons public accounts committee, sums it up well:

“British Steel pension members were badly let down by placing their trust in the very system designed to protect them.

“The handling of the BSPS case was a failure from top to bottom. Many of the pension advisory firms gave bad advice to customers and the FCA, whose job it is to regulate these firms, was asleep at the wheel.

“Efforts to improve the pension advice market and provide compensation will be too little too late for many BSPS members. “The bottom line is that many pension members have been left out of pocket and seen the rewards for their years of hard work melt away”

The Financial Conduct Authority issued this statement:

“In a letter sent today, the FCA has set out its expectation that firms in the scope of a potential redress scheme should retain assets and should not try to avoid their responsibilities.

The FCA has warned it will take such action as it deems necessary if a firm attempts to avoid redress liabilities. 

Former BSPS members should continue to check whether they received unsuitable advice and find out how to complain at fca.org.uk/bsps.

Firms should continue to progress any existing FCA required Past Business Reviews and engage in any ongoing enforcement investigations or supervisory work connected to the British Steel Pension Scheme.”

There seems to be another moral of this story, Be wary of silken tongue financial advisers and research very carefully what you want to do with your pension. Remember not all of them are competent and some are just plain dodgy.

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The “systemic maladministration ” facing the disabled applying for Personal Independence Payments -official findings

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Margaret Kelly Northern Ireland Ombudsman

Northern Ireland ministry and Capita under fire

An absolutely damning report has been issued by Margaret Kelly, the Northern Ireland Ombudsman on the way hundreds of thousands of disabled people between the ages of 16 and 64 are assessed to see if they qualify for personal independence payments.

This two year investigation into the benefit is the first made by the Ombudsman using new powers under Northern Ireland legislation giving their Ombudsman the power to initiate inquiries if the Ombudsman thinks something is going wrong. This type of inquiry would be illegal in England, Scotland and Wales because Ombudsman do not have the same powers.

In Westminster Michael Gove, the Cabinet Office minister, is currently refusing to even introduce draft legislation to give Rob Behrens, the Parliamentary and Health Service Ombudsman. similar powers to start his own inquiries.

The findings apply to the 250,580 people who applied for the benefit in Northern Ireland but as the NI Ombudsman’s Office says ” there are many similarities to PIP across other parts of the UK.”

The report – which examined 100 cases in minute detail, made extensive inquiries of the ministry and Capita, and looked at statistics governing appeals concludes there has been ” systematic maladministration” by the Northern Ireland Department for Communities and Capita, who were administering the assessments.

Not “one off mistakes”

The report says these were not one off mistakes. Instead she” identified repeated failures which are likely to reoccur if left unremedied. It is therefore my view that there is more work to be done to improve the experience and outcomes for claimants, the robustness of decision making and public confidence in the system.”

She has made some 33 recommendations and has given the ministry and Capita six months to rectify them. She can’t compel the ministry to implement them but has said she will do a follow up report to see what they have done. The report also went to members of the Northern Ireland Assembly.

Ms Kelly said:
“Too many people have had their claims for PIP unfairly rejected, and then found themselves having to challenge that decision, often ‘in the dark’, and on multiple occasions, while not knowing what evidence has been requested and relied upon to assess their entitlement.

” Both Capita and the Department need to shift their focus to ensure that they get more of the PIP benefit decisions right the first time, so that the most vulnerable people in our society get access to the support that they need, when they need it. Furthermore, it will safeguard public resources by reducing both the time and costs associated with examining the same claim on multiple occasions.”

The report reveals a serious lack of leadership and guidance from the ministry, poor communication with claimants and a failure to get key additional medical information which would have helped them get the benefit. As a result many of them had their applications turned down only to appeal and get the benefit – at a cost of some £14m to the taxpayer. If the ministry and Capita had got the information in the first place there would have not have been the need for an appeal.

Capita had an incentive NOT to get further medical information to help claimants

She also discovered that disability assessors working for Capita had a perverse incentive NOT to get additional information to help the claimant because they would get a bonus if they completed the application quicker and getting extra information slowed down the process.

Capita were also criticised for poor communications with health professionals as well as claimants. When evidence was requested from Health Professionals named by the claimant, the request letters sent by Capita were often poorly completed and did not specify what information was sought.

In face to face assessments, the evidence from the consultations was often the primary and in some cases the only source of evidence relied upon by the Disability Assessors when providing their advice to the Department.

I came across this report because of a link to my blog from UKAJI, the United Kingdom Administrative Justice Unit, who have reviewed the long report. Their article is here.

I concur with their review which was impressed with the high standard of the research and the bar it set for future Ombudsman investigations.

To my mind this again shows the current weakness of the Parliamentary Ombudsman in Westminster. The present Ombudsman can only investigate complaints and therefore is left with a much narrower remit. By having powers to do a broad ranging investigation, much more detail can be investigated and issues that governments don’t want to address can be highlighted. Hence the conclusion in this report that the disabled have been subject not just to maladministration but ” systemic maladministration”. I bet disabled claimants are similarly treated in the rest of the UK but nobody has the resources to properly investigate their poor treatment. Let’s see what happens in Northern Ireland following this devastating report.

England’s buses “expensive, unreliable and dysfunctional” – damning findings of a former UN human rights expert

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Bus stop image; Pic credit: Pexels Suzy Hazelwood

A report out today by Philip Alston, the former United Nations rapporteur on human rights, condemns the outcome of Margaret Thatcher’s privatisation of the country’s bus services for denying rights to the people of the UK. He came to the UK to interview people about bus services and contacted some of the bus companies.

In a stinging review he finds that many people have lost jobs and benefits, faced barriers to healthcare, been forced to give up on education, sacrificed food and utilities, and been cut off from friends and family because of a costly, fragmented, and inadequate privatized bus service that has failed them.
“Over the past 35 years, deregulation has provided a master class in how not to run an essential public service, leaving residents at the mercy of private actors who have total discretion over how to run a bus route, or whether to run one at all,” said Philip Alston, who authored the report with Bassam Khawaja and Rebecca Riddell, Co-directors of the Human Rights and Privatization Project at New York University’s Center for Human Rights and Global Justice. “In case after case, service that was once dependable, convenient, and widely-used has been scaled back dramatically or made unaffordable.”

He describes the form of privatisation as the most extreme possible – with the exception of London where Transport for London has overall control of how private operators run services.

He is also critical of the government’s new bus strategy started by Grant Shapps, the transport secretary, saying merely tinkers with the existing system, offering ineffective half measures that fail to address the structural cause of the
country’s bus crisis.

Philip Alston getting people’s views at a public meeting in Newham, East London. Pic credit: Bassam Khawaja

Some of the points in the report.

“People living in London, Scotland, Wales, and Northern Ireland can get a concessionary pass to travel for free on buses at the age of 60, an important measure that guarantees older people access to transport. But in England outside London, the government has tied the bus pass to the female state pension age—which was changed from 60 to 66, severely penalizing those on the cusp of retirement who had every expectation that they could rely on a pension and a free bus pass in the next phase of their lives. The UK government should rectify this injustice

“The abysmal state of the bus system in many rural areas is perhaps the strongest argument against a deregulated, for-profit approach to public transportation.

” There is no reason why rural parts of the United Kingdom cannot have a functioning bus service. The Zurich region of Switzerland guarantees villages of 300 people or more at least an hourly service seven days a week. In North Hesse, Germany, bus routes reach all communities with more than 200-250 residents on at least an hourly basis, with ambitions to double public transport use by 2030. Notably, none of these systems rely on an unregulated market to provide this essential service.”

He makes a strong case for bus services to be returned to public ownership and for Parliament to lay down minimum standards for the provision of bus services.

This really is a damning indictment of the state of bus services in England and it has human rights implications because women, people with disabilities, the poor and those living in rural areas cannot access services or get jobs because of poor transport. As usual ministers are pretending they provide good services while other similarly rich countries -like Switzerland and Germany -provide services that English people can only dream about. In the meantime the bus operators make good profits by not providing the services they need.

Philip Alston hears from people affected in Newcastle-upon-Tyne. Pic credit: Bassam Khawaja

A toxic indictment of the bungled nuclear decommissioning mess that cost taxpayers millions

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Steve Holliday: A damning report Pic Credit: Twitter

Report recommends a root and branch review of the National Decommissioning Authority

You have a right as a citizen to be kept safe from any dangerous pollution from the ageing 12 closed Magnox nuclear reactors and research stations in the UK. You would expect the organisation protecting us to hand out properly thought out contracts to do the job. The failure by the Nuclear Decommissioning Authority to organise a £6.6 billion contract to clean up properly cost taxpayers £97.5 million when rival companies who lost out successfully sued the agency forcing them to settle with them.

This month completely unnoticed by the national press Steve Holliday, the former chief executive of the National Grid, published a damning report on how the agency failed to do its job and the failure of its supervising body, the UKGI, to supervise it and the Department for Business, Energy and Industrial Strategy, to keep tabs on what was going on.

So frightened were former senior executives of the Nuclear Decommissioning Authority(NDA) of his inquiry report that they rushed to the High Court to try and get a judicial review to stop him ruining their reputations. They failed but delayed the report.

For the record they were John Clarke. the former NDA chief executive; Stephen Henwood, the former chairman; Robert Higgins, the former head of legal services; Mr Graeme Rankin, former head of competition and Mr Sean Balmer, former commercial director, He has spared their blushes by not naming them personally in his report.

Steve Holliday had in his remit the power to recommend disciplinary action against them for their failings. But he chose not to do so instead blaming the culture of isolation in the nuclear industry in general and the running of the Nuclear Decommissioning Authority in particular.

NDA failed to keep a grip

In broad terms the NDA failed to keep a grip on what has happening after they awarded the contract to the Texas company Cavendish Fluor Partnerships before it ended up in the courts where it was successfully challenged by rivals Energy Solutions and Bechtel. The original contract was changed so much and cost so much more – latest estimate is up to £8.9 billion that the companies who lost out were able to sue.

So imbued were the senior staff at the NDA with how clever they were in organising procurement contracts that they missed warning signs and worse didn’t inform the NDA board what was really going on until it was too late. The UKGI is revealed to have a conflicting role – both supervising it and sympathetically helping it sort out problems. He rightly suggests that it should be stripped of its day to day supervision.

The report says : “There appears to have been a culture that sought to self-justify, and which was inward looking. In particular: the NDA had a belief in its own skills and intellectual ability, and did not recognise or seriously contemplate that it may have any weaknesses, when contracting and managing external advisers, it had a propensity to limit their role, and did not appear to welcome strong challenge; and it failed to take sufficient steps to bring in people from other industries with different skills and experience, and to learn lessons from them.”

Damning conclusions picked up by a whistleblower

His criticism of the culture of the NDA has been picked up by Alison McDermott, a whistleblower taking the NDA and Sellafield to an employment tribunal, and may be quoted in her case expected later this year. The BBC recently did an exposure on bullying and harassment at Sellafield. The link to the story is here.

He recommends a root and branch review of the NDA by the business ministry- which has now handed the contract back in house – changing its structure and bringing in people from outside the nuclear industry and putting a top flight lawyer on the board.

I am worried that since there was so little publicity about this report whether the ministry will have the incentive to do anything about it. If it doesn’t we could see more waste of taxpayers’ money and we need changes for our safety in cleaning up some of the most toxic sites in the country.

Four years ago Sir Amyas Morse, then comptroller and auditor general , said “The NDA’s fundamental failures in the Magnox contract procurement raise serious questions about its understanding of procurement regulations; its ability to manage large, complex procurements; and why the errors detected by the High Court judgement were not identified earlier.”

We now need the National Audit Office and MPs on the House of Commons Public Accounts Committee to keep an eye on this. He also has wider recommendations for the rest of Whitehall when it hands out big contracts.

Bradwell Nuclear Power Station; Being decommissioned under this contract

Previous Stories https://davidhencke.com/2017/10/26/nuclear-decommissioning-how-whitehall-turned-toxic-waste-into-a-dirty-mess/

https://davidhencke.com/2020/12/11/the-latest-toxic-progress-on-the-great-nuclear-decommissioning-mess/

The scary chaotic privatised Covid-19 national survey and me

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The ONS survey promises they could not fulfill

Inside story of how the government can’t even organise a Covid- 19 survey let alone sort out the pandemic

Much has been said of the government’s expensive muddle and mishandling of the Covid -19 pandemic where millions if not billions of taxpayer’s cash has gone down the drain. Contracts have gone to the Vote Leave chumocracy, apps have failed, people have unnecessarily died in care homes and it has been bonanza time for private firms.

What has been missed is that while all this is happening the Department for Health through the Office for National Statistics and Oxford University have undertaken a randomised survey of 220,000 people to find out about the spread of Covid -19.

This is not just a once off questionnaire but those taking part in each household can opt to participate for a year. For the first month they are swabbed once a week and then monthly. The aim is to provide the government with a detailed picture of the pandemic’s progress and once approved the effectiveness of any new vaccines.

The scheme has been branded with trustworthy names – who would object to helping researchers at Oxford University or the Office for National Statistics.

Private company bonanza

But in fact the work is yet another bonanza for private companies and labs just like test and trace. What could possibly go wrong?

Well it did and this blog is my personal experience and my wife Margaret’s experience.

It started with a package being posted through our front door.

We were invited to ring a free number to sign up. Then within a week you would have an appointment. A pleasant socially distanced study worker would turn up, take your details, show you how to administer your own swab and send it off to a lab. You would get the result – if positive – within 24 to 72 hours from Public Health England. If it was negative you wouldn’t hear. You would also be eventually paid £50 in vouchers for the first visit and £25 for subsequent visits.

Sounds a doddle. It wasn’t.

First try and ring up and get an answer. I got through on the sixth attempt. And it is not to Oxford University but to IQVIA, an American multinational based in Durham, North Carolina, not Durham, England, with an income of $11.11 billion – effectively a health care data mining company. They have set up offices in the UK and guess what they are under staffed – hence the difficulty in getting through.

I was told to expect a call from NatCen, a private social research company, based in London that were in charge of appointments.

Rhe survey organisation must have been going wrong – they sent out this standardised apology to me and plenty of others.

A week went by, two, three, then a month and nothing. Finally there was a knock on the door and a genial man called Kirk asked me who I was.

” We have been trying to ring you for weeks and couldn’t get you. We got someone else who was already on the programme”, he told me

The reason was simple. The mobile number they had for me was not remotely like mine – they had put in someone else’s in their records

The came the swab – straightforward. We were told if we heard nothing after 48 hours we would be in the clear.

Then SIX days later we took a call from Hertfordshire County Council. It was for my wife – we are both in our 70s – she was Covid 19 positive . She had to self isolate for another four days. I was negative but had to self isolate for another seven.

The woman didn’t seem to know why we had been tested together, didn’t know about the national survey, and then told my wife not to have another swab in case it was a false positive.

This was scary because my wife did not have ONE SYMPTOM, no temperature, no cough, nothing. But we had to quickly cancel a hospital outpatient appointment for that day and cancel a visit due the next day from a physiotherapist.

The advice from Herts County Council was contradicted the next day by another study worker pointed out that the survey required people who were positive to take another test. He was puzzled that she – given we are part of the vulnerable group susceptible to Covid 19 – had no symptoms. He could not explain why we had been contacted by Herts County Council and not Public Health England.

Even after we got the invalidated result they still sent us the wrong result ( Note they spelt our surname wrong

After scary days of waiting to see if anything developed we had another call from IQVIA. It was to tell us that Lighthouse Laboratories – the privatised mega lab consortium – set up by  Medicines Discovery Catapult Ltd and UK Biocentre Ltd- who tested the swab had got it wrong. She was not positive and the test had been invalidated because the lab had used the wrong compounds to test it.

Nor were we the only ones – an entire batch – was wrong. Imagine the distress this would cause.It wasn’t the first time either. The Independent reported in September that tens of thousands of people had been cleared of Covid- 19 by the same labs when they were positive.

We now await our promised vouchers. I see they are provided by Sodexo – a private company which I remember was responsible for the hopeless failed privatisation of the probation service. They also provide child care vouchers. I wonder what they can to do to muck things up. I can’t wait.

Covid-19: How the year of the bus became the year of bust

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Pic Credit: Wes Hicks – Unsplash

2020 was supposed to be the Year of the Bus. A newly elected Tory government promised £220m to improve services which had been in decline since 2010 when another newly elected Tory led government created the cuts.

The initiative ticked every election promise box. It was going to reverse service cuts – mainly in the shires as part of levelling up. It was going to produce a brilliant new demonstration package of co-ordinated bus and train services in Cornwall – one of the poorest areas of England. It was going to be green -promising the first total electric powered bus service in an English city. It was going to be faster with more dedicated bus lanes and expressways and it was going to be easily accessible by introducing a national data system for services and fares available on the internet.

Then came Covid 19. And as a new National Audit Office report revealed on Friday the bus plan crashed off the road.

unglamourous buses

Buses have never been a glamourous subject. As the NAO report shows they are mainly used by the poor, over 70s, the 17-21 age group before they get their own wheels and single women seeking a safe way home.

It also suffered huge service cuts and big fare rises for many of its passengers outside London. A useful map in the NAO report shows how passenger traffic has declined by an average of 10 per cent between 2010 and 2019 – falling highest in places like Tyne and Wear, Lancashire, Teesside, East Sussex and Lincolnshire but rising in Bristol and Brighton and Hove.

Pic credit: Suzy Hazelwood Pexels

Some 3000 routes have disappeared with bus mileage down from 243 million to 112 million and the average local authority support for services dropping 38 per cent with 42 authorities slashing expenditure by over 50 per cent. Some of the worst examples are West Yorkshire, Surrey and Northamptonshire. Average fares went up 18 per cent between 2010 and 2019.

free bus pass

The biggest cost to local authorities has been the free bus pass – now estimated at £650m a year – a national service – but funded by the local authority where you live. Funding from central government to bus operators has dropped from 31 per cent to 24 per cent between 2010 and 2019.

One of the problems is that since the de-regulation of services the government has had little control – so it can make a lot of noise about improving services – but it can’t force private operators to do it. The plan for a national data system for bus timetables and fares – depends on whether individual operators want to spend the money.

When Covid 19 hit the government was faced with a dilemma – only key workers were encouraged to use public transport – slashing revenue. The government did provide extra cash in tranches to bus companies to keep them going. But it also raided its shiny new support budget to improve services.

The plan for a co-ordinated Cornwall transport service from Plymouth to Penzance was dumped.

So was the money put aside to restore cut services. And it looks like – despite interest from 50 different towns and cities – to be the first to run an all electric bus service – is being delayed by Whitehall inertia.

And other promises to improve express bus services = especially in the West Midlands – have been undermined by the operators themselves.

First Worcester cut service

One check I did on Google First Worcester company had created a furore by halving the number of express buses between Worcester and Birmingham north of Bromsgrove – forcing people to use more expensive services elsewhere. Yet this is an area given priority in the government’s new bus plan and it happened before the Covid 19 crisis hit.

There are some bright spots. Bristol has improved passenger use by 36 per cent. Nottingham has increased bus use and invested in clean bio gas buses and new trams by imposing a work car parking levy. And London, which was not examined in this report, has seen bus use up 89 per cent.

The lesson is clear to all. Grandiose plans to ” level up ” the poorest parts of the country are going to be very expensive if they are to work. And if they don’t deliver there will be a political price to pay for falsely raising people’s hopes. You have been warned.

Assetco: The negligent privatisation audit that has cost Grant Thornton over £20m in damages

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Top accountancy firm loses appeal over failing to spot forged documents in huge London fire brigade privatisation scandal

A London fire engine -once owned by Assetco

The big four accountancy firms make a fat living from auditing the large number of private companies taking over public services.

But a Court of Appeal ruling last month suggests that if they don’t do the job properly they could now face huge damages claims from directors of companies who were duped by their negligent auditing.

The Assetco saga has been extensively covered on this blog. It involved the sale and leasing of the entire fire engine fleet of London and Lincolnshire to a gang of spivs and fraudsters – who were last known to still be evading justice nearly a decade after swindling investors and conning the London Fire Brigade. The Fire Brigades Union also took up the issue on behalf of its members.

ban after causing fraud

A separate investigation by the Financial Reporting Council found Assetco’s chief executive John Shannon ” causing or facilitating fraud. He was banned as practising as a chartered accountant  for 16 years – a new British record – fined £250,000 and ordered to pay £300,000 in costs.

Raymond “Frank” Flynn (former Chief Financial Officer) for  banned from practising for 14 years and Matthew Boyle (former Financial Controller) for 12 years. Additionally, £150,000 and £100,000 respectively have been imposed and they share paying  part of the £400,000 costs bill.

Grant Thornton, and the accountant who audited the company Robert Napper,  has led to a £3.7m fine for  both of them for professional misconduct. ( Napper was fined £120,000) Neither Grant Thornton nor Mr Napper made any financial gain out of the scandal. The accountant took early retirement and now lives in a bucolic Oxfordshire village developing his hobby as a wine buff.. See here.

Now the Abu Dhabi directors of Assetco who took over in 2011- straight after the London and Lincoln operations collapsed have successfully sued Grant Thornton for £22m and their case has been upheld by the Court of Appeal.

The first trial lasted 20 days, involving extensive evidence from factual and expert witnesses and consideration of a large volume of documents and of 877 pages of written submissions as well as oral submissions.

Grant Thornton appealed but lost the case. The court was told that if Grant Thornton had audited the accounts properly they would have found evidence of forged documents which inflated the value of the firm.

Fraudster John Shannon when he was boss of Assetco

The court were told Mr Shannon and Mr Flynn told GT that the “unitary payments” due under the London Contract had increased by nearly £47,000 per month (£564,000pa) from April 2009 and produced documents to establish it. The statements were dishonestly made, and the documents were forged. It was only on the basis of these alleged payments that the London Contract appeared to be profitable.

Grant Thornton argued unsuccessfully that they couldn’t be responsible for all the losses. The judges found in the company’s favour.

The Financial Reporting Council did pass its findings to the Serious Fraud Office but so far it appears nothing further has happened. Mr Shannon has thought to have moved to Thailand while Mr Flynn remains in Northern Ireland.

The most important development is this judgement could form a major piece of caselaw if any other major accountancy firm does not do its auditing job properly. It is a big shot across the bows of the big four accountancy firms to be more diligent.

Revealed: How “Failing Grayling” derailed transport billionaires Richard Branson and Brian Souter

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Ex transport secretary Chris Grayling Pic credit:BBC

Chris Grayling – who tomorrow is expected to become chair of Parliament’s intelligence and security committee – is a byword for wasting public money.

I have already written for Byline Times on his activities – and so extensive were his failings it took two long articles to add up the cost of Chris Grayling. You can read them here and here. He seems to have cost the nation some £2.7 billion – an extraordinary achievement for one individual – as well as causing misery for the probation and prison service and for millions of commuters.

Yet every human being can sometimes get things right. And last month Chris Grayling did so in a decision which involved risk.

A court judgement – virtually unreported except in the Financial Times – vindicated a very controversial decision he took as transport secretary way back in April last year on every count.

Grayling decided to disqualify three bidders from getting hold of three very lucrative rail franchises – the West Coast main line from London Euston to Glasgow and Edinburgh; the East Midlands franchise and the commuter lucrative South Eastern franchise from Kent into London.

Sir Richard Branson : A quote that came back to bite him

The bidders banned were Sir Richard Branson’s Virgin Trains (as part of the West Coast partnership with the French state owned SNCF) Sir Brian Souter’s Stagecoach and Arriva owned by German state railways Deutsche Bahn.

The reason why Grayling disqualified them is because all three did not want to take on a big share of the liability for paying out pensions to some 346,000 retired and active train drivers and staff while they were running the services. Instead they wanted to make as money as they could by dumping the pension cost onto the state – that’s you and me.

pension costs

Their move was despite a ruling by the Pension Regulator which said anybody running a privatised rail service should have to fund any pension shortfall and not taxpayers.

Their decision caused consternation in rail franchise industry since two of the contracts were subsequently let to new providers. The East Midland franchise was awarded to Abellio East Midlands Ltd and the West Coast Partnership franchise was later awarded to First Trenitalia West Coast Rail Ltd. The South Eastern competition was cancelled.

Expensive law case

A lengthy and extremely expensive trial followed with costs building up not only for the ministry but the three companies and the companies who subsequently won the contracts who had to keep an eye on the case. Deutsche Bahn’s owned Arriva decided to settle out of court.

So complicated is the judgement from Mr Justice Stuart Smith that it runs to 193 pages and the Courts and Tribunals Service issued a rare explanatory memorandum to help the public understand it.

If it had gone the other way it could have thrown the whole rail franchise system into further chaos – since it would have meant that the two private contractors would have won the franchises by an illegal competition and they would have to bid again.

But it didn’t. As the Department for Transport said; “We strongly welcome this decision, which finds our franchise process was fair, our conduct was transparent, and the disqualification at the heart of this case was proportionate.”

There is a sting in the tale. The Department of Transport want Sir Richard Branson and Sir Brian Souter to pay all its costs.

Sir Brian Souter was chairman of Stagecoach when Grayling took action. He is still a member of the board.

This is a blow to Sir Brian who condemned the ministry when it took the original decision as ” dysfunctional and deceitful”.

And it will be lesson for Sir Richard who once wrote: You don’t learn to walk by following rules. You learn by doing, and by falling over.

This time he has taken a real tumble, particularly after suing the NHS when he failed to win an £82 million contract and then blaming the NHS Commissioners. See the riposte here. The case was settled out of court and it is understood his company Virgin Care got £328,000.

This new judgement may explain something else. The Department for Transport is very wary about continuing the present franchise system. And because of Covid 19 it has virtually nationalised the railways. I suspect it won’t return to the old system as it won’t want any more nail biting court cases even though it won.

Labour is much clearer – they will simply nationalise the system permanently – a decision that its new leader Sir Keir Starmer has followed through from Jeremy Corbyn.

Byline Times Exclusive: Chris ” Failing Grayling ” The misery man who cost taxpayers £3.5 billion

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Chris Grayling: The Lord Voldemort of the Cabinet

For those who are not yet following me on Byline there is now a two part investigation by me into the cost – both financial and personally damaging – to British taxpayers of cabinet minister Chris Grayling. His nine years in office – from Employment Minister to Lord Chancellor and now Transport secretary – have brought misery to millions of people whether they are rail commuters, prisoners, victims of criminal attacks or faced discrimination at work. Some people have even had to plead guilty to criminal offences they did not commit to save money. Others have become victimised twice because of the debacle of his probation privatisation programme.You read the two part series in byline here and here.

My Blog in 2018: Year of growth

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50s women dancing in front of the Royal Court of Justice after the judge granted their request for a judicial review

To my surprise the number of hits on my blog soared to a new record of 464,000 this year- up by over 350,000 from just under 100,000 last year.

This huge increase was almost entirely to the support given by this blog to the plight of the 50s born women who are facing up to six years delay in getting their pensions.

I was persuaded by Joanne Welch, director of the BackTo 60 campaign – who I knew from previous work she had done in helping the victims and survivors of child sexual abuse – to investigate for the energetic campaign whether the government’s reasons for raising the pension age from 60 to 66 were justified. I found they were not on all counts from money, longevity to equality.

The result was a blog which revealed that a decision taken by the Thatcher government in 1988 – as much as £271billion had been denied to the National Insurance Fund – by the abolition of the annual Treasury grant and later limitation of grant payments by successive governments. This post attracted a phenomenal 188,000 and more hits. It still is attracting new readers today.

Subsequent blogs on the subject attracted 14,500, 19,000, nearly 31,000 and over 33,000 culminating in over 56,000 when – against the odds- the 50s women with the help of Michael Mansfield QC won permission for a judicial review. The blog telling you how you can boot out your MP if he or she won’t support the campaign – attracted nearly 31,000 hits – and led to an amazing 4,600 hits on the House of Commons library reference paper which gave a constituency by constituency breakdown of where the affected women live.

Thanks for the deluge of Christmas greetings from so many 50s women this year supporting the blog and my work.

Gosport

The other main achievement this year which I can’t blog about – as I was member of the independent panel- was the report on the scandal at Gosport War Memorial Hospital where at least 456 elderly people had their lives shortened by the over prescribing of drugs. I am very proud of this report and the amazing professional collaboration led by former Bishop James Jones, who chaired the panel inquiry, that produced the findings hidden from people for nearly 20 years.

mental health

I also this year worked with the extraordinary Professor Suman Fernando, who at 85, is a tireless campaigner for mental health reform and author of a book outlining the history of racism in psychiatry.

I was a member of a working party which tried – with only partial success – to influence Theresa May’s planned reform of the mental health act. They were particularly exercised by institutional racism in mental hospitals which sees a disproportionate number of Afro-Caribbeans sectioned every year and some appalling examples of deaths in police custody. The mental health service is in a pretty bad state anyway.

I am unhappy about the outcome and will blog about this later.

domestic and sexual abuse

Last December I was invited to attend a national conference hosted by the BBC on domestic abuse and addressed by leading figures in government, the ministry of defence and Cressida Dick, the Metropolitan Police Commissioner on how employers could help people suffering domestic abuse.

This campaign was led by Elizabeth Filkin, another tireless campaigner and a former Parliamentary Commissioner for Standards. I blogged about it last December and was reminded this Christmas again when I willingly agreed as part of a libel settlement with John Hemming to donate £500 to the Victim Support charity and got it earmarked solely for dealing with domestic abuse.

There also was a great story of hope for child sex abuse survivors when a former victim who successfully saw his abuser jailed for 33 years for crimes committed in North Wales decades ago set up a successful volunteer project in Cumbria to tackle the issue of child sex abuse. See here

fire engine scandal

This year has seen a very gratifying outcome for those who followed the scandal over the privatisation of London and Lincolnshire’s fire engines which led them to be handed to a bunch of spivs who milked the contract for personal gain.

I have been following the story since 2011 when the Fire Brigades Union raised the issue of Assetco taking over responsibility for maintaining and replacing London’s fire engine fleet.

This year the Financial Reporting Council caught up with former Assetco directors John Shannon, Frank Flynn and Matt Boyle and barred them from practising as accountants for 16. 14 and 12 years respectively. They were branded fraudsters and liars for the way they handled the firm’s accounts and the Serious Fraud Office has been passed their details. The blog got over 4000 hits.

The accountant from Grant Thornton who supervised and passed the fraudulent accounts has also been fined along with his firm.

lack of reporting

The one common theme in all these stories – with the major exception of Gosport – has been the paucity or non existence of coverage in the mainstream media. They have been diverted by wall to wall coverage of Brexit but I think it reflects the fact of an increasing reluctance to put resources into proper investigative journalism. The country will be a far less informed place if this continues and it will give a green light to those who think they can get away with bad practices, incompetence, maladministration and fraud and ruin the lives of ordinary people without any proper scrutiny.