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SPECIAL BULLETIN No 4 - Surrey highways

posted 29 Nov 2011, 02:38 by Peter Webb

Here is a report by John Glanfield who, before and after joining forces with STAG along the way, has single-mindedly and objectively investigated and challenged SCC on its highways management.


We eventually arrived at the October 31 meeting with new Leader David Hodge at which we reviewed the evidence.  John here sets out what has transpired and in so doing demonstrates that he and STAG have, as ever, done more than 'sound off' and make unsubstantiated attacks.


I can add that apart from anger at the disjoint between potholes and the 2003 tax hike I picked up my first ‘prompt’ about contract management in May 2004. With colleagues including a civil engineer I followed up with many interventions and questions over time which did not shift political management  and the then Leader. I see from correspondence that the County Councillor responsible in 2004 is now portfolio holder for Change & Efficiency. This gives me the opportunity to complain that we taxpayers are paying through the nose for an organisation headed by worthy elected people of good party political stock but who, as “political managers” populate 30 Cabinet, Select and other committees often apparently without the adequate skills, experience and ‘clout’ necessary  to oversee and monitor operations.  In so doing it seems to me that they also to an extent duplicate line management and ‘muddy the waters’.


We can only hope that David Hodge will recognise this, and must wish him well.
Peter Webb 29/11/2011

"First the bad news. Surrey County Council (SCC) confirms that over 40% of its 2,968-mile road network needs repair. Of those 1,200 miles on the waiting list, just 77 were fixed in 2010/11. Another 209 miles will be treated this financial year. The increase reflects SCC’s understandable decision to concentrate its limited funds on fixing maximum miles at minimum cost. Worn roads are to be sealed with an economical dressing to prevent water penetration and frost damage and extend surface life. For most it will be patching, ‘tarring and chipping’ at some £27,000 a mile. A few bad stretches may get a micro-asphalt surface averaging £75,000/mile. Full resurfacing at around £190,000/mile means Surrey must get by with 6-10m fixed each year. There is no realistic prospect of clearing the 355-mile resurfacing backlog. Typically, Guildford’s programme for 2011/12 will resurface 1.2 miles of the 51 on the borough’s waiting list. Another 24 miles will be surface-dressed, leaving 93 awaiting treatment.


The fact is that the lamentable state of Surrey’s roads arises not only from very high traffic volumes and historic under-funding, but also SCC’s gross mismanagement of the maintenance contracts between 2003 and April 2009. Consequently our highways remain in markedly poorer shape than those of neighbouring counties. The first serious sign of trouble came with the extraordinary decision to transfer Surrey’s highways inspectors from SCC’s payroll to employment by the contractors themselves, whose work they continued to inspect and sign off as acceptable for payment. This deeply unsatisfactory arrangement continued until August 2007 when the inspectors were re-employed by SCC. Unsurprisingly, an internal transport select committee report acknowledged in 2009 that there had been ‘insufficient monitoring [of road repairs] resulting in a lack of quantifiable evidence of poor performance’.


Other internal SCC papers reveal that for those six years the council bypassed its own strict contractual provisions governing payment. The road contractors were instead paid on an ‘actual cost’ basis, thus removing any incentive for them to deliver increased productivity or savings. This also left the council unable to penalise them if they exceeded cost forecasts, and it was the council not the contractors who became liable for unforeseen price increases. Accordingly, Surrey bore the contractual risks and underperformance for all that time at incalculable extra cost. Its magnitude can be gauged from repayments by both contractors in 2006 totalling £1.35m for overcharging or poor work. Yet they continued to be paid at actual cost for another three years until sanity returned in 2009.The previous year saw the contracts extended until 2011, to general amazement. When later challenged by me, a senior member of the transport select committee emphasised the great importance of maintaining good relations with these contractors. The final straw came with discovery in 2009 that Ringway, responsible for W. Surrey’s roads, had been charging 30% more than Carillion in E Surrey. Ringway’s pricing was brought into line but for how long has this gone on, and at what extra cost to we taxpayers?


Maladministration of this magnitude in a commercial entity would bring demands from shareholders to sack half the board. Yet nobody at SCC, members or officers, was held accountable. What on earth were successive executive members for transport and their select committees doing as elected representatives of Surrey’s taxpaying ‘shareholders’? They are either responsible for ‘oversight and scrutiny’ as proscribed, or they are nothing. Had due diligence no meaning? Surrey Tax Action Group (STAG) asked David Hodge the council’s new Leader if SCC had come to acknowledge this abject failure of oversight and scrutiny. He assented, saying that changes were under way but progressing slowly.


The council is at last getting a grip. It was realised that Surrey could not extend Ringway’s and Carillion’s contracts yet again when they came up for renewal last April, without provoking public outrage. Mr Jason Russell, a local gov’t officer experienced in highways management and the civil engineering aspect, had joined SCC Highways as contracts manager in 2008 to sort out the mess. As acting head of highways he led the open tender competition for new contractors. May Gurney won the core contract for surface dressing, structures and gullies, with a vital additional role as coordinator of four specialist contractors covering highway construction (Tarmac), lighting, road markings and tree maintenance. Leader David Hodge told STAG that Surrey would thereby save £7m over the next three years by directly employing the specialists instead of leaving a single firm to subcontract them and take a profit. It was a neat move.


Contrarily, SCC had put at risk the critical transitional phase between September 2009 and last April during which a new road maintenance strategy and the new multiple contracts worth £40m p.a. had to be meticulously prepared and set in train. Yet the council chose that period in which to shuffle key Highways officers around. Inexplicably, head of highways Ms Jenny Isaac whose role was pivotal, was seconded away to Adult Services for nine months despite concerns expressed by the transport committee’s task group. Mr Russell took over as acting head. He was leading the successful selection and tendering process until his abrupt transfer out of Highways on Ms Isaac’s return there in June 2010, leaving the process to run on in other hands. Continuity of command and control was broken not once but twice, and Mr Russell’s superior technical expertise was discarded precisely when most needed. Such disregard for the most basic principles of good management by the cabinet member for transport and presumably the chief executive, is deeply worrying. Mr Russell was finally recalled and promoted head of highways in October 2011, shortly after Dr Andrew Povey’s resignation as Leader and his replacement by C’llr David Hodge. Ms Isaac has left SCC. A rum business. Perhaps Councillor Ian Lake can explain?


On the brighter side, Surrey has taken the lead in collaboration with six other local authorities in the South East to profit from joint procurement and pooled specialist services, including design of highways structures. This winter’s programme has added 110 miles to the priority salting list after efficiency savings on the contract. Surrey now holds 16,000 tons of road salt, twice the tonnage stockpiled at 1 November 2010. The service goes critical if supply falls below 4,000 tons, as happened last December when nearly 300 tons of salt was spread every 24 hours for 23 consecutive days. The decision to salt rests with May Gurney as lead contractor. They will interpret weather forecasts from one approved provider. SCC has a reserve of £5m against severe costs arising from all weathers. 


The state of our highways comes down to competence, cash and the contractors. SCC’s past failings on the former were grave, perhaps actionable, but some lessons have been learned and good officers are in post in Highways. It remains for the elected members to convincingly prove their worth. Of funding, no local authority can magic the millions. C’llr Povey estimates that £200m is needed to fully restore SCC’s road network. Despite its best efforts the council can only allocate £20.09m for highway maintenance in 2010/11, and £26.19m including a gov’t grant for 2011/12. Projections to 2013/14 average £25m yearly. David Hodge encouragingly assures STAG that ‘after services to those in greatest need, highways come behind safeguarding children and safeguarding adults in my priority ranking for funds.’ May Gurney on the contracting front have got off to a good start. Their senior management team impresses as quietly assured professionals, the operations managers sharing the open plan Control Hub at Merrow with their SCC counterparts. The quality of their maintenance work also promises well.


What of the future? Highways operational planning has a 6-year horizon to renewal of the four main contracts in April 2017. Interestingly, a year ago an important little group of members of the transport select committee was contemplating a fully outsourced service using private finance investment, recognising that this would require a 4-5-year lead time to set up. A small straw in the wind perhaps?



John Glanfield