How Essex betrayed its residents

Ross Clark on a supposedly ‘model’ Tory authority which has, behind the scenes, left elderly homeowners to suffer at the hands of private contractors

For an idea of what public services might look like in Cameron’s Britain we are encouraged to look at Essex County Council. Along with Hammersmith & Fulham it is held up as a ‘flagship’ Conservative authority, showing what can be achieved if councils become more businesslike. Essex it was that in December signed a five-year, £5.4 billion deal with IBM to manage and provide public services such as management of schools, maintenance of highways and organisation of social care. The deal, claims Essex, will save £200 million a year by replacing people with technology and cutting down the number of staff sent to administer social care to the elderly. It was Essex, too, which claims to have put 239 extra officers on the beat by slashing £27 million of police waste — cutting out tea and biscuits, and ordering police to fill up their cars at Tesco.

Essex’s image as a shining example of public administration has been looking a bit jaded recently, after Lord Hanningfield, the then Tory leader of the council, was named three weeks ago as one of four parliamentarians who will face charges over the expenses scandal: he stands accused of claiming for overnight stays in London when records are alleged to show that he was driven home to Essex. He has since resigned. But Hanningfield is far from the only problem. The council has also been criticised for wasting £62,000 sending 13 councillors and officers on a junket to Jamestown, Virginia. The Essex police must manage without even a consolatory biscuit with their tea; even so, the council delegation felt quite comfy going business class and ran up a £7,000 hotel bill.

But if I were an Essex council taxpayer neither of these would bother me quite so much as the treatment that the council has meted out to residents in Colchester. It’s a salutary tale — of the interaction between the council, a private company contracted to build a major road, and the elderly residents whose lives were disrupted by it.

Roads, of course, have to be built, even though they are never going to be welcomed by everyone. But once the protests have finished and Swampy has moved on, there is a clearly laid-down procedure for compensating property owners who have suffered. Under the Land Compensation Act 1973 such homeowners can, 12 months after the completion of the road, claim from the relevant highway authority a sum based on the diminution in the value of their homes. The same applies for new airports, railways and other public building works. Seven years after the Colchester Northern Approach Road was completed, the men and women who live next to it are still waiting. Though their view is gone and their houses devalued, the county council has done nothing but try to wriggle out of paying compensation by hiding behind the contractor which built the road.

The road saga began with a public-private deal that Essex signed with Cofton Homes. Cofton, a developer which specialised in large regeneration projects, was granted permission to build a large estate on the northern edge of Colchester. But under a section 106 agreement (named after the clause in the Town and Country Planning Act which enables councils to make planning permission conditional on payments toward infrastructure improvements), Cofton was asked to build the Northern Approach Road, to speed traffic from the A12 to the town centre. As part of the deal Cofton was supposed to make the compensation payments to residents — in spite of the Act making it quite clear that it is the council which is responsible for paying the money. In 2006, 57 residents received a letter offering them sums between £5,000 and £25,000. But the developer failed to make the payments. Then, in February 2009, the company collapsed into administration. The council says that Cofton indemnified the council against claims, and paid a £500,000 bond to cover the compensation costs, but cannot explain what has happened to this money and why it cannot be accessed now. Outside Notting Hill, conservatism becomes a whole lot less compassionate.

Essex County Council may have been hoping that the problem would go away: a clause in the Land Compensation Act states that property owners must lay a formal claim for their money within seven years and a day of the relevant infrastructure project being completed. Perhaps they also hoped, in a caring way, that the residents — many of whom are elderly — would be put off by the high costs of using the Lands Tribunal — an expensive court which deals with land valuation issues. Many have been to the tribunal, but with a few months to spare, 30 others have taken out an action against Essex Council. The council has already been ordered to pay the costs of a preliminary hearing of the Lands Tribunal on 10 February; moreover, the Land Compensation Act demands interest to be paid on late payments. So — no surprise — the end result is likely to be a far bigger bill for taxpayers than if the council had simply paid up in the first place.

There’s a lesson in the story of the Colchester road for conservative local authorities: don’t get too cocky. Unless you’re very careful and very clever, your contractors are going to take you for a ride and leave you with the bill. The Labour years are littered with examples; of the public sector ripped off by IT contractors, and PFI deals where NHS trusts have come off the worst. In one notorious case an NHS Trust was stung for an extra bill for marmalade, after the PFI consortium pointed out that the catering contract had stipulated toast but nothing to spread on it.

So Essex is not the answer. If the Conservatives want to create true flagship authorities they are going to have to come up with a better big idea than simply to hand over all their responsibilities to private contractors. Private contractors are often capable of doing things more cheaply — but as anyone who has ever employed a plumber knows full well, they are also capable of talking you into a bigger job than is necessary, then of taking the money and disappearing halfway through the job, leaving your floor still up and your bath still not plumbed in. And of course, they can go bust, too. No council can escape its lawful responsibilities by handing day-to-day running or project management over to the private sector. If councils or any other public sector body want to save money, they are going to have to employ people with business acumen to negotiate better with contractors or — in contravention to some branches of conservative ideology — actually to deliver services in-house, more cheaply and effectively.