A LEAKED report has revealed shocking failings over consultancy spending at Worcestershire County Council - including contracts being extended without politicians being told, people employed without insurance checks, no records of job interviews and practises so shoddy there are fears EU laws were breached.

Your Worcester News has been handed an explosive secret dossier highlighting major flaws over the way taxpayers' money has been handled.

The report, which has only been circulated to a handful of people and is marked 'protected', reveals:

- Contract extensions were signed with third parties without it being approved by the relevant cabinet member or manager, which is against council rules

- In one example, a contract was extended from £14,200 to £117,309, and in another it went from £30,000 to £184,000

- In both of those cases found by auditors there was no evidence the cabinet member was told, despite council rules specifying they must sign off deals costing more than £50,000

- A "common theme" was that contracts with fixed costs and timescales ended up being "significantly" longer and more expensive without any further "competitive procurement processes" taking place to find a cheaper supplier

- The worst example there was an ongoing contract, which started in March 2004 and lasted all the way to July 2013, costing £636,000, with the report saying not only was the council "unable to demonstrate value for money" but could have breached EU laws over procurement

- In a random sample of 10 outside consultants employed by the council, 40 per cent were not asked for any evidence of public liability insurance

- In two cases from a pool of 10, auditors found no proper records of job interviews taking place

- The investigators also found no proper audit trails in contracts costing taxpayers sums such as £73,000 and £103,000

- There were widespread concerns over HR issues, with risks many ongoing consultants "may be deemed an employee" by HMRC and liable for tax, all because managers were failing to complete basic questionnaires to determine whether the consultant was self-employed or regarded as an 'employee'

- That failure means the council could be held liable for unpaid income tax, National Insurance Contributions, interest and penalties

The report, compiled by internal auditors, also says in "many examples" consultants were not given clear, measurable targets, making it near-impossible to determine whether it was successful or not.

It also says there is "widespread non-compliance" around managers following council rules, with forms routinely not being filled to keep proper records, called form C1 of the Procurement Code.

The findings relate to the 2013/14 financial year, during which time more than £1 million was spent on outside consultants, the third time in five years it has smashed through the seven-figure mark.


THE findings have been labelled as "absolutely shocking" by Worcestershire's opposition Labour group - amid claims the report was kept confidential to "cover up incompetency".

Councillor Peter McDonald, Labour group leader, said: "This demonstrates clearly the cavalier way it which the council too frequently engages consultants and spends taxpayers' money without a care in the world - and then tries to keep hidden the report to cover up its incompetency.

"Many consultants may never even had the necessary insurance cover, putting the council at severe risk.

"The failures are staggering - this is a shocking and damming report into the way the county spends hardworking families’ money.

"Thee systems and process that should be protecting the taxpayer are not fit for purpose."

He said at September's full council meeting he will move a motion calling for a "full investigation" into the report's findings which he wants made public.

The county council say the £636,000 contract was for a decade of work by Ellwoods Limited who provided project management services in the directorate of adult services and health, costing just over £60,000 per year.

In the two specific cases mentioned in the report where contracts were extended without proper approval, the £117,309 went on the strategy for 'early help' around young people, focusing on commissioning, while £184,000 went to an unknown third party for advice on waste initiatives.

It is also unknown whether any staff have been disciplined for failing to follow the correct procedures.

The type of spending on outside consultants over the last year include £4,525 on 'commercial mentoring' where staff went to see how the private sector operates, £18,060 on asking a private firm to look into how Worcestershire can dispose of rubbish, £259,000 on a blueprint aimed at saving money, £4,750 to collect data on traffic congestion and £168,000 on IT consultants.

The council did say an "action plan" is being put in place, which has been sent to finance director Patrick Birch, to address all of the issues.

The report was marked January 8, 2014 and the exact progress made since then on following the proper procedures is unknown.

A separate report on tax compliance has also been agreed.

The auditors said they believed there were no issues around tax not being paid, but could offer only "limited assurance" over the rest of the findings because of the risks it was exposing the council to.

Councillor John Campion, cabinet member for transformation and commissioning, said: "We are always looking to get the best value for money for the taxpayers and in some circumstances that means buying in expertise where and when we need it.

"We want to get the best outcomes as we move towards becoming an excellent council which sometimes means brings in specialist consultants for specific jobs. "However we are always selective and considerate where we do use this type of expertise.

"Our policy is to appoint consultants on a fixed-term assignment basis only and for a fixed payment following a competitive tendering process.

"As the council transforms into a 'commissioning' authority we are able to negotiate even better value from consultants now than previously."

He said using more in-house staff would "cost the taxpayer more in terms of additional benefits to a fixed wage" like pensions.

"With regards to the distribution of confidential information the council has taken a number of steps to ensure officers are reminded of internal rules and procurement procedures that must be followed at all times," he said.