Published: 7 September, 2012
• IN a recent Channel 4 Dispatches programme, Housing Minister Grant Shapps referred to Islington’s profit-sharing “sweetheart” deal as both “unforgivable” and “shameful”, since leaseholders have been blatantly overcharged for repairs, as a direct result of profit-taking.
Although the council’s own repairs department provided a less-than-efficient service, and resulted in a backlog of thousands of outstanding repairs, the subsequent profit-sharing contract performed no better, and effectively cost more.
The details of the profit-sharing arrangement of the new contract were that, after all the operating costs were covered, the surplus was split 50-50 between the council and the contractor. It has now been established that over the contractual 10-year term this amounted to £24m, affording an extra payment to the operator of £12m, with £12m going to Islington Council.
The annual cost of the new contract included servicing all outstanding repairs; unfortunately, however, all pending repair dockets were inexplicably “mislaid” in the ensuing reorganisation, somewhat fortuitously allowing the new management to fulfil their contract without requirements to service the backlog. Consequently, if costs related to outstanding repairs were not omitted from the original agreement the contract was grossly overpriced from the start.
How else could this contract generate profit? Simple, instead of treating all new job requests as “responsive repairs”, just re-allocate them to the new “cyclic maintenance and Decent Homes” programmes, where all leaseholder S20 billing would be re-chargeable, for not just the repair, but, also the massive scaffolding and associated “set-up” costs. This would drastically reduce spending on the responsive repairs budget, and, at the same time, justify extortionate leaseholder billing by Homes for Islington (HfI) on major works projects.
Notably, since this contract was financed through the ring-fenced housing revenue account, and the ensuing surplus was not reinstated, this cosy arrangement constitutes nothing less than “legalised money laundering” by the council, which has admitted using it for “purposes other than responsive repairs”.
Dr BS POTTER
Chairman, Islington Leaseholders’ Association and Federation of Islington Tenants’ Associations