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The council paying contractors up-front is risky business

08 February, 2018

• THE collapse of Carillion, the civil engineering contractor, must act as a very timely warning to Camden Council.

The average council-taxpayer may not be fully aware that what used to be a widely-practised, but questionable, procedure during my employment with the authority (and it may still be) has always been a serious risk of financial loss to the council-taxpayer.

What risk? It was not uncommon at Camden, and at some other local authorities I believe, for contractors to be “paid up-front” for work not actually done and completed at the end of the financial year.

The principal reason for undertaking this somewhat questionable “procedure” (risk) was said to ensure that the “funding” was not lost, because “the rules” governing this funding meant that if it was not utilised – not merely “committed” but the work was actually carried out and paid for – by the end of the financial year the funding was “lost”. The risks with such a procedure are obvious.

Indeed I understand that, in engineering services, works to the value of up to £400,000 may have been paid “up-front” to a contractor for projects to have been executed by the end of March 2017, but these works had still not been completed even in May 2017. In fact some of the work was not completed until well after that date.

Hopefully the authority will clearly say, in a very loud voice, that it now has no contracts for which it has paid “up-front”, and that it will ensure that this practice does not occur in the future.



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