Black ink...now comes the whitewash!

by EWAN LAMB

The decision by Borders councillors to terminate their expensive and useless waste management contract with New Earth Solutions - the only thing they got right during the entire financial disaster - has, as predicted, been fully backed by the council's external auditors.

But the report from KPMG, the accountancy firm which will be paid £302,000 by Scottish Borders Council taxpayers for auditing the local authority's 2014/15 accounts only covers the decision taken in February to abandon the 24-year contract. It does not look at the background which led to the multi-million pound gamble with untried and untested technology.

The 51-page document, now available to read on the SBC website, deals with the waste management issue in a few sentences. Here is the relevant section of the report in full:

Termination of waste management contract
 
In 2014-15, £2.2 million was written off as a result of the termination of a waste management contract. We have reviewed the Council’s decision making process in relation to the termination of the contract. Key points include:
■
these costs do not include any early termination fees or additional costs claimed by NES, as a “no fault” termination provision formed part of the contract;
■
the decision was considered and made by the Council in February 2015:
■
information was provided by an internal project team, supported by appropriate external professional advisors; and
■
appropriate options were considered and due diligence processes are evidenced as being followed.
We are satisfied that the Council has followed appropriate procedures in relation to this decision. We have reviewed the business case relating to this decision, which was presented in February 2015 and set out the options available to the Council. The recommendations were approved by Scottish Borders Council in February 2015 and a joint statement issued publicly thereafter.

As one observer remarked: "We've already had the generous helpings of black ink from the council's own censors when dealing with requests for information on this controversial topic. Now we have a complete whitewash from the 'guardians' of  public expenditure."

According to an experienced consultant contacted by Not Just Sheep & Rugby : "Interestingly it is what is not said that speaks volumes. The audit refers to having followed the correct process: there is no comment in relation to whether the business case was sound in its assessment, if there were additional costs to the council or whether it was a saving, whether they supported the recommendations, and there's no commentary on assumptions made

 

"In my experience of dealing with auditors and their reports, they generally make very limited commentary to avoid overly embarrassing officers/council. Most audit reports I have seen on reviews similar to this have generally been around 15-25 pages long. To summarise to this extent indicates their scope was very restricted.

"Generally there would at least be commentary around the written off £2.2m (e.g. this could have been avoided if….). So why was the remit so narrow".

Even the implications of the move to end the deal with NES will be massive. The council has already indicated it will have to borrow millions of pounds for an alternative waste management strategy, adding considerably to the volume of loan charges payable over the next 30-40 years.

 

Their intention is to take all of the Borders household rubbish out of the region in fleets of lorries which would represent one of the biggest "anti-green" initiatives in Scottish local government history.

SBC's outstanding debt - according to the auditors - stands at £172 million on which they are paying an average interest rate of 6.5%. The annual bill for loan charges totals £29.4 million....more than enough to build several waste management facilities which actually work.