East Anglian council uncovers £390,000 hole in repairs service

A report into an east Anglian council repairs service last Thursday found it had a £390,000 hole in its finances.

The difference between expected and actual income came about because South Cambridgeshire council’s repairs service, also known as its direct labour organisation, was undercharging the council’s housing department for its services, the internal interim report found.

In addition, the amount the council’s housing department was contracted to pay the DLO did not keep pace with inflation of costs and wages.

However, the investigators found no evidence of fraud.

The housing revenue account normally foots the bill for DLO services and it will now have to cover the shortfall. If the miscalculated charges had stayed in place until the end of the financial year this March, the shortfall would have reached £580,000. However, when the old contract expired in October 2004, a new one taking better account of inflation was drawn up.

Such a large financial discrepancy at the beginning of the new financial year would have made it difficult for the council to balance its housing revenue account and plan budgets in advance.

Steve Hampson, the council’s director of housing and environmental health, said:

“We are increasing management resources to the DLO to make sure it charges the council properly for works it carries out for us.”

He added that in the past the DLO had broken even or made a small surplus or loss.

The internal review also recommended that the accuracy of housing repair work requests should be improved, the out-of-hours emergency service reviewed and better financial monitoring introduced. It added that the council should investigate whether the out-of-hours emergency repairs service should continue at all.

The council’s cabinet has endorsed the review’s recommendations.

Liz Heazell, the council’s portfolio holder for housing, said: “This has been a thorough and far-reaching review carried out in a short space of time. I am pleased that councillors have been impressed that the confidential review report is candid and holds nothing back. I share the concerns of local residents and housing tenants about this shortfall in income.”

She added that the out-of-hours service had seemed like a brilliant idea but that take-up has been uneven.

“Sometimes people are more likely to miss appointments during the day if they are rushing to get home and then we have staff sitting around doing nothing,” she said.

She said the service could be abolished.