Agenda item

(a)  Witness Evidence submitted by Mears Islington

The Committee received evidence from Theo Petrou, General Manager of Mears Islington, and Damian Dempsey, Group Leader – Quantity Surveyors.

A discussion was had during which the following main points were made:

·         Mears appreciated Islington’s commitment to the use of local labour and sought to employ local people as far as possible.

·         A priority of Mears was to achieve social value through its work. Mears had worked with the council to provide employment opportunities for those with learning difficulties and offered flexible working hours to staff where appropriate.

·         It was reported that the partnership between Mears and the council had developed over the course of the contract and the contractor had continually sought to make improvements to its service. In particular, Mears considered that it had made significant improvements to how it engaged with residents. Representatives of Mears attended pre-start consultation meetings and would seek to tailor capital works schemes to resident needs as far as possible.

·         It was confirmed that Mears was a living wage employer.

·         The Committee was pleased that Mears had employed six apprentices and queried if this number could be increased. In response, it was reported that there were a limited number of opportunities given the nature of the contract. The contract with Mears was for planned works only, with the building works on site carried out by sub-contractors. This meant that opportunities were limited to positions such as administration, resident liaison, site management and surveying. It was suggested that, in general, more apprenticeship opportunities were available under direct works and reactive maintenance contracts, as the contractor would be required to directly employ tradespeople.

·         It was advised that Mears had a 5% retention clause with some of its sub-contractors; however the council did not have a similar arrangement with its capital works contractors. A retention clause would allow the council to retain a proportion of the cost of the works for a given period in order to rectify any problems arising at a later date. In response, officers confirmed that the capital works contract was a term partnering agreement which did not contain retention or penalty clauses; however this could be reviewed for future capital works contracts.

·         Members commented on casework arising from capital works, noting instances of delayed works, breakages and incomplete works. It was suggested that chasing contractors to rectify such problems after work had finished could be a time consuming process and it was queried how such issues could be mitigated or minimised. In response, it was advised that this did not match Mears’ experience of capital works and Mears consistently received a resident satisfaction rating of over 93%. It was thought that this discrepancy could be partially attributable to sign-off processes; as although it may appear that works were completed when contractors left the site, works were not formally completed until sign-off had been received from the council and this could take up to two months. It was advised that clerk of works officers worked with area housing officers to assess works prior to completion. Officers operated to high standards and on occasion the council had delayed completion until remedial works were carried out to a higher standard. It was commented that this motivated contractors to carry out these works quickly as guarantee policies did not commence until works had been signed-off.

·         Sometimes it was not possible to carry out remedial grounds maintenance works before completion, as works such as re-planting had to be carried out seasonally.

·         Officers noted that contractors had voluntarily agreed to carry out remedial works when required. An example was given of an occasion where incorrect paint was used in decorating due to an oversight in the specification. On this occasion it was agreed that the supplier would provide the correct paint and the contractor would provide labour at no additional cost.

·         The Committee queried the value of guarantees and the level of protection offered if a company ceases to trade.

·         It was advised that the council’s capital works contracts were ‘design and build’ contracts. The council had chosen to procure on this basis as it placed greater responsibility for design, planning and surveying on the contractor, which was considered to represent better value than carrying out these tasks in house.  

·         Mears advised that works on site were almost entirely carried out by sub-contractors. Mears Islington had 42 members of staff. The ratio of sub-contractors to direct employees was approximately 4:1.

·         The Committee queried if the council could do more to support local people into apprenticeships and employment on capital works. In response, it was commented that there were a limited number of opportunities for apprenticeships within Mears; the current number was considered appropriate for the amount of work to be carried out. It was known that many local sub-contractors used by Mears employed apprentice tradespeople, however it was not possible to comment on their labour needs.

·         It was commented that Mears’ method of surveying satisfaction did not appear to be sufficiently detailed to capture resident complaints. In response, it was advised that the survey form was intended to provide a snapshot of satisfaction and a complaints process was operated separately. The questions asked on the form were necessary for Mears to report on its satisfaction performance indicator as set out in the capital works contract.

·         The diagrams produced by contractors were contractual documents which documented the works carried out. A scanned copy of every document was provided to the council and was stored on a database. The Committee suggested that greater value could be obtained from the diagrams if they were provided in an accessible format which could be integrated with the council’s own housing systems.

·         When procuring sub-contractors, Mears considered social value aspects alongside the capacity and expertise of the contractor. However, it was confirmed that it was not industry practice to formally document such evaluations.

·         The Committee queried why Mears could not contractually require sub-contractors to take on a given amount of apprentices to carry out works. It was advised that imposing such conditions would be unfair as Mears was not able to guarantee the volume of works to sub-contractors, however Mears did informally negotiate with sub-contractors and encourage them to offer apprenticeships in return for works.

·         Following a query by Dr Brian Potter of the Islington Leaseholders Association, it was confirmed that guarantees for roofs and windows were issued by the supplier and held by the council. It was advised that guarantees for roofs were insurance backed and this would be confirmed in writing outside of the meeting.

The Committee thanked Damian Dempsey and Theo Petrou for their attendance.

(b)  Witness Evidence submitted by Islington Leaseholders Association

The Committee noted the evidence submitted by the Islington Leaseholders Association:

·         Dr Potter queried the commercial sensitivity of the schedule of rates and suggested that greater transparency was needed in leaseholder billing for capital works.

·         Dr Potter commented that the bespoke schedule of rates used by contractors in addition to their submission against the national schedule was of particular interest to leaseholders and suggested that the schedules should be published online to enable leaseholders to calculate their own bill.

·         Officers commented that schedules of rates were technical documents and were not presented in a format which was easily accessible to members of the public. As a result, officers suggested that disclosing the schedules would not necessarily be helpful to leaseholders in calculating their own service charge bills.

·         The Committee considered the arguments for and against disclosure of the schedules. It was concluded that further work was required to increase the accessibility and transparency of leaseholder service charges for capital works and the council should seek to discontinue the use of commercial sensitivity clauses relating to the schedules of rates when tendering for future capital works contracts.

The Committee thanked the Islington Leaseholders Association for their submission.

(c)   Draft Recommendations

The Committee considered the draft recommendations circulated and requested the following amendments:

·         Recommendation 1 be expanded to incorporate the monitoring of sub-contractors.

·         Recommendation 2 be amended to remove the words ‘poor performance’ and incorporate the exploration of incentives for contractors.

·         An additional recommendation be added that the council further consider social value matters when procuring capital works. Social value includes the social, economic and environmental well-being of the borough. It was commented that the council should review how social value matters are identified and evaluated in capital works procurement. 

·         An additional recommendation be added that resident inspectors be appointed to review capital works, with a view to increasing engagement and transparency.

·         An additional recommendation be added on using the capital programme to increase the quality and quantity of local employment opportunities and to implement the recommendations of the employment commission.

·         An additional recommendation be added on seeking to discontinue commercial sensitivity clauses relating to schedules of rates when tendering for future capital works contracts.

·         An additional recommendation be added to consider establishing an in-house capability to carry out a proportion of planned maintenance works, subject to consultations with labour unions.

·         An additional recommendation be added for future capital works contracts to require property data compiled by contractors to be held in an accessible format to enable integration into the council’s own ICT systems.