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Published: 1 October, 2010
by TERRY MESSENGER

AN inquiry team probing bitter allegations of swindles in a £200million Islington Council housing repairs contract has uncovered overcharging by builders.

Outside investigators were called in after accusations of fraud were made by leaseholders of former council flats.

The leaseholders suspected they were being fleeced after they were presented with bills of up to £10,000.

Private venture, Partners for Improvement in Islington (PFII), is supervising the contract to repair 6,400 flats in street houses owned or sold off by the council.

The team from accountancy giant Price­waterhouseCoopers (PWC) uncovered six instances of overcharging out of a sample of 30 – but blamed lax controls.

A statement from the council revealed:  “In most of these cases, items had been billed for by a sub-contractor, however PFII had not been able to verify that the works had been carried out following a re-survey.”

Islington Leaseholders’ Association chairman Brian Potter said:  “In many cases the work either hasn’t been done or it hasn’t met the required standard but it has still been paid for. What we are seeing here is gross overcharging for extremely low quality work.”

PFII builders are renovating council-owned flats and the communal areas – such as roofs – of blocks shared with leaseholders, with leaseholders charged a proportion of the bill.

Instances of overcharging ranged from £220 to £3,500 but the council rather than leaseholders were stung – because the bills exceeded a £10,000 limit on repair charges to leaseholders under the scheme.    

The six cases were discovered by the PWC team when they examined 10 complaints by leaseholders. They investigated a further 20 cases at random and found two instances which were “incorrectly certified” as having met the required standard.

But PWC stressed: “We did not identify any cases of fraud perpetrated by PFI or its sub-contractors against the council or its leaseholders. However, we have identified some control weaknesses”

Dr Potter branded the exercise “a disgrace”, claiming that the sample examined was too small.

And Islington Tories challenged PWC’s independence, claiming its findings were “completely under­mined” because a housing assoc­iation which part-owns PFII  has paid the firm £663,000 for other accountancy work in the past two years.

Oriel Hutchinson, organising secretary of Islington Conservative Federation, asked:  “Given this information, completely undermining any credibility in the report’s finding, will the council executive, as a matter of great urgency, commission a truly independent and thorough investigation?”

The Labour-controlled council has rejected the demand for a fresh team to investigate but commissioned PWC to carry out a deeper probe to uncover the extent of “discrepancies”.

Labour housing chief Councillor James Murray said: “It is very important for us that leaseholders have confidence that any works done to their properties are carried out completely, to a good standard and billed accurately.   

“Although the report confirms there has been no fraud, I was very concerned to see there had been overcharging in some cases.”

A spokesman for PWC said: “Due to our size and complexity we often work on different sides of the same client engagement and can do this by ensuring rigorous safeguards are in place to manage any conflicts of interest.” 

PFII said in a statement: “We wel­comed this audit and have immed­iately taken action on its recommen­d­ations to give leaseholders and the council confidence in our systems.”