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Bankrupt Birmingham Council faces calls to explain gaping £116MILLION black hole in its school taxi spending figures – but Labour authority is still yet to publish the audit reports…


Questions have been raised over the £116million black hole in bankrupt Birmingham City Council’s school taxi bills, as a spending chief appeared unable to account for the colossal sum at an audit committee meeting.

Council records show the values for all 163 four-year school transport contracts are exactly £64,938.27, around £10.5million in total (plus £1.5m for recently published contracts), around ten times less than the £128million the council paid out from 2020 to July this year, according to MailOnline analysis of invoices data.

Responding to questions after a MailOnline investigation revealed the identical contracts, procurement boss Mike Smith said the figure was an average across total estimated spend.

The £64,938.27 figure was just low enough to avoid publishing transparency data, raising renewed questions over the awarding of millions of pounds of school transport contracts to local firm Green Destinations Ltd (GDL) – owned by Jameel Malik – which charged more than £200 a day to take a child three miles to school and back.

This comes as opposition Tories at the troubled Labour-run council renewed calls for an investigation and the publication of internal audits, after education director Sue Harrison promised the committee their release last Wednesday.

Graph showing the value of Birmingham Council school transport contracts compare to the amount actually spent by the council

Graph showing the value of Birmingham Council school transport contracts compare to the amount actually spent by the council

Questions have been raised over the £116million black hole in bankrupt Birmingham City Council's school taxi bills, as spending chief Mike Smith (pictured) appeared unable to account for the colossal sum at an audit committee meeting

Questions have been raised over the £116million black hole in bankrupt Birmingham City Council’s school taxi bills, as spending chief Mike Smith (pictured) appeared unable to account for the colossal sum at an audit committee meeting

Opposition Tories at the troubled Labour-run Birmingham City Council renewed calls for an investigation and the publication of internal audits, after education director Sue Harrison (pictured) promised the committee their release last Wednesday

Opposition Tories at the troubled Labour-run Birmingham City Council renewed calls for an investigation and the publication of internal audits, after education director Sue Harrison (pictured) promised the committee their release last Wednesday

Conservative deputy leader Ewan Mackey said MailOnline raised ‘very serious questions’, adding that ‘Labour should publish the audit reports in full, along with any other investigation, as well as answering the discrepancies highlighted’.

The council have since added that comprehensive spend report is being 

More than a week later, these reports have still not been released.

The council has previously refused Freedom of Information requests from MailOnline for the investigation report, saying the ‘information was given in confidence’. The Information Commissioner is now deciding if the audits should be released.

From April 2020 to July this year, invoices data suggests the council paid all school taxi firms a total of £128million – nearly £12m in 2020, £27m in 2021, £52.3m in 2022 and £36.9m this year until July.

In total, Green Destinations Ltd have invoiced the council £41.8m in three and a half years – £1.1m in 2020,  £6m in 2021, £18m in 2022 and £16.5m to July this year.

When asked by audit scrutiny committee chairman, Labour’s Cllr Fred Grindrod, to explain why all 163 school transport contracts were the same value, procurement head Mike Smith said it was to comply with ‘transparency requirements’.

He said that ‘for the purposes of our transparency requirements’ he effectively took the total estimated cost and divided it by 163 to get an average contract value. 

Tory Cllr Meirion Jenkins blasted the explanation, telling Mr Smith: ‘It may be a mathematically correct calculation but in terms of understanding the point of the transparency, an averaging across the whole thing is pretty meaningless.’

Referencing a MailOnline investigation which revealed concerns that Green Destinations were being overpaid by huge amounts for school taxis, Cllr Jenkins asked internal audit boss Sarah Dunlavey: ‘It seems reasonable then that £200 a day to take a child three miles a day to school seems like a reasonable taxi fare?’

‘It hasn’t been considered to be fraudulent, no,’ she replied.

Conservative deputy leader Ewan Mackey (pictured) said MailOnline raised 'very serious questions', adding that 'Labour should publish the audit reports in full, along with any other investigation, as well as answering the discrepancies highlighted'

Conservative deputy leader Ewan Mackey (pictured) said MailOnline raised ‘very serious questions’, adding that ‘Labour should publish the audit reports in full, along with any other investigation, as well as answering the discrepancies highlighted’

Tory Cllr Meirion Jenkins (pictured) asked: 'It seems reasonable then that £200 a day to take a child three miles a day to school seems like a reasonable taxi fare?'

Labour councillor Karen McCarthy (pictured), cabinet member for for Children, Young People and Families, told the committee: 'I have got a stack here of previous internal audit reports into home to school transport'

Tory Cllr Meirion Jenkins (left) asked: ‘It seems reasonable then that £200 a day to take a child three miles a day to school seems like a reasonable taxi fare?’ Labour councillor Karen McCarthy (right), cabinet member for for Children, Young People and Families, told the committee: ‘I have got a stack here of previous internal audit reports into home to school transport’

A Green Destinations mini bus leaves the depot of school cab firm in Hockley, Birmingham

A Green Destinations mini bus leaves the depot of school cab firm in Hockley, Birmingham

Cllr Jenkins also asked her for any investigations into the service to be made available to the audit committee. Ms Dunlavey replied: ‘We have been in and looked at accusations against various providers and concluded that, as far as we can tell there was no systematic or deliberate overcharging.’

Labour councillor Karen McCarthy, cabinet member for for Children, Young People and Families, told the committee: ‘I have got a stack here of previous internal audit reports into home to school transport.

‘Care for our most profoundly needy children is expensive, whether it’s the transport to get them to the right place for their education or whether it’s care in a variety of care settings.’

Cllr Jenkins responded: ‘This is starting to sound like the last ten years where there’s words, words, words. No one has yet committed to letting me as a member of audit committee get sight of that report. And in fact nobody has really said why it costs £200 a day.’

Following months of investigation by MailOnline, Cllr Alex Yip submitted a series of questions to the audit committee over the concerning over school taxi contracts.

Data leaked to MailOnline earlier this year suggested that, aside from higher than usual prices on individual routes, a significant proportion of the money going to GDL and AFJ comes from the large proportion which have just one child in a vehicle – the most expensive way to transport pupils.

The number of routes operated by GDL in Birmingham has grown substantially since 2020 – and rose by more than a third between 2022 and 2023, leaked data suggested. Half of the routes run by GDL are solo occupancy, which is by far the highest proportion of any H2ST in Birmingham. The firm runs more than 60 per cent of all solo H2ST routes in Birmingham.

But major competitors, including nationally recognised firm HATS Group, who have contracts for a significant number of routes in Birmingham run close to zero single-child home to school journeys.

HATS chairman Henry Bilinski previously claimed that their firm was not offered a fair opportunity to tender for lucrative solo-route contracts on this scale, which could be against public procurement laws.

The £64,938.27 question for bankrupt Birmingham Council: Public data shows that all 163 school transport contracts were exactly the same - and routes some were not even listed (actual prices are rounded annual costs for all Green Destinations routes to a school)

The £64,938.27 question for bankrupt Birmingham Council: Public data shows that all 163 school transport contracts were exactly the same – and routes some were not even listed (actual prices are rounded annual costs for all Green Destinations routes to a school)

Eye-watering home to school transport fares charged to Birmingham City Council by Green Destinations Ltd (figures have been rounded)

Eye-watering home to school transport fares charged to Birmingham City Council by Green Destinations Ltd (figures have been rounded)

Birmingham City Council went effectively bankrupt last month (head office pictured)

Birmingham City Council went effectively bankrupt last month (head office pictured)

Responding to these claims, education boss Sue Harrison told the committee: ‘HATS did not submit a competitive bids and so did not win all the routes they had been awarded in the emergency tender.

‘The outcome of the tender was that HATS did not submit a competitive bids and so did not win all the routes they had been awarded in the emergency tender because they had not been competitive. Green Destinations were awarded a high number of routes from one of the procurement lots, mainly for small vehicle contracts and solo occupancy journeys, because they were the best value for those particular lots.

‘Hats were unsuccessful where they were more expensive, particularly on routes with smaller vehicles and solo route – their specialism has always been larger vehicles and minibuses and we are seeing a growing demand – for various reason – for children requiring that solo transport routes.’

Disputing the overspending on school taxis revealed by MailOnline earlier this year, Ms Harrison said: ‘The children transported in solo occupancy taxi routes, as Cllr McCarthy’s explained, have the most complex needs, some of them requiring even more than one to one support for their journey.

‘There’s always the case where one example can be quoted out of context and I think that every single council in the country you would find those cases if you look as these are the demands we have got and we have to take out private hire contracts.’

However, according to MailOnline analysis, the examples used in the article from July this year are likely not children with the ‘most complex’ needs. All of the vehicles used bar two are unadapted cars and just two of the routes listed have guides which, in any case, the additional cost of which was not factored into the analysis.

The council education boss also said: ‘The Daily Mail reported that HATS was cheaper than Green Destinations had been overpaid but that was not true. The council informed the Daily Mail that this information was erroneous.’

However, MailOnline repeatedly asked the council press office to comment on the figures and was not told they were wrong. The council has now said: ‘Regarding a story about alleged overpayment – there is no “over-charging”. In reality, some bidders have been much more expensive than winning bidders in recent contract tenders.’

Ms Harrison claimed that the costs of school taxis rose from £12,702,424 in 2017/18 to £19,409,323 in 2021/22.

Cllr Mackey told MailOnline: ‘MailOnline has raised very serious questions which deserve thorough investigation and a clear and transparent response.

‘This is particularly so given the history of this service in Birmingham where we already know there have been previous breaches of procurement rules, failings in contract management and incorrect and misleading information provided to opposition councillors and the public by the Labour cabinet. These errors have not only cost significant sums of public money, but also put children at risk.’

Cllr Mackey added: ‘Transparency is the best disinfectant, but unfortunately Labour in Birmingham have promoted a culture of sweeping problems under the carpet, and as we have seen with Equal Pay and Oracle implementation, this has had disastrous consequences, with the council now effectively bankrupt and subject to direct government intervention.

‘Home to School Transport is a vital service providing support to some very vulnerable children, we need to protect them, as well as protecting taxpayers, from any suggestion of impropriety or mismanagement.

‘Labour should publish the audit reports in full, along with any other investigation, as well as answering the discrepancies highlighted by MailOnline, so that there can be full public confidence that this matter is being treated seriously and all appropriate action being taken.’

MailOnline has raised questions about seemingly inaccurate information being told to the audit committee with its chair Cllr Grindrod. He has not responded.

After being forwarded these questions, a Birmingham City Council spokesperson said that local authorities mostly use dynamic purchasing systems for home to school transport, which involves bids being scored on a price and quality matrix.

The spokesperson added: ‘Green Destinations has been successful in its bids through the DPS because they provide quotes which are consistently cheaper than the other operators and are very high performing, with excellent consistent feedback from families.

‘With regards to the £64,938.27 figure, as part of our transparency obligations the council is required to publish details of the contracts it lets. At the outset of the Dynamic Purchasing System (DPS), the spend figures that were published were based on the first set of mini-competitions that were ran and awarded in April 2020.

‘These were a total of 163 school routes which came to a total of £10,584,938. When raised on our Finance system (then Voyager – now Oracle), this total value was split across the 163 school routes. An export from this Voyager Finance report is then used to meet our transparency requirements and shows a notional figure against each provider and not the actual spend with those providers.

‘Details of actual spend will be captured in the spend reports we are currently verifying and as stated at Audit Committee last week, we will now produce a comprehensive spend report for all organisations providing a transport service for us.

‘The service has been extensively audited internally and these audits concluded no fault has been found, nor recommendation made, regarding favourable conditions for any provider.’

Do YOU have a story to be investigated? Email oliver.price@mailonline.co.uk



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