24/09/2019 – the 3 month anniversary of the ‘Introduction of a National Schedule Of Repair Costs for network damage (Green Claims)’.
We await Highways England’s review of the operation of NSORC to address any concerns, errors or inconsistencies. Judging by the number of enquiries we have received about Highways England’s new process and some of the comments made about ‘NSORC’ it is evident there is a lack of understanding and concerns about the process. 3 months and 3 versions, it would not surprise us if they went back to the drawing-board.
The question we first raised and which no one has yet addressed is…
Why bother? You have a perfectly good process. An obvious answer is that the current methodology, in operation since 2014, was not complied with by contractors insofar as Third Parties are concerned and not enforced by the Authority. Third Parties have been overcharged for years on 1,000’s of claims. The contractually agreed process was not complied with from day-one by contractors. The methodology setting out how a Third Party was to be charged (a maximum uplift) was kept secret and ignored by the Authority.
Contractors, in the name of Highways England, have been content to distort facts to secure contract non-compliant demands.
As for the new process, you will understandably see on each claim:
• £1,601.59 – Make Safe and Restore Traffic Flow. This is attendance & clearance. Already the subject of a £127 increase from 24/06/2019. But what is the composition of this rate? 2 operatives and a van?
- The Authority dropped into a conversation that a sweeper was included. This would require an operative but we seldom see such vehicles attend incidents.
- An NCC operator, someone viewing CCTV? If so, we expect to be provided with the record and will be re-circulating contractors and the Authority to retain the footage
An operative costs around £25 per hour, a van £15 per hour and this is at the higher ‘DCP rate’. At a combined £65 per hour, if incidents required on average about 4 hours to clear, would attract a fee of £260. We continue to await the Authority’s reason for the vast difference between the real cost and the amount charged.
• £662.25 Management or Supervision or Administration Duties. It is the ‘reactive rate’ that immediately catches the eye, it is double the ‘planned’ (£662.25) charge.
- How does an admin employee (9-5 ish) give rise to duplication of costs; they are office-based, work a set period. If there are too many incidents to cope with they may be paid overtime or more staff employed but then more invoices are issued.
- But these rates are being backdated, we have seen some from early 2018. The ‘management’ costs have already been averaged for last year. Why apply the process to pre-24/06/2019 incidents?
We continue to await the Authority’s breakdown, the composition; assets, their rates and number associated to reach each composite. The Authority has not answered questions despite repeated assurances. We have therefore placed information online at ‘06/2019 Schedule of Rates‘.
Third Parties having been subjected to gross exaggeration on an industrial scale for 5 years, we are concerned that the new process may be embellishment in another guise. The lack of information and contradictions received fuel suspicion. The conduct is not in keeping with the online assurances of ‘transparency’ and ‘benefit’ (to insurers):
There is scant evidence of this ‘transparency’ in operation. Highways England have returned to the dark days of ‘composite rates’ which they appeared happy to see the back of in 2015 because … they lacked ‘granularity’ (transparency). Despite requests for a breakdown of the composites since the process was launched and despite assurances this information would be forthcoming, we have received nothing, nada, zilch. Even a FoIA request has been ignored in breach of the legislation
- Insurer ‘Benefit’
Highways England has written that the Authority ‘is giving the insurance industry the benefit of the rates that it has been able to secure in a competitive market’. They must mean it, their brief on-line explanation repeats the statement.
But are drivers, fleets, hauliers and their insurers (Third Parties) really receiving a benefit?
Who knows? The Authority claims to have no DCP Rates in any of its contracts i.e. no benchmark. Therefore, it appears the rates have been taken from claims or ASC (contract) rates for pre-planned (scheduled) works.
If from claims, many figures will be overstated; by their own admission, the Authority has no rates against which to compare the charges. For years and 1,000’s of incidents, the Authority has rubber-stamped invoices for payment – we have yet to see one correctly priced. When we raise the issue of reimbursement from a contractor, the response is this is ‘none of our business’.
If ‘planned rates’ are being used, insurers should see marked reductions. However, the current presented rates suggest excessive charges and the lack of transparency is not encouraging.
- Why the New Process?
To benefit insurers? How?
‘Highways England currently recovers only around 20% of the total value’ of DCP incidents. This appears to be about £6million i.e. there is a further £24 million to try and extract from insurers.
Is it coincidental that, as the Authority introduces a new process, they are bringing DCP claims in-house and will not have a contractor to present claims for them? It is already difficult for the Authority to extract information from their contractors, this is unlikely to improve as the contractor reduces or does away with claims staff.
Ultimately, the Authority will be pursuing the annual £60million bill. Then there are non-processed claims from previous fiscal years of around £42m.
Whilst Third Parties may seem like an obvious target, we would suggest the Authority gets its own house in order first. After all, the issue is not that damage is caused; collisions, spills and fires will continue. The problem is the costs and having placed road maintenance responsibilities with private contractors looking to profit, some have sought to profiteer. That this has occurred with impunity, is the root cause of the problem that Highways England is ineffective, possibly compromised?