Southwark Council has suspended several staff members and may conduct fraud investigations after works on Bermondsey’s Devon Mansions estate went roughly £4.2 million over budget and 102 weeks over schedule.
A furious estate resident claimed the quality of the works was unsatisfactory at Southwark Council’s Overview and Scrutiny Committee meeting on November 29.
She claimed contractors were seen smoking on the scaffolding and had left the estate “filled with cigarettes”.
A Southwark councillor admitted there had been “serious failings” while the interim director for housing vowed that “officers involved in these failings will be held to account”.
In 2020, Southwark Council awarded Equans Ltd a £5.9 million contract to refurbish the Devon Mansions estate by London Bridge.
But according to Cllr Emily Hickson, who brought the case under scrutiny alongside Cllr Sam Dalton, the costs rose to over £10 million.
She said: “This is a huge increase in costs and suggests something has gone seriously wrong in the management of the project by the council.”
“We believe there have been serious failings deserving proper scrutiny,” she added.
The contract was also extended for 102 weeks and given a new forecasted completion date of October 20, 2023.
A Devon Mansions resident, who gave her name as Ina, told councillors: “Southwark has handed a completely blank cheque to its contractors and also to its consultants.
“There are two years’ delay [sic]… so we have been in almost like a prison of scaffolding for almost three years.”
Ina also claimed the new concrete slabs had already been broken, glass bricks were replaced with cheap alternatives and “hundreds” of 14cm-deep holes had been left all over the estate.
The resident also said contractors were seen smoking on the scaffolding and had left the estate “filled with cigarettes”.
“On top of the building and in the basement – everywhere is full of cigarettes,” she said.
The interim housing director said the council had “commenced disciplinary investigations into some council officers” involved in the works, and staff had been suspended.
Southwark Council has also commissioned investigations by internal auditor BDO and external auditor Grant Thornton to look into the case.
The interim housing director said: “It may be that we need to undertake some fraud investigations in this space.”
The Overview and Scrutiny Committee meeting saw councillors and residents discuss the terms of certain contracts.
Consultancy firm Calfordseaden was awarded the contract to manage the project. Devon Mansions resident Ina claimed their fee was 3.99 per cent of £5 million.
Ina claimed this increased to 4.49 per cent of £9.8 million as the project progressed and was overran.
Southwark Council has not confirmed this but did not dispute it at the meeting.
Instead, Southwark Council’s interim housing director, who was not in post when contracts were signed, admitted: “The idea of having [a] percentage fee for a contractor in this space is very unusual.”
Describing such an agreement as “perverse”, he said: “That’s an incentive for costs to run away with themselves”.
Victor Chamberlain, Leader of the Southwark Liberal Democrats, asked “why there were no alarm bells” when project costs started increasing.
Cllr Chamberlain said: “Why was the cabinet member not looking into the facts at the time?
“They could see then there was huge inflation on scaffolding costs. Why were there no alarm bells?”
The interim housing director said there was a sense of “déjà vu” – referring to failings in the major works on the Canada Water Estate, revealed by the News in September.
On that Rotherhithe estate, residents branded the works “a comedy sketch” after it went £1.7 million over budget and seventeen months over schedule.
Cllr Darren Merrill, Cabinet Member for Council Homes, said: “I want to apologise for everything that has gone wrong with these works at Devon Mansions. The council had previously taken up residents’ concerns, and had received assurances that things were being put right.
“However following our further investigations and in the light of the further evidence gathered by residents it is clear that failures have continued. I am truly sorry that residents have been let down in this way.
“The council expects far better on tenants’ and leaseholders behalf from the contractors and consultants who were employed to oversee the budget, timeline and quality of the project.
“We will be ensuring the work that has gone wrong is put right and will be fully investigating how this project got to such a place, so we can ensure such failings cannot happen again. I want to reassure leaseholders that they will not be charged for the works to date.”
EQUANS and Calfordseaden were approached for comment.