Why did Bankrupt Birmingham City Council pay Taxi Firm £17m?

Birmingham City Council has contracts with several taxi firms but it paid one taxi firm an eye-watering £17 million.

Why did Bankrupt Birmingham City Council pay Taxi Firm £17m f

GDL has charged approximately £17 million

An unassuming office above a children’s playschool was at the centre of a multimillion-pound investigation at Birmingham City Council.

The premises on Park Road, Hockley is the listed base of operations of taxi firm Green Destinations Ltd (GDL). Jameel Malik owns and runs the business.

It was revealed that Birmingham City Council gave the taxi firm a series of ultra-lucrative contracts to transport children with “special educational needs and disabilities” around the city.

Often, lone pupils were driven just a few miles to school.

And during the 2022 academic year, the council – which effectively declared bankruptcy – paid GDL £17 million.

GDL are routinely paid around £200 a day, which adds up to tens of thousands of pounds a year.

Included among the dozens of charges is a £230, three days a week charge, to drive one child less than two miles each way to school in a wheelchair-accessible cab, around £65 per mile.

Why did Bankrupt Birmingham City Council pay Taxi Firm £17m

A Hackney Carriage fare would be less than £15 a day.

Another example is a £210 a day (£40,500 a year) fare to drive one pupil just over three miles each way.

GDL also charged £120 a day for a daily journey of just 1.5 miles each way for one pupil in a standard car.

According to documents filed at Companies House, Mr Malik’s firm has increased its bank balance from £260,000 to £2.6 million in the past two financial years.

The boss of rival cab firm HATS, which has similar contracts with Birmingham City Council, was more than surprised by figures which suggest GDL charge around £11 million more per year than their competitors for a comparable service.

Since 2020, the number of routes operated by GDL in Birmingham has grown substantially.

A whistleblower alleged that staff may have “knowingly enabled or allowed overcharges to occur” spurred the more than £3 billion-a-year authority to launch an internal investigation.

While the council has refused Freedom of Information requests, it admitted that there was a public interest argument.

Local authorities are legally required to provide pupils with transport to school in certain situations.

GDL has charged approximately £17 million to run over 450 home-to-school transport (H2ST) routes a year.

Why did Bankrupt Birmingham City Council pay Taxi Firm £17m 2

But compared to its competitors, this cost could be closer to £6 million.

When accounting for the number of pupils in a vehicle and route mileage, GDL charges nearly three times more than their biggest competition.

Another local firm, AFJ Ltd, also appears to be charging Birmingham Council far more than their competitors for their services.

They run more than 173 routes at a total cost of around £7 million a year.

The council was reportedly made aware of these amounts but senior leadership have seemingly failed to act on those concerns for over a year.

It has been alleged that staff who raised these issues were routinely blocked from important meetings on H2ST contracts.

The officers who are directly responsible for arranging these H2ST contracts are still employed by Birmingham City Council.

Data suggests that a significant proportion of the money going to GDL and AFJ comes from the large proportion that have just one child in a vehicle.

Half of GDL’s routes are solo occupancy. The firm runs more than 60% of all solo H2ST routes in Birmingham.

More than a quarter of AFJ’s routes in Birmingham are solo occupancy routes.

But the likes of HATS run close to zero solo occupancy routes.

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

He also said the company lost a significant chunk of their business a year after being brought in despite a pristine record.

But Birmingham Council claimed all contracts were “tendered in accordance with the council’s procurement processes and in a legally compliant manner”.

Staff who brought up issues with GDL contracts were accused of unfairly targeting the firm by senior managers.

A Birmingham City Council spokesperson said:

“The city council’s Internal Audit regularly carries out reviews across the organisation and responded following an allegation that an employee or employees may have knowingly enabled or allowed overcharges to occur.

“The investigation found no evidence or indication of this.”

“Route costs vary due to the type of vehicle required, journey distances and durations and number of students on each vehicle and their individual needs.

“Solo occupancy routes are often required due to the individual needs of the students; these routes are regularly reviewed and all students are supported to access shared transport where appropriate.

“Historically, a large number of contracts were procured at short notice and high cost due to the emergency procurement of North Birmingham Travel contracts to avoid substantial disruption to vulnerable Special Educational Needs Students’ school attendance.

“However, a new procurement Framework is being launched to enable us to procure our contracts cost-effectively.”

It is evident that transporting children to school in taxis is costing Birmingham’s ratepayers a huge sum of money.

Financial documents show that the overall Children and Young People’s Travel Service, which transports 5,177 local kids to school, is currently chewing through an astonishing £230,000 every single day.

In the last academic year, the department had a total budget of just over £40 million.

However, it actually ended up spending almost £59 million, meaning it was more than £18 million, or almost 50%, over budget.

Dhiren is a journalism graduate with a passion for gaming, watching films and sports. He also enjoys cooking from time to time. His motto is to “Live life one day at a time.”

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