Mouchel is a service company in crisis. But that hasn’t stopped their subsidiary winning a massive contract to maintain roads in Croydon, writes ANDREW PELLING

There was nothing wrong with the gritting and snow clearing following last winter's blizzards, if Croydon Council's own publicity is to be believed. But now one company has been given sole charge of maintaining the borough's roads

When not advertising the borough’s brothels or handing down the latest tablets of wisdom straight from the council’s Chief Executive office through its “Insider” column, the Sadvertiser dutifully relates, uncritically, the latest multi-million pound gamble  Councillors have made in an attempt to save money.

Thus we were blessed with an unquestioning story about how Councillor Phil “Two Permits” Thomas has decided to put all his eggs in one basket and give all the council’s road, pavement, drain and playground repairs to Enterprise-Mouchel. That’s £37 million of your money that Thomas, whose expertise is in teaching and youth services rather than commerce, has bet on just one provider, instead of spreading his risk among some of the previous 16 contractors.

The Sadvertiser glowingly reported Thomas saying that having just one contractor would lead to an improved service. And we thought Conservatives were against state-funded monopolies, and instinctively favoured competition.

Our craven local paper’s acceptance of this assurance was granted apparently in ignorance of the corporate difficulties currently being encountered by Mouchel, the joint owners of Enterprise-Mouchel. The heavily in debt company’s share value has been nose-diving, following a profits warning and a multi-million pound accounting error, and they have lost their CEO and chairman. A safe pair of hands for all Croydon’s road maintenance contracts then?

Don’t just take my word for it. To quote from yesterday’s Financial Times:

“Mouchel, the troubled support services group, has announced sweeping management changes including a new chief executive and chairman, just one week after issuing a profits warning in the wake of discovering a £4.3m auditing error.

“The group, which manages highways and local authority back offices, has appointed Grant Rumbles, formerly at testing group Exova and Serco, as its new chief executive while it continues to negotiate with lenders to avoid a breach of banking covenants on its £87m debt. Bo Leranius, the former chairman, has also stepped down to be replaced by David Sugden, a non-executive director as interim chairman.

“Despite the swift appointments, the shares on Thursday fell a further 2.25p, or 17.3 per cent, to 10.75p, compounding the damage inflicted last week when the company lost a third of its market value…”.

Indeed, just two years ago, Mouchel shares had been trading at 292p.

The FT then offered a further note that ought to have made any potential client council more than cautious before entering into any contracts with Mouchel or its subsidiaries: “Mouchel will breach banking covenants unless it can come to a deal with lenders, who are currently in talks with the company. They have appointed KPMG as independent advisers as they seek to understand more fully the problems.”

With two free parking permits for his family's cars, Phil Thomas will want Mouchel to keep Croydon's roads properly maintained

But not even the merest suggestion of any of this in the Sadvertiser.

“Two Permit” Thomas has tied us to this unfortunate entanglement for four years.

Let us hope that Thomas got plenty of insurance from Enterprise-Mouchel to protect the Council Tax-payers from any potential loss or lack of service.

And the really good news from the Sadvertiser? Do you remember how, during the great snow of last winter, Croydon Council’s Ministry of Truth moved into overdrive to claim that all major routes were properly gritted and cleared, even when there was snow-bound gridlock at Fiveways and other major junctions in the borough? Well, the teams who the council went to such trouble to claim had done such a good job are now to be replaced by Enterprise-Mouchel, who Thomas has made responsible for road gritting and snow clearance this winter.

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