Advisers on cutting costs paid pounds 500,000 by health authority: MPs told of 'cavalier disregard' of procedures in awarding contracts to consultants

THREE consultants employed by the West Midlands Regional Health Authority to advise on cost-cutting received more than pounds 500,000 in fees, expenses and 'termination costs', the Commons Public Accounts Committee revealed yesterday.

The committee was told in February that the authority had spent pounds 4m on consultancy fees and other costs, including a year's expenses of pounds 350,000 that had helped to cover the rent of houses in London, the hire of aircraft and lavish entertainment.

But minutes of evidence published by the all-party committee yesterday explained that while the bulk of consultancy work had been carried out by a US firm called United Research Group, other consultants had been taken on to help review the authority's supplies division. Two worked for the Birmingham-based MMM Consultancy Group, and the third for P M Vignoles Associates.

The committee was told that MMM's Mike Winslow 'filled role of Supplies Chief Executive from March 1989 until contract terminated January 1992' and that in 1991-92 he was paid pounds 70,429 fees, pounds 3,700 expenses, and pounds 41,290 termination costs - 'all payments exclusive of VAT'.

Mike Hurt, also of MMM, 'filled role of Director of Information, Supplies, June 1990 - January 1992', and his final year's payments came to pounds 44,603 fees, pounds 1,680 expenses, and pounds 28,875 termination costs.

Peter Gibbs, of P M Vignoles, was 'appointed Commercial Director of Supplies, 1 November 1990 - January 1992', and his 1991-92 costs were pounds 45,385 fees, pounds 5,580 expenses, and pounds 29,460 termination costs. Between March 1989 and January 1992, the three men cost the authority pounds 509,162.

The MPs were told that P M Vignoles Associates was 'not particularly known for work on supplies; no information about work for other HAs (health authorities)'.

But Chris Watney, the health authority's Director of Regionally Managed Services, and the official largely blamed for showing a 'cavalier disregard' for NHS procedures in agreeing the initial contract with URG, said that they 'had an impressive client list', including British Aerospace, Devonport Docks, Rolls Royce and Vickers.

The committee was told in February that the senior partner of a company called Vignoles, an executive search agency, was said to have had a 'close relationship' with Mr Watney. Vignoles was said to have introduced URG to Mr Watney.

Sir James Ackers, the former chairman of the RHA and a prominent local Conservative, resigned two years early in January over the pounds 4m loss on management consultancy contracts, but he was given a pounds 10,000 pay-off by Virginia Bottomley, the Secretary of State for Health.

Last year, the National Audit Office attacked the authority's decision to lend nearly pounds 1m to Financial Information Project, a company set up to market health-related computer software. The NAO said the loan was unlawful.

Chris Watney, the authority's former director of supplies, was criticised by the district auditor for entering into an 'improper and badly-managed' pounds 2.5m contract with the United Research Group.