An IT services company hosted on UKCloud, the cloud services provider placed into compulsory liquidation on 25th October, has complained of a 700%-plus increase in fees while the firm is wound down.
An executive from the small company, who asked to remain anonymous, told Computing the huge jump in hosting fees was only communicated by EY, the company appointed by the Official Receiver as Special Manager overseeing the liquidation process, on 7th November. The new rates apply for the entire month of November and until UKCloud is finally wound up, which is planned for early December.
The fees imposed by EY will amount to an additional £100,000, which the executive said would be difficult to find.
The executive said they were not made aware of UKCloud’s terminal financial problems through any official channels and had no time to plan. Under the terms of the company’s contract with UKCloud, 30 days notice is required for any price changes. However, all bills, including the increase charges, are due to be paid by tomorrow, 18th November.
“They didn’t give us 30 days, effectively they gave us minus seven days,” the executive said. “No-one’s looking for a freebie but we don’t expect 700 and something percent increase in fees. Those prices are completely out of the market and it’s difficult to come up with that cash. And really, why should we?”
EY told the company the additional charges were being levied to minimize UKCloud’s losses, but the executive questioned the fairness of recouping UKClouds debts through its customers.
“It seems like we’re getting punished for mismanagement of a business we have no control over,” the executive said, adding that they understood many other UKCloud customers in both the public and private sector are similarly affected.
“Some organizations may be able to swallow these inflated prices, but we can’t, and we can’t pass them on to our customers”.
Concern over continuity of service
A bigger worry, the executive said, is the possibility that the service might be withdrawn completely before migration to a new cloud services provider has been completed. The company had initially scoped a controlled migration as taking three months, but this was now happening at a forced pace. NHS England and the Cabinet Office assured the company they would have six weeks, but after discussions with EY, the company was not reassured.
“They’re making that demand, and they’re not saying ‘this service will continue’, they’re saying ‘if you don’t pay it we can’t guarantee the service will continue’.”
The company has paid all bills due under the existing terms and has taken legal advice on what to do about the additional charges.
At the time of the UKCloud liquidation announcement, the government said: “We regularly monitor the health of key suppliers and we have contingency plans in place to ensure the continuity of public services.” However, as a supplier to the NHS, whose patients would be impacted by any shut-off, this does not seem to be supported by the lack of guarantees offered by EY to keep services running, the executive said.
The Cabinet Office is underwriting EY for any losses it might incur between 25th October and 6th December, but after that the picture is unclear. It’s possible UKCloud will be acquired in that time, or that the winding-down period may be extended. The government department is supportive of EY’s charging inflated fees to UKCloud’s customers to minimize losses from the defunct provider, the executive concludes, after discussions with the Department.
“Effectively [the Cabinet Office] told me that this is an action that EY has taken and the Cabinet Office is supportive because otherwise it’s more likely that EY will call in that funding.”
The Official Receiver’s office declined to comment on the inflated charges, citing “commercial confidentiality”, but they did provide some reassurance that services would continue.
“In his role as liquidator of UKCloud, the Official Receiver is an independent office holder and is required to ensure the costs of providing ongoing services for UKCloud’s customers are covered. The amounts being charged for ongoing provision of services are being forecast on a regular basis .The Official Receiver and Special Managers are engaging with all customers to enable the continued provision of services.”
Computing also contacted EY but had not received an answer at the time of publication.