A series of calamitous mistakes that will see Liverpool's electricity bill soar by £16 million will have 'devastating consequences.'
On Friday, the ECHO revealed the remarkable litany of errors made by council staff, which will see the council's own energy bill balloon by nearly £5m and city schools hit by rocketing bills. The catalogue of mistakes saw council chief executive Tony Reeves offer an apology to the people of the city.
A formal investigation is now underway, involving government commissioners in place at the council, to look into the 'controls, process and culture issues' that have led to the city's electricity contract jumping from £10.6m to £26m at a time when the authority has just approved a controversial package of £20m in budget cuts.
READ MORE: Catalogue of calamities at Liverpool Council to cost city £16 million in energy bills
Amongst the wide range of errors noted in a damning cabinet report, was the revelation that council officers failed to inform the mayor or cabinet members that the energy supplier it was agreeing to extend its contract with had closed its trade desk. As a result, no contingency plans were made and the council was automatically placed onto a far more expensive deal.
Not only had the cabinet not been informed, but the council's senior leaders - including Chief Executive Tony Reeves - had not been either. They would not find out about the ensuing crisis until they were informed by the government-appointed commissioners weeks later when an officer returned from leave.
After a range of alternative options were looked into, it was agreed the best option was to enter into an interim electricity deal with the government-approved Crown Commercial Service. This temporary contract will run from July this year until next March. There is no price guarantee as the contract is entirely market dependent and work is now underway to procure a longer term electricity contract for the council.
The financial implications of this saga for a council in an already difficult economic situation are dire and the costs of these mistakes to city schools could be devastating. It is estimated that the total cost of electricity covered by the current contract will now increase from £10.6m to £26m. This figure includes costs paid by schools and the fire service in the city, who have their own individual budgets that sit outside of the council’s general fund budget.
The debacle has raised serious questions about a council supposed to be making progress on an improvement journey a year on from the damning revelations of a government inspection report. Commissioners installed at the council recently asked for a delay in providing their latest update, stating that further problems at the administration had been found.
City opposition leader, Cllr Richard Kemp, has now written to Mayor Joanne Anderson calling for an emergency meeting to discuss the concerning situation. In his letter he suggested the costly mistakes will have 'devastating consequences in the provision of front-line services, which will need to be hacked back again because of this failure of managerial and political leadership.'
He said: "The situation regarding the incompetence of the council in the way it has been absolutely negligent in the way it has procured its power supply beggars belief. It is clear that there are insufficient systems within the council to ensure openness and accountability.
"Why was this only reported to the cabinet at this late stage? Why is there no transparency within the council as to the decision making processes which need to be followed with proper financial and legal sign offs for a contract of this size at a senior level? It is absolutely vital that this lack of capacity within the council is addressed. This £4-5 million extra cost just adds to the difficult decisions that need to be made next year."
He added: "This situation will have a huge effect on the schools which are hard-pressed as they try to meet huge challenges in bringing children back into school and education post covid." He urged the council to either bring the matter to the next meeting of the audit committee or to arrange a special meeting where it can be discussed.
On Friday, Mayor Anderson offered her own response to the energy contract mistakes. She said: "It’s a kick in the teeth, when our council is struggling to keep frontline services running due to continued Tory austerity, that this has happened. We have started to make improvements, but this is shameful and I have demanded answers from officers as to how this happened."
She added: "The fact that officers did not make the cabinet and myself aware of the situation is shocking. We as politicians are rightly held to account in this city for both the good and the bad, but I won’t defend something that is a clear failure on the council’s part."
