The litany of shortcomings at Liverpool Council that has led to a multi-million pound increase in energy costs has been laid bare.
A devastating report was published into the expensive energy contract howler at the Cunard Building earlier this year and now the details behind the foul-up have been revealed. Accountants Mazars, who were commissioned by the Mayor of Liverpool Joanne Anderson, to carry out an external investigation have identified gaps in the council’s own audit process, criticised individual decision making and accused the authority of failing to learn lessons from previous contract renewals.
While the 42-page report did not shine a favourable light on former chief executive Tony Reeves’ leadership, the accountants’ assessment is equally critical across the whole organisation. It said Lee Kinder, assistant director of asset management, failed to inform cabinet as early as March of Scottish Power’s (SP) decision to temporarily close its trade desks, which ultimately led to the move to a more expensive tariff.
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Mr Kinder openly admitted this is something he should have done, according to the report, but had not acted with deliberate intent to mislead. It added how Mr Kinder “openly admitted that, with the benefit of hindsight, he should have informed Cabinet of the material change in SP’s circumstances.
“During the interview with the AD Asset Management, he informed us that the agenda during the Cabinet meeting was pre-scripted and he did not have the opportunity to address the issue.” It was said that owing to a “lack of urgency from council officers, such as the AD Asset Management” that cabinet was not informed of the material changes to Scottish Power.
The report said there was a culture at Liverpool Council of not having the confidence to speak up and be heard and as a result, there was a “significant delay” in Mr Reeves and his former deputy and finance chief Mel Creighton being informed of Scottish Power closing its trade desk. Mazars said the Cunard administration had a “lack of strategic approach to major issues, in particular major contracts” and lessons had not been learned from the previous contract renewal in 2019, “despite the Energy and Carbon Manager flagging them at the time”.
The Mazars findings said such a review “may have assisted with the issues faced when renewing the electricity contract this time around.” It added: “Had there been more forward planning, and the involvement of senior staff, in relation to the contents of the electricity report and the information that needed to be presented to the Cabinet by the Energy and Carbon Manager, the AD Asset Management and the S151 Officer, this could have avoided significant delays in decision making processes.”
The report for cabinet on energy contracts began last September and took five months “to reach a quality that it could be put before the Cabinet Report Review Meeting which caused significant delays in decision making processes”. The process of getting the report to cabinet was described as “cumbersome” and despite there being enough provisions for both delegated and urgent decision making that could have been used in the council’s constitution, “it appears that these provisions were not utilised”.
It added: “In the case of the electricity contract, our evidence showed that there was a lack of urgency in ensuring timely Cabinet approval.” Mazars found that confusion also reigned between the council’s energy team and its contract procurement unit (CPU).
The accountants’ report said the authority’s energy and carbon manager emailed its ethics and compliance officer “raising concerns about the role confusion between the CPU and the Energy team in October 2021, stating “I am never sure what [CPU staff member] role is with regard to energy as we have little contact with [them].” In addition, the energy and carbon manager “appeared to be alone in managing the entire electricity contract with little oversight from his immediate line manager.
The report said: “The Energy and Carbon Manager also flagged deficiencies in the system on several occasions and it appears he was not heard by senior management.” Liverpool Council’s own internal audit of the process came in for criticism during the investigation with Mazars deemed the scope of the in house report to have not been broad enough “and did not cover all areas we would normally expect to see in sufficient detail”.
It added: “The time period covered in the internal audit (IA) report started too far down the line to fully understand the root cause of the issues surrounding the procurement of electricity for Liverpool Council. We were informed that the Commissioner team also sent the IA report back upon receipt as ‘the scope was narrow, and the report lacked transparency and nuance’.”
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