The recently resigned chief executive of Liverpool City Council (LCC) has been criticised for his leadership style in a long-awaited report highlighting 'clear and significant failings' that could cost the city millions of pounds in energy costs.
The report, by accountants Mazars, found that failings 'at a strategic level' were part of the problems surrounding the extension of the council's major electricity contract that came to light earlier this year. The failures around the deal are set to cost the council millions.
As revealed by the ECHO in May, a litany of errors led to the council's cabinet signing off on an extension to its electricity contract with Scottish Power at a meeting on March 4 this year, despite the firm having already withdrawn from the commercial market. The cabinet had not been informed of this move before it was asked to agree the deal.
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As such, the council was placed onto a temporary and far more expensive standard rate, which has also severely impacted the city's maintained schools and fire service, which get their electricity through the same deal. After the revelations first came to light, Mayor of Liverpool Joanne Anderson commissioned Mazars to carry out an independent investigation into what went wrong - demanding full accountability.
The report, published today, found that there was 'no evidence of malpractice or a cover-up by any LCC employee', nor did it uncover any evidence of 'playing the market' by any council employee. However, a range of high level failings have been uncovered.
Mr Reeves, who quit his post last week, has been singled out for specific criticism. The report states that the 'Chief Executive Officer (CEO) did not have controls in place to flag major risks ahead of time."
It also criticises his leadership style, stating that he had 'insufficient knowledge of the detail of major contracts', that he had 'not encouraged a risk management culture', was 'not aware of the significant work pressures of council employees' and had 'not always created an environment where colleagues could speak or were encouraged to speak openly about errors."
Another key figure to resign from the council in the weeks following the first news of the energy fiasco was former deputy chief executive and finance director Mel Creighton. The Mazars report states that both Mr Reeves and Ms Creighton, in their roles, had 'a lack of input into, and management of, the council's gas and electricity contract.'
But the report also states that key staff, like Ms Creighton and the council's asset management director Lee Kinder, were 'overloaded with work,' which 'reduced their focus on the electricity contract.'
The report found that Mr Kinder failed to inform the cabinet on March 4 of Scottish Power's decision to temporarily close its trade desks. It adds: "He openly admitted that this is something he should have done. We have seen no evidence that this was a deliberate act of concealment."
Deputy Mayor Jane Corbett, who saw her cabinet portfolio for finance removed after the revelations first came to light, is largely exonerated in the report. The accountants found 'no evidence that the Deputy Mayor was made aware of the significant issues surrounding the renewal of the electricity contract in a timely manner.' The report also found that Mayor Joanne Anderson 'does not appear to have been made aware of the key issues until March 17', several weeks after the contract decision was made.
The report acknowledges that the global market conditions of the energy sector resulted in volatile prices and unprecedented decisions being taken by Scottish Power to temporarily close their commercial desk and then withdraw from the market altogether. It is clearly stated that the city council could not have foreseen this.
But the council was criticised for its processes. An energy report was submitted to the council back in January that was 'not of a quality that could be presented at cabinet and needed improvement.' It adds: "Had the urgency of the decision to extend the contract due to the global market conditions been relayed to the correct individuals the contract extension may have been approved sooner."
Mazars found that lessons had not been learnt from a previous electricity contract renewal and that there was a lack of proactive risk management. The report recommends a lessons learnt exercises are being undertaken and changes and improvements are being implemented to prevent similar issues arising again in the future.
The report also highlights a culture within the council where staff do not always have the confidence to speak up and be heard. There are also issues highlighted around a lack of forward planning and key staff being overloaded.
Responding to the report, cabinet member and culture change lead Cllr Frazer Lake said: "There has been a mistake that has been made. A report was approved by cabinet in March and agreed in May, but there were officers in that room in March that knew that report was null and void. As soon as we found out about it we put action in place to make sure it doesn't happen again."
"The report found that there was no malpractice or cover ups from any members of staff. There is obviously something that went wrong, there was confusion about roles and responsibilities and a lack of urgency from officers to contact senior leaders."
Mayor Joanne Anderson added: "“Scottish Power’s last-minute decision to withdraw from the energy market clearly left the council in a very difficult position.
“The timing of this decision - and how it was communicated to myself and the Cabinet - was very disappointing.
“When I campaigned to be the Mayor, I promised honesty and openness and it is important to me to be open with the residents of our City. To that end, I widened the scope of the Mazars report to ensure that it included accountabilities and responsibilities and that these were fully transparent.
“Lessons have been learnt and the necessary improvements are being made to ensure this council delivers best value for the services it provides to residents.
“The council’s energy contract is now on a surer footing and a root and branch review in the city’s contract management system is already underway.”
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