A Liverpool secondary school was hit with £150,000 extra in energy costs after the city council’s electricity contract error last year.
A local authority report last week confirmed schools across Liverpool were left with an additional bill of £2.3m as a result of its errors around its energy contract in the spring of 2022. Council leaders were not informed that the electricity provider it was dealing with had withdrawn from the commercial market, leading to the council - and other city institutions including schools and the fire service - being placed on a far more expensive contract.
A new cabinet report on how schools will be financially supported has revealed the scale of cost faced by more than 130 sites across the city. Hit hardest was Gateacre School, which according to documents released by the council, was left with a bill of more than a quarter of a million pounds - £156,000 more than expected.
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West Derby School was handed an electricity bill of almost £140,000 for the period of April to June 2022, £84,000 more than it should have been. The cabinet report is recommending the council’s executive signs off on repayment to the schools when it meets next week.
It said: “The additional costs arose from the council’s failure to renew its contract with Scottish Power in early 2022 in time for it to benefit from a 12 months extension of the existing contract. The situation is considered to be of a wholly exceptional nature.”
The report added while it was widely known energy costs would increase in this financial year for all organisations including schools, “it is accepted, however, that schools can argue they have incurred even higher costs because the council did not extend the Scottish Power contract before the decision by Scottish Power not to extend the contract and could not secure a new contract until 13 June. While there were other unforeseen factors, such as the invasion of Ukraine in late February 2022, the council accepts that as a matter of fact it had time before 4 March 2022 to secure the 12 month extension.”
The document said some of the calculation comes as a result of retrospective analysis on “assumptions about what alternative decisions would have been made and about prices at a point in time” and payment will have “significant impact on the council’s own finances and reserves bearing in mind its own unforeseen additional electricity costs.” It added: “This is a discretionary payment to schools and, due to the finite resources available to the council, will have an impact on the funding of other services and the adequacy of the council’s reserves.”
Mayor Joanne Anderson and lead cabinet member, Cllr Tom Logan’s preferred policy is to provide a payment to schools to reflect the additional costs identified “on a wholly exceptional basis,” according to the report. It is considered exceptional because it is arguably as a result of the Council’s actions and “was of a significant size which added to schools’ difficulty in balancing a budget in a year when they were already facing difficulty from higher than expected pay awards and high energy bills.”
The move to support schools as a result remains standalone and would not seek to set a precedent. The report stated in reaching their decision, cabinet members “must be clear that paying this amount to schools is of a higher priority to other financial pressures it is facing and budget savings proposals it is having to consider.”
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