Commissioners may get more control of Liverpool City Council after multi-million energy bill mistake

Government Commissioners who were brought in to oversee troubled parts of Liverpool City Council in the wake of a damning report say they may now have to ask for more powers - after mistakes over an energy contract which could cost the council millions of pounds.

It's emerged that the city council failed to properly extend their energy contract in the Spring - having signed off on an extension with Scottish Power despite the firm having already withdrawn from the commercial market.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 - and and so for three months, the council was put on a more expensive variable rate.

The city's schools and the fire service all have to pay their electricity costs on this contract. Although the exact cost is not yet known, it's thought to run up to £7.5 million.

So, where did it all go wrong?

'Some clear and significant failings'

A specialist accountancy firm was asked to examine why the council had been unable to secure a fixed tariff by the Mayor of Liverpool and the Government-appointed commissioners currently overseeing a number of departments.

The Mazars report has found that there was a combination of factors that led to the contract confusion, including a lack of forward planning, overloaded staff, and confusion over roles and responsibilities. 

They found no evidence of malpractice or cover up by Liverpool City Council Staff.

The report also acknowledged that while the volatile nature of the energy market (exacerbated by Russia’s invasion of Ukraine and the subsequent withdrawal by Scottish Power) "could not have been foreseen" by staff at the council, there were still "some clear and significant failings".

It concluded, "Had there been more forward planning, and the involvement of senior staff... this could have avoided significant delays in decision making processes".

Will frontline services pay for the council's mistake?

The City Council has apologised for the error - and said that changes recommended in this report were already underway.

Councillor Frazer Lake said they are working with Merseyside Fire and Rescue Service and local schools - who had already budgeted for an increase in energy costs because of the global issues in the market - and that any decision to pay extra costs from council reserves would have to be made at a later date.

He added "Our priority is to make sure there is a continuity of service across all our frontline services, so will do everything we can to make sure that the residents are protected and the service they utilise are protected as well."

What does this mean for the Government Commissioners currently running parts of the Council?

Government-appointed commissioners were brought in to oversee a number of departments at the council from March 2021 to 2024, after the damning Caller Report found "a serious breakdown in governance".

They are due to report back to the Communities Secretary next week, and say they may need to increase their control at the council, with a greater oversight of finances.

Lead commissioner Mike Cunningham said the energy contract issue was "a case study" of the wider problems at the council.

"We are concerned about finance - that is an area we are looking to see what more responsibilities we could and should have in that area, and there might be some other functions that Commissioners can support the council with."

But there have also been concerns raised about the cost of the Commissioners, to a Council already facing challenges in its budget.

ITV News asked Mike Cunningham if his salary was value for money:

Mr Cunningham added that he can give the people of Liverpool "every reassurance that improvements are being made, that more improvements will be made, and we will not rest until they have happened"

'A lot of money for no purpose'

The report does not say exactly how much money the mistake will have cost the council, something which Liverpool's Liberal Democrat leader said meant the whole exercise had been a "complete waste of time and money".

Richard Kemp is also sceptical that more powers to Government Commissioners will be effective: "Having yet more outsiders coming in and peering into the bowels of the council when the existing four weren't able to foresee some of these problems seems a lot more money for no purpose."

He added "What we need is a full time Director of Resources in place, a full time Chief Executive, who've got the long term desire to see this council improve, because they're going to be with it for a large amount of time - temporaries and interims just won't work."

What's going to happen to the council's energy bills?

A new team is now in charge of managing the council's electricity .

The Cabinet has since approved a new energy contract on a "better value for money" rate, which will run until March 2025.

This final cost to the council (alongside the Merseyside Fire and Rescue Service and the city’s schools) will be reported in August, once the bill of being on a variable tariff between 1 April and 30 June has arrived.

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