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Nottingham Council Loses Millions On Green Energy Venture

August 13, 2020

By Paul Homewood

 

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Nottingham City Council had less cash available for other purposes as it worked to prop up its energy company, a report has revealed.

In a damning report by External Auditor Grant Thornton, which has today (August 11) been made public, a lengthy list of criticisms have been laid bare, revealing how the city council governed its not-for-profit subsidiary, Robin Hood Energy (RHE).

The council’s determination to make the energy company a success "led to institutional blindness" according to the auditor, putting tens of millions of taxpayer money at risk.

Leader of the city council, David Mellen, has apologised for what he said was done "with good intentions" to provide households with affordable and greener energy.

While Robin Hood Energy is under a Strategic Review, the council, now facing axing hundreds of jobs and cutting services, will consider the recommendations made by the auditor and a decision will be made on the future of RHE in the coming weeks.

Last year, accountants Grant Thornton (GT) issued a dire warning to Nottingham Council that its much-vaunted energy supply venture, Robin Hood Energy (RHE) was in significantly worse trouble than they’d acknowledged, putting the entire council’s finances at risk.

GT have just now reported on the comprehensive failure of governance – “institutional blindness”, they call it – that this represents, along with yet further financial warnings and some scathing criticisms: of the council for its failure to rein back inept political projects; councillors for having inadequate skills and “very clear conflict of interest”; and RHE management for dubious and secretive reporting practices. “This is not how local authorities should look after large amounts of public money”, as GT concludes.

https://www.nottinghampost.com/news/nottingham-news/nottingham-city-council-pumped-millions-4414892

 

Which all rather goes to prove that “affordable and greener energy” is a contradiction in terms!

45 Comments
  1. David permalink
    August 13, 2020 9:32 am

    If our system was more democratic things like this would never start. Instead of local candidates being shoed in by the political parties there should be a system of primaries where any one could be proposed.

    • JBW permalink
      August 13, 2020 11:21 am

      Actually, anyone can stand for election as an independent. Several in our local area did and got themselves elected last time (thanks to Mrs May!). Part of the problem is that people tend to vote for party rather than independent, and the larger parties have deeper pockets to afford all the mail shots and publicity required. But yes, party affiliations at council meetings mean that the party agenda is usually followed. (Well you won’t be selected as a party candidate next time will you). So if people feel the system is rotten – stand for a parish council and get your feet wet, learn the system, and work up from there. It can and does happen.

  2. August 13, 2020 9:38 am

    What is “greener”? Even the language contains a weasel nothing term. Is greener 1% greener? If they claimed “GREEN” then that would be another thing but “Greener” is weasel nothing.

  3. Ian Magness permalink
    August 13, 2020 9:38 am

    I just want to be the first to write “Robin Hood Energy – robin from the poor to give to the rich”.

    • Robert Jones permalink
      August 13, 2020 10:16 am

      Congratulations, you made it! Nottingham Council’s ‘institutional blindness’ comes hot on the heels of Bristol Council’s, which also over-reached its capabilities at a big cost to its tax-payers. It really is about time that the fumbling Climate Change Committee faced up to the reality that there isn’t a Climate Emergency, despite Greta Thunberg’s clarion calls, and that electricity suppliers cannot continue to boast of selling ‘100% Green Energy’. This is state-level fraud which the Government needs to wipe out before it is publicly seen to be in the same position as Nottingham!

    • Jellied Eel permalink
      August 13, 2020 9:44 pm

      The irony is strong in this one-

      “A very significant cashflow crisis occurred in October 2019. As part of the regulatory regime established by Ofgem, energy companies which do not obtain green energy directly have to either trade their obligations with a green energy supplier or pass on to Ofgem, for redistribution, the premium which customers pay to them as part of their tariffs. This arrangement is known as ROCs (Renewable Energy Obligation Certificate) and for 2018/19 for RHE amounted to £9.5m. ROCs payments had to be made to Ofgem within 6 months of RHE’s financial year end. RHE’s management were aware over the summer of 2019 that, although the majority of the cash for paying the ROCs had already been received from customers, it had been absorbed into the Company’s wider cash position and was not available to make the payment.”

      So RHE created to help reduce energy poverty caused by renewables. Yet RHE charged their customers the renewables subsidies, failed to set those aside to settle their ROC obligations, and then had to go to the Nottingham council tax payers for an emergency loan. And despite the need for ROCs being a known obligation for RHE’s business, nobody at RHE seems to have been fired for their negligence. Or perhaps investigated given the tax was collected, but not paid to the regulator as due.

  4. John Palmer permalink
    August 13, 2020 9:39 am

    “Institutional blindness”…. that’s about as damning as people like GT get!!!
    I wonder how many of them will now fall on their swords?
    Judging by the ‘all done with the best intentions’ statement, probably not very many.

    • CheshireRed permalink
      August 13, 2020 12:31 pm

      They need to be made to resign en-masse. (No, I don’t think it’ll happen either!)

    • bobn permalink
      August 13, 2020 12:57 pm

      They should be in Court on fraud charges. Any resident in their constituency should be able to sue them as individuals for malfeasance in public office.

  5. August 13, 2020 9:48 am

    The council’s determination to make the energy company a success “led to institutional blindness” according to the auditor, putting tens of millions of taxpayer money at risk.

    Leader of the city council, David Mellen, has apologised for what he said was done “with good intentions” to provide households with affordable and greener energy.

    1. Institutional blindness = at best institutional (the council) incompetence…..resign en mass!

    2. “With good intentions” Oh then it is all right then is it and you keep lousy your job no matter what willful incompetence and potentially illegal stuff was going on we should turn a blind eye because you were trying to save the planet? This is the shallow end of the nasty black pool that is religious zealot-ism..”all done in a good cause”. You led the council through this shocker and you should do the gentlemanly thing and resign IMMEDIATELY!

    I hope some concerned citizens have the wherewithall to bring a class action suit

    • Graeme No.3 permalink
      August 13, 2020 1:16 pm

      Amazing how costly ‘Good Intentions are”. But mouthing the platitude protects one from resignation, bots and the plague.

  6. Gray permalink
    August 13, 2020 10:17 am

    I’m no lawyer but I don’t think class action applies in the UK, but group litigation does.
    I’m surprised that people affect by the XR protests don’t do this.
    If the protests cause you to lose money, miss appointments, disrupt travel, cause damage that has to be paid for to cleanup, why not sue them?
    Perhaps it would make then think twice before pouring fake blood everywhere to protest in the UK about Brazil!
    Any lawyers out there?
    PS Bristol Energy’s going the same way.

  7. Geoff B permalink
    August 13, 2020 10:33 am

    Heads should roll, but it will all be covered up. I smell the whiff of corruption, I hope there is a full forensic audit to see where all the money went…..brown envelopes in back pockets?

    • Mike Jackson permalink
      August 13, 2020 11:18 am

      I think you’re almost certainly wrong about the corruption, Geoff. (‘Almost’, please note. All things are possible as anyone who remembers Newcastle in the 1960s knows!).

      What we almost certainly have at work here is groupthink. Councillors do not need to be very bright. Pretty much like most of us in fact. The overwhelming majority are no more crooked than you or I and are in local politics mainly to serve the community — though a bit of personal local recognition never goes amiss!

      “Everybody” knows that global warming is happening and that we need to switch to green energy, ie wind and solar, so if we can get in on that act then we can actually offer our local
      people cheaper energy (we are told) and probably be able to cut Council Tax and/or do some projects locally that we can’t afford at the moment.

      At what point this particular project went pear-shaped we don’t know but I think we do need to accept that as far as the councillors are concerned it was started “with good intentions”.

      The major problem that we have at present is that there is at least a 50/50 chance that the officials were no wiser than the councillors. The ‘need’ for ‘green’ energy is currently the received wisdom. The best outcome we can hope for from this is that local government auditors like Grant Thornton will continue to point out the inevitable failures and their cost to the taxpayer and that government will start calling out the environmental liars.

      I’m not holding my breath but it amazes me that no official government organisation has ever, to my knowledge, challenged the blatant untruths that fossil fuels are subsidised in a way that renewables are not and that, taking all costs into account, renewables are cheaper.

      • Martin Burlin permalink
        August 13, 2020 11:51 am

        Unfortunately, “The road to hell is paved with good intentions.”

  8. Harry Passfield permalink
    August 13, 2020 10:43 am

    Yet another RHI scam. The first of many yet to come.

  9. Joe Public permalink
    August 13, 2020 11:07 am

    Quelle surprise.

    “Bristol Taxpayers Pay Cost Of Council’s Green Energy Delusion”

    https://notalotofpeopleknowthat.wordpress.com/2018/03/06/bristol-taxpayers-pay-cost-of-councils-green-energy-delusion/

  10. OldCynic permalink
    August 13, 2020 11:09 am

    How often have we seen – at every level of government – that the elected representatives are clueless when it comes to commercial matters and risk management?

    It would be reassuring if there were a mechanism for referring the errant councillors to to a formal review, and – if found guilty of recklessness – disqualifying them permanently from holding public office and bankrupting them for the losses their stupidity has led to the Council incurring.

    However, I believe no such mechanism exists, so I expect more of this recklessness to continue.

    • ianprsy permalink
      August 13, 2020 11:57 am

      When my council voted on their proposals to deal with The Climate Emergency, proposals which went a lot further than even UK government’s, councillors were queueing up to endorse the proposal and even suggesting the targets should be even more extreme. This is a council with the ruling party occupying 90% of the wards. Only one councillor, one of the minority, made a less-than-enthusiastic comment but it was so abstract that you’d have to be a serious student of the subject to know what he meant. With this sort of representation, what chance is there of a challenge to the orthodoxy?

      It would be interesting to know whether the subject is addressed and differently in councils with a more balance make up.

    • August 13, 2020 12:26 pm

      When was the last time any bureaucrat-run pseudo-green ‘enterprise’ didn’t go pear-shaped?

      • Graeme No.3 permalink
        August 13, 2020 1:18 pm

        I think it was some time ago. The name King Canute springs to mind.

      • Tym fern permalink
        August 13, 2020 1:34 pm

        King Canute was very wise, demonstrating to his court that he could not control nature.

  11. HotScot permalink
    August 13, 2020 11:16 am

    Nor is this behaviour, conflict of interests, and over inflated beliefs of their own abilities confined to climate related activities.

    I hesitate to suggest there ought to be a ‘Department of Common Sense’ to go through Westminster before tuning their attention on local authorities. The country could slash spending on that basis alone.

    It’s just that I want a smaller government, not a larger one!

  12. Phillip Bratby permalink
    August 13, 2020 11:26 am

    Councils should not be allowed to get involved in commercial enterprises, as they always prove to be incompetent. Emptying bins is about as far as they should be allowed to go (and that would be better put out to tender), since they are rubbish at everything else – including recycling..

    • Paul H permalink
      August 13, 2020 4:31 pm

      Shades of the Councils who invested funds in the Icelandic banks, with promises of returns greater than what was on offer at home. That didn’t end well either. When will they ever learn…

      • Mike Jackson permalink
        August 13, 2020 6:28 pm

        When Hell freezes, Paul.

        Read this and weep!

        Click to access general-power-competence–0ac.pdf

        The principle behind Localism is that councils are permitted to do anything they are not expressly barred from doing. Some of it has potential for good but it depends on how ambitious (for themselves!) your officials are.

        I know one small authority where the Chief Exec, along with the Council Leader and the senior representative of other two parties on the Council, vets every proposal for projects outside what the Council has decided are its “core” functions. The chances of them doing a mini-Nottingham are non-existent. Unfortunately they aren’t all as diligent.

  13. Penda100 permalink
    August 13, 2020 11:38 am

    Local Government cannot be trusted to run commercial enterprises and the sooner their piers are curtailed and the doctrine of ultra vires is reintroduced the better for all tax payers.

    • Penda100 permalink
      August 13, 2020 11:51 am

      Piers = powers

  14. MrGrimNasty permalink
    August 13, 2020 11:39 am

    For some reason Brighton Council got involved in the not economically viable Brighton Eye(sore) with incompetent predictions of how much it will earn directly/indirectly in the future. There’s little hope of ever getting most of the cash back I would suggest.

    https://www.brightonandhoveindependent.co.uk/news/politics/restructuring-i360-council-loan-agreed-1334156

    But at least that makes £12Million on ‘climate investment’ (i.e. down the drain) seem inconsequential.

    https://new.brighton-hove.gov.uk/council-and-democracy/council-finance/council-budget/our-capital-investment-programme-2020/21

  15. jack broughton permalink
    August 13, 2020 11:45 am

    This is a very small case of the total losses that “Green” religion is costing. Political dogma allows people to progress pet-schemes without due financial care and accountability. There will be no heads-rolling as the mess starts at the top with policy guidelines that cannot be questioned by underlings.

    So, the 130 000 clients of Robin Hood Energy have been given £ 160 each by the sheriff of Nottingham. But, I assume it created a few worthless jobs.

    Mike Jackson’s note about Newcastle in the 1960s when councillor T.Dan Smith did what he wanted with the council moneys is still relevant.

  16. bluecat57 permalink
    August 13, 2020 12:07 pm

    Oh look, they found it in their OWN pockets.

  17. ThinkingScientist permalink
    August 13, 2020 12:58 pm

    From the report:

    The Council decided to make significant additional loans to [RHE] on several occasions during 2018/19 and 2019/20. Had it not done so, [RHE] would have immediately failed, and the Council would have lost most of the value of its existing stake in it, with £47.4m at risk at the time when the largest loan was requested in October 2019.

    And how much do they stand to lose now? More, or less?

    One of the golden rules of business is to only evaluate project viability on a point forward basis, not to consider “sunk costs”. There is even an old adage for it – “Never throw good money after bad”. And gamblers also a have a phrase for it – “stop chasing your losses”

    WTF is a council doing trying to an energy company? And does it not occur to them that if we didn’t have stupid climate change commitments and renewable energy we WOULD have cheap electricity?

    • August 13, 2020 2:10 pm

      That’s the great irony. They were trying to address the problem of high electricity costs, created by insisting on useless so-called climate policies.

  18. markl permalink
    August 13, 2020 4:34 pm

    “Affordable green energy for the people” is an oxymoron.

    • Mike Jackson permalink
      August 13, 2020 6:33 pm

      I think when it comes to anything to do with environmentalism, “for the people“ is a cruel joke.

  19. Keith Harrison permalink
    August 13, 2020 4:44 pm

    Taking from the poor and giving to the rich?

  20. Goose permalink
    August 13, 2020 4:46 pm

    Shouldn’t that be Dennis Moore Energy?

  21. August 13, 2020 5:16 pm

    These comments are a touch harsh. After all they got the not for profit bit right.

    • Martin T permalink
      August 13, 2020 6:05 pm

      Yes, an outstanding success by that measure!

  22. August 13, 2020 6:34 pm

    O/T It’s not only the BBC that thinks its main purpose is activism
    Social Purpose @ITVPurpose tweets
    ITV News are the 1st regional newsrooms to be @WeAreALBERT certified.
    As part of our environmental targets, all @itvstudios @ITVSport & all @ITV commissions
    will be certified
    and ITV colleagues will complete #ClimateCrisis training,
    all by the end of 2021.

    http://bit.ly/341kXDB

    That account was created in 2012

  23. George Reagan permalink
    August 13, 2020 6:35 pm

    From Texas USA:: We have had the simular results with some of our more liberal cities. One in piticular, Georgetown, just north of Austin, TX (another liberal enclave) invested in 100% “green” energy, to have the total project 100% fail. And that was 5 years ago. Today they have reinstated the local power company that uses natural gas. US$Ms have been waisted and the city still owes US$Ms to contractors. The Texas voters have time and time AGAIN voted to a minimum payment to their original bureaucrats. Regards, retired engineer, Fort Worth, TX

  24. August 14, 2020 3:54 am

    A microcosm of what’s in store for the UK?

  25. Gerry, England permalink
    August 14, 2020 3:05 pm

    There is a case in Hampshire where the investment in commercial property has been so successful it was considering to drop council tax as unnecessary. The guy masterminding it was a talented person from the private sector. However, it did not involve buying property in dying city centres that are being strangled by local and central government.

    There has been so much centralisation in the UK that local authorities are not left much to do so anyone with real talent would not be interested in being a councillor. In most councils now, the councillors don’t get to make decisions as a ‘cabinet’ has been introduced and ‘cabinet members’ make the decisions that fall in their area. Another reason not to be a councillor. With the idiot we currently have a PM centralisation in being taken to extreme with even Parliament being cut out and that is not good. A better system of much greater local government and vastly reduced central government is desperately needed. Ideally Parliament should only be required to meet a few times a year on truly national issues.

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