Independent report into council’s electricity contract published
An independent report into how Liverpool City Council handled the renewal of its electricity contract has today been made public.
The report from the International accountancy firm Mazars – published this morning – was requested by the Mayor of Liverpool and the Government-appointed Commissioners to understand why the council was unable to secure a fixed tariff in March.
A Cabinet report seeking approval to renew the city’s energy contract had initially been drafted in the Autumn, but a final version was not shown to the city’s Mayor and Cabinet until after the supplier – Scottish Power – had withdrawn its trading desk from the market.
The Mazars report has concluded that this delay was due to a combination of factors relating to the volatile nature of the energy market, which was exacerbated by Russia’s invasion of Ukraine and the subsequent abrupt withdrawal by Scottish Power.
The report identified issues with the council’s risk management process and lines of reporting, both of which the council has already begun to review as part of its improvement journey.
Critically, the Mazars report found no evidence of malpractice, cover-up, or ‘playing the market’ by any council employee.
The report also found no evidence that the Mayor, or Deputy Mayor, had any prior knowledge of the situation that Scottish Power had withdrawn from the commercial market.
The auditors concluded that there was no indication that the Nolan Principles of Public Life had been breached.
The city council has since approved a new energy contract with Crown Commercial Services, which will run until March 2025.
This final cost to the council, the Merseyside Fire and Rescue Service and the city’s schools, of being on a variable tariff between 1 April and 30 June is expected to be reported to the council in August.
“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.”
Mike Cunningham, Chief Commissioner to Liverpool City Council, said:
“This report reaches conclusions about the council that align with our own judgements after a year into the intervention, set out in our second report to the Secretary of State for Levelling up, Housing, and Communities, to be published soon. It is essential that the Mazars report is carefully considered, lessons learned and the recommendations implemented.
“It is a challenging time at the council at the moment. However, Commissioners are confident that with determined leadership and necessary urgency, the required improvements will be made.”