Nottingham City Council will be subject to a review over its handling of Robin Hood Energy, the government has confirmed.
The rapid non-statutory review, which has been agreed by the council, will look into the “serious governance and risk management issues” associated with the council-backed energy firm, the customers of which were recently sold to Centrica.
Leading the informal review is Max Caller who previously led the best value inspection into Northamptonshire County Council and was also the government commissioner in London Borough Tower Hamlets charged with improving the council’s governance and culture.
The decision to carry out the review was taken following a number of issues raised in a public interest report published in August by Grant Thornton which highlighted the “serious failure of governance at the council” since Robin Hood was established in 2015, including lack of effective risk management, plus failure to take on advice or pass on accurate and timely information.
The review will focus on five main themes:
- Governance
- Culture and leadership
- Financial stability
- Services, e.g. reports from inspectorates/regulators/ombudsman;
- Capacity and/or capability to improve
Local government secretary Robert Jenrick said: “I have been monitoring the very serious situation at Nottingham City Council closely, including the collapse of their Robin Hood Energy scheme.
“A review such as this is not undertaken lightly – councils have a duty to manage taxpayers’ money responsibly and should be held to account where they are found to have failed to do so.
“It is important we work together to turn the council around at this challenging time as they continue to support their community through the pandemic.”
Since the start of the pandemic, Nottingham Council has been allocated more than £34.3 million in unringfenced funding. In addition, the council’s core spending power saw an increase of nearly £17.6 million this financial year even before additional emergency funding was announced.
Recently Ofgem issued a final order to Robin Hood over its failure to pay more than £12 million in renewable obligations (RO) and Feed-in Tariff (FIT) payments. In total, £15 million is still owed by various suppliers.
The regulator has since confirmed that it will reveal the amount that is due to be mutualised shortly.
Meanwhile the report by Grant Thornton revealed that the council invested £43 million of public funds into Robin Hood, and risked a further £16.5 million in the form of guarantees as of 31 March 2020. Should the council pay the money owed to Ofgem, it will have committed more than £71.5 million to the business.
Furthermore in August it was revealed that the local authority absorbed a loss of more than £24 million from its investment in Robin Hood Energy, mainly by writing off loans to the supplier.
Elsewhere in the sector fellow council-backed retailer, Bristol Energy, was recently acquired by challenger Together Energy for £14 million. London Power, which is supplied via a white label agreement with Octopus Energy, remains the only similarly-backed supplier.