Liverpool’s electricity procurement scandal drags on with no resolution

The Council presided over by Joanne Anderson seems to be almost as bad as the that presided over by her predecessor Joe Anderson when it comes to spending public money

As the Chair of the Council’s Mayoral and Performance Select Committee, I have arranged for a report to come to our budget consideration meeting tomorrow regarding the cost to schools of our failure to secure a fixed rate contracts as electricity costs rocketed last year.

I am highly critical of the way that the Council has still to decide what to do over its electricity supply debacle a year after it was first discovered that the Council had failed to adequately protect schools, the Fire Service and its own budget by not screwing down a fixed rate when the Government was persuading every householder and business to fix a rate.

The Council’s cost over run has not been quantified in the report but previous reports have suggested that it could have lost up to £12 million. The Fire Service has agreed to meet its own costs which were earlier estimated to be about £1million.

After almost a year since the Council’s major blunder on the purchase of electricity was uncovered the Council still has to decide whether it can legally reimburse schools for the £2.3 million they have lost because of the failure of the council to seal in a fixed rate contract at a time of sharply rising prices.

The report makes clear that the 132 affected schools, who joined into our bulk purchase, will have lost £2.3 million. It then goes on to suggest that because of the way the Council supports schools we might need to give another £2.2 million to unaffected schools who did not lose out because of our incompetence. But it could get worse than that. The total bill to schools could be £7.7 million if the amount was given according to the loss as calculated in an independent report from financial experts CIPFA.

All this comes at a time when the Council is already having to come up with £73 million of savings and increased charges. All the Council’s payments have already been met from the Council’s reserves but this amount will ned to be replaced in the budget setting. No allowance appears to have been made for a pay out to schools.

Incredibly, despite the passage of a year the Council has still been unable to establish what it legally can give back to schools!”

The matter will now go from the Performance Management Committee which meets on Thursday evening to the Cabinet later this month when it will meet to consider all the budget options which have been reviewed by the Council’s Select Committees and public consultation.

The most important part of the report says this:

Before deciding whether the council will offer financial support to schools, officers have been exploring the practical implications should such a decision be made.  The rules and regulations surrounding school finances are complex and finding a compliant legal route to providing money to schools has so far proved elusive. The standard route is to allocate funds to schools via the locally agreed funding formula however, this means all schools would benefit. It is estimated that it would cost the council £4.5M to ensure the 132 participating schools receive £2.3M. Even then some schools would consider themselves out of pocket and it would cost £7.7M to ensure each school received at least the amount calculated by CIPFA. This option has been ruled out on cost grounds.

All that the Committee can do tomorrow is to ask questions and raise further questions for the Cabinet to answer in line with the overall budget discussions. How they can establish what is legal and possible in the 16 days before the Cabinet must make its budget proposals when they have failed to do in almost a year is beyond my comprehension.

Yet again the people of Liverpool are suffering because of the inability of the Council’s Labour leadership to establish systems which will use taxpayers money effectively and monitor the effectiveness of those systems. It would appear that the reign of Joanne Anderson  prove every bit as costly to Liverpool taxpayers as the reign of Joe Anderson.

Liverpool needs to change and the time to do it is next May when the all-up elections will give us the opportunity to choose a new Council capable of acting with competence and integrity to run the Council’s affairs.

About richardkemp

Leader of the Liberal Democrats in Liverpool. Deputy Chair and Lib Dem Spokesperson on the LGA Community Wellbeing Board. Married to the lovely Cllr Erica Kemp CBE with three children and four grandchildren.
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