Nottingham City Council has accepted the findings of a new report on its governance of Robin Hood Energy, the not-for-profit company set up by the authority to tackle fuel poverty in the city.
The Report in the Public Interest is published by the External Auditor.
It outlines a number of recommendations for action by the Council including to urgently determine the future of Robin Hood Energy (RHE), with options properly evaluated and risks assessed; review the approach to how councillors are best used and supported on the boards of subsidiary companies and ensure all board members have the required knowledge and experience to challenge the management of the companies.
Councillor David Mellen, the Leader of Nottingham City Council, said: “We accept the findings of this report which, despite our best intentions, reveal failures in the Council’s governance of Robin Hood Energy over the several years following the formation of the company.
“The report makes a number of recommendations to review our current practice of company governance which we are fully committed to carrying out. Some of the recommendations have already started to be put into place while a review of future options for RHE will be completed shortly.
“There is much more to do however and the Council is working hard to try to protect as much of its investment in the company as possible.
“We very much regret the past failings in the Council’s governance of Robin Hood Energy. The change in leadership at both Nottingham City Council and Robin Hood Energy over the last year has seen changes in governance procedures and financial rigour. We now need to look forward and continue to make the necessary improvements including those recommended by the external auditor. We will continue to build on the work done so far but we fully accept there is much more to do over the coming months to address the findings of this report.”
The report recognises the improvements in governance embedded over the last year with a critical moment arising in October 2019 when RHE unexpectedly requested support from the Council for the payment of its Renewables Obligation Certificates (ROCs) amounting to £9.5 million. In the period following this request and in response to examples of inadequate financial reporting from the company, Councillor Mellen, in conjunction with the new Chair of the Board, took action resulting in:
• Establishment of a fortnightly Robin Hood Energy Steering Group
• The replacement of the Council’s Shareholder Representative
• Alongside the new Chair of the Robin Hood Energy Board, the strengthening of the Board with a councillor who is a qualified accountant and more legal and administrative support and expertise
• The suspension of senior staff at Robin Hood Energy
• The appointment of industry experts and a new management team to lead the company
to bring a fresh approach to governance
• The establishment of an Companies Governance Executive Sub-Committee to strengthen the Council’s approach to governance across the authority
• The commencement of a wide-ranging Strategic Review to consider all options for the future of the company.
Councillor Mellen continued: “It’s important to remember that in 2015, when Robin Hood Energy was set up, there was wide concern that the energy supply industry was not acting in the best interests of consumers.
“Our motives in setting up the company were to try to tackle fuel poverty given the prevailing energy supply situation at the time and the level of fuel poverty in the city, including a reliance on pre-payment meters. There was a lot of support for the move at the time both locally and nationally. We wanted Robin Hood Energy to reduce energy prices in Nottingham and initially we achieved that.”
Councillor Mellen has established Companies Governance Executive Sub-Committee to strengthen the governance arrangements across the rest of the Council’s companies and remains eager to keep improving governance in the light of this report’s findings and recommendations. However, he said the Council does not underestimate the findings in the report.
“We have already embarked on a range of improvements, we will go further to make the necessary changes in our governance. This will include working closely with the external auditor to ensure all of the recommendations in the report are fully implemented and learning from best practice elsewhere, including partnership working with the Local Government Association.
“We will also continue to work with the new management team we brought into the company at the end of last year to conclude and implement the wide-reaching strategic review of the business which is due to be completed shortly.
“We need to be clear that a number of other companies within the Council’s Commercial Group including Nottingham City Transport and Nottingham City Homes have operated on a successful basis with good governance and do not form part of the external auditor’s report.”
A copy of the Public Interest Report can be read here along with additional background information.