Nottingham suffered ‘institutional blindness’ over Robin Hood risks

Nottingham City Council suffered from ‘institutional blindness’ when it came to the risks of running an energy supply company, according to a new report.

The report by Grant Thornton into the governance arrangements at Robin Hood Energy (RHE) highlights a number of issues at the largest council-owned energy company in the country.

The report says there was ‘an insufficient appreciation within the council’ of the huge risks involved in owning the company.

It adds there was also ‘insufficient understanding within the council of Robin Hood Energy’s financial position’.

Robin Hood Energy was set up in 2015 by Nottingham City Council with the specific aim of taking on the ‘Big Six’ suppliers.

According to the report, the governance arrangements at the energy supplier were ‘overshadowed by the council’s determination that the company should be a success’.

‘This led to institutional blindness within the council as whole to the escalating risks involved, which were ultimately very significant risks to public money,’ the report states.

‘Where concerns were raised by some individuals, these concerns were downplayed and the resulting actions insufficient.’

The report does recognise there have been improvements in governance over the last year, following a ‘critical moment’ in October 2019, when the regulator Ofgem revealed Robin Hood Energy owed more than £9.4 million Renewables Obligation payments.

At the time, Nottingham City Council agreed to loan the energy company the necessary money to pay off the regulator.

‘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,’ said council leader, Cllr David Mellen.

‘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.’

The report comes just days after Bristol City Council announced it had sold Bristol Energy’s B2B customer book to another supplier.

‘We very much regret the past failings in the council’s governance of Robin Hood Energy,’ added Cllr Mellen.

‘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.’

Photo Credit – Jplenio (Pixabay)