Fury boils over at dramatic council showdown over pound energy contract disaster

Liverpool Council's problems are well documented, but tonight in the town hall the latest existential issue facing the troubled authority played out in dramatic fashion.

Ever since news of an catastrophic catalogue of council errors - which could see Liverpool hit with £16 million in energy costs - was revealed, anger has been building. Tonight that anger came out in force as furious councillors grilled the council's leaders about who was to blame, how these mistakes were made and what might happen next.

It was an intense, sometimes explosive two and half hour session for the specially held Finance Committee - and we have pulled out some of the key points from the night. Here is what we learned.

Huge anger at total 'disaster'

This won't come as a major surprise, but councillors are furious at this situation. Repeated errors over an electricity contract mean the council itself is facing a potential £5m hit in energy bills, while the wider city could see costs rise by as much as £16 million - with the city's maintained schools and fire service badly caught up in the mess.

READ MORE:Liverpool Council scrutiny 'unsustainable' and 'has little impact'

There was outrage expressed from all political parties tonight. Chair Barry Kushner called the situation 'terrible'. A visibly furious Cllr Peter Mitchell said it was 'astonishing' that councillors had been kept in the dark about the crisis for so long. Alfie Hincks of the newly formed Liverpool Community Independents said this latest issue made last year's damning Caller Report read 'like the Beano.' His group leader, former Lord Mayor, Anna Rothery even called for multiple resignations.

Chief Executive under huge pressure

For many, Tony Reeves has been seen as the man turning Liverpool Council's fortunes around. He was cited by the government last year as a driving force for good as years of failures and poor practices were uncovered in the Caller Report. But tonight was easily his most bruising night in the job.

Mr Reeves was the focal point of much of the anger from committee members and other councillors, with many suggesting the buck for these costly mistakes should stop with him. Several councillors specifically called for him to leave his position and he looked visibly weary as the night went on after answering dozens of questions.

At one point, Chair Cllr Kushner suggested Mr Reeves' leadership was 'passive', as the chief executive said he could not be aware of every singly contract and had to delegate to senior colleagues. Responding forcefully, Mr Reeves stated: "There's nothing passive about my leadership, no chief executive can have eyes on every single contract, but I am here and happy to answer all your questions."

Finance Director away from duties

There are a number of key figures facing pressure over this most costly of errors and one of those is the council's Finance Director and Deputy Chief Executive Mel Creighton, Mr Reeves' number two. She was not at tonight's meeting and it was mentioned that she is currently signed off from her role.

Mr Reeves made clear that a 'very senior colleague' had been in charge of the contract situation. He said he could not answer when his deputy was first made aware of the problems with the energy contract, adding: "She isn't here tonight."

Former Deputy Mayor Ann O'Byrne said that given the relationship between Mr Reeves and finance officer Ms Creighton is so close, it is “so worrying for all of this to have failed so miserably.”

Key questions about timeline of events

The explosive cabinet report that first revealed the litany of mistakes leading to this situation made clear that on March 3, Scottish Power had informed the council that it was withdrawing from the commercial market. This was not communicated by officers to the cabinet, who met the next day to sign off an extension for an electricity contract with the firm, without this absolutely crucial information.

That same report said it was then lead commissioner, Mike Cunningham - installed by the government after last year's inspection - that actually first flagged the issue with Chief Executive Tony Reeves on March 17.

It was a tense night in the Liverpool Town Hall (Image: Liverpool Echo)

In a new twist tonight, Mr Reeves said he was assured by his own officers at that point that this was not a major issue, but on closer inspection he realised the severity of the situation on March 23. This is also when Deputy Mayor and cabinet member for finance Jane Corbett was first informed.

Also tonight, Mayor Joanne Anderson confirmed she was also first told of the situation on March 17, but like Mr Reeves did not become aware of the full extent of the issue until March 23.

The council is now scrabbling to secure a new deal with Crown Commercial Services as it continues to leak cash over the mistakes. The committee tonight agreed to proceed with that move.

Schools not given full assurances

The energy contract mistakes and miscommunications won't just affect the council's own coffers. A number of schools in the city get their electricity from the same deal struck by the council - this means they too are likely to be hit by ballooning costs because of these mistakes. It is estimated these costs could hit £4m.

In a radio interview last week, Deputy Mayor Jane Corbett said the council would have to cover these costs and it would be unfair to leave schools to pick up the tab, but when pressed on this tonight she was less committed to the response.

She said the 'political will' was there to cover any extra costs for the schools, but said the council must wait to find out how much those costs will be and any decision will have to be ratified by the cabinet. These will be concerning words for affected schools, some of which may simply not be able to meet those additional costs.

'Wait for the investigation'

These were words we expected to hear a lot tonight, and we did. As previously reported, there is now a wide-ranging and independent investigation taking place into the energy contract debacle. International accountancy firm Mazars is carrying out that audit - at a cost of £80,000 to the city.

Councillors were frustrated to hear many times tonight that full answers couldn't be given until that probe is completed in the next few weeks. There were some heated exchanges between elected members and the city solicitor on what could and could not be responded to. An animated Cllr Mitchell asked 'what is the point in a scrutiny committee if we can't scrutinize."

Mayor looking for who is at fault

Another piece of new information to come out of tonight's meeting concerns Mayor Anderson. It was revealed that an initial audit had begun concerning the energy contract, but that she intervened to strengthen the terms of the probe to ensure that there would be full accountability for the mistakes made. The Mayor was clear that she wants to know who was at fault.

Mayor Anderson also revealed tonight that she sought meetings with the chief executive of Scottish Power and the company told the local authority in February that an extension of their existing contract remained available.

Council's processes criticised again

In another embarrassing moment for the council, it was reported that a 'lessons learned' exercise had been carried out regarding the expensive energy contract mistakes. However, lead commissioner Mike Cunningham said this work was not good enough and 'lacking in sufficient detail' and so requested a full, external investigation.

More trouble could be on the way

Sat watching tonight's dramatic showdown was Mike Cunningham, the chief commissioner, appointed by government last year to try and turn things around following that damning inspection report, long before the energy disaster came to light. Mr Cunningham and his colleagues have asked to delay their latest report to the government about the progress being made at the council, presumably so the full story of this latest disaster can be included.

The government retains the option of sending more commissioners in for a full council takeover if it does not feel the required progress is being made. As Cllr George Knibb succinctly put it tonight, 'there could be a lot more trouble to come.'


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