The Secretary of State for Housing, Communities and Local Government has ordered a rapid non-statutory review into Nottingham City Council that will examine “the serious governance and risk management issues” associated with the council’s private energy company Robin Hood Energy (RHE).
The council had agreed to this “short, informal” review to identify the issues it is facing and make recommendations for action that should be taken, the Ministry for Housing, Communities and Local Government (MHCLG) said.
The review will be carried out by Max Caller, who will be supported by a financial reviewer, Julie Parker, as well as a commercial reviewer, Phil Brookes.
A public interest report, issued by Grant Thornton in August 2020, had accused the city council of "institutional blindness", claiming Nottingham made several failings in the creation and management of RHE including inadequate governance arrangements and a failure to understand the risks associated with entering the energy business.
The report also exposed RHE's year on year losses since its creation in 2015, which came to £34m.
In September Nottingham announced that RHE, which was the UK's first energy company to be set up and run by a council, was to be shut down and its customer base sold to a rival energy supplier.
Several councils across the UK which used Robin Hood Energy as a supplier for their own energy companies were forced to close or shift their focus away from supplying energy entirely.
The MHCLG said the rapid review did not rule out a more formal, statutory intervention from the government in the future – a decision on which will be informed by the work of Mr Caller's team.
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.”
Mr Caller 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. He has served as Chief Executive of London Boroughs of Barnet and Hackney Councils.
A spokesperson for Nottingham City Council said: "We want to be the best we possibly can be as a council and that involves taking on board advice and support from a range of sources.
"The Council is committed to implementing the recommendations made in the recent Public Interest Report by external auditors and we have put an action plan in place to achieve that. Our action plan specifically mentions taking advice from outside of Nottingham to help address the issues raised in the report.
"Discussions with the Ministry for Communities and Local Government and the Local Government Association have been a part our ongoing work to respond to the significant areas highlighted in the Public Interest Report.
"The MHCLG non-statutory review of the City Council is a short focused review that follows the publication of the Public Interest Report. It is understandable that MHCLG are conducting this review and we see it as part of our commitment to seek external advice and to ensure public accountability to the actions we are taking.
"We are committed to resolving the comprehensive set of actions we publicly committed to on 27 August at meeting of the City Council. We are on track with those actions as outlined in an Executive Board report on 20 October.
"The review will help the council build on the work we have already started since the Summer to reappraise the priorities we have set out in light of the major challenges we face. We welcome good advice and guidance which will help us do better for the people of our city."