A Sutton MP has raised serious doubts whether a supposedly “independent” review into the controversial council-owned SDEN company will make any difference for the hundreds of Hackbridge residents whose homes and lives have been blighted by the expensive and unreliable heating network.
Tory MP Elliot Colburn: sceptical about terms for council’s SDEN review
“The SDEN project has been another catastrophic failure of the LibDem-run council,” according to Tory MP Elliot Colburn.
And some councillors are angry that the Liberal Democrat-run council’s review will prove to be a cover-up for what some claim has been a multi-million-pound shambles, and others allege has been a massive fraud.
“An independent investigation is not supposed to be a cherry-picking exercise to avoid getting to the truth,” one councillor said after the terms of reference for the review were released and it was announced that CIPFA is to conduct it.
The 400 homes in New Mill Quarter have now endured more than 20 heating and hot water outages since the start of 2020, thanks to the unreliable heating system provided by Sutton Decentralised Energy Network Ltd.
Last month, Sutton’s LibDem majority group backed a motion from the opposition Conservatives, with minor amendments, that called for an investigation into the multi-million-pound financing deal for SDEN and its highly dubious business model.
Resigned: Amanda Cherrington quit the SDEN board soon after the council investigation was announced
With a resolve to “ensure complete transparency and accountability” (“That’ll be a first as far as this mob is concerned,” according to one back-bench opposition councillor), the amended motion was passed unanimously by all councillors – LibDem, Tories and the curmudgeonly Beddington independents.
In part, the motion stated, “Council notes the allegation that 9per cent was never achievable as a return from this project as in order to achieve this, the council’s solution was to add extra buildings which could not be accommodated on the New Mill Quarter site, therefore artificially increasing the demand to make the project viable.
“In addition, council also notes the comments that KPMG were not fully informed and not aware of all the material facts when assessing the financial model.”
Within days of the motion being passed, Mandy Cherrington, the senior council employee and the long-term “interim” managing director of SDEN, resigned as a director of the company (although the council withheld the news of that significant change for nearly a fortnight before informing councillors).
Last week it emerged that Richard Simpson, Sutton Council’s financial director, had appointed CIPFA, the Chartered Institute of Public Finance and Accountancy, to conduct the review, and had drawn up strictly restricted terms for their investigation.
These include “the reasonableness at the time“, our italics, “of the assumptions in the final financial model which led to the decision [for the council] to invest in SDEN.
“The review should cover the full financial model and the resulting rate of return achieved.”
CIPFA has also been asked to consider the number of homes put forward in SDEN’s plans (after five years, Barratts and their development at Hackbridge remain SDEN’s only customers), the inclusion of a Care Home in the business model (Barratt’s planning permission for NMQ was tweaked by the council to allow them to drop the care home in favour of more housing units); the level of energy consumptions assumed; the inclusion of income from the government’s Renewable Heat Incentive in the business modelling.
“In addition,” Simpson’s note continues, “the review should cover any conflicts of interest within the decision-making.”
And finally, CIPFA is asked, “To review the latest financial projections for SDEN and make recommendations on actions that could be taken to ensure the continued financial sustainability of the company.” Since SDEN has never been financially sustainable, the bean-counters might struggle with a request to ensure it continues.
CIPFA is expected to deliver its draft report by September 17.
Mixed record: Richard Simpson, once of Croydon, now finance director at Sutton Council
Simpson, having drafted the terms for CIPFA to mark his own homework, should be very familiar to our loyal reader.
Simpson’s previous job was in a similar role at Croydon Council, where he worked until an abrupt and never-explained exit in December 2018.
In his time at Croydon, Simpson helped to establish Brick by Brick, the council-owned loss-making house-building company, he oversaw the deal that put the fledgling development company in charge of the refurbishment of the Fairfield Halls, which is now known as “a £70million fiasco”, and also helped the council pay £36million for a town centre hotel which just months earlier had been hawked to developers for half as much.
With local authorities’ entanglements with heating companies under national scrutiny – Nottingham City Council went bust last year because of its failed Robin Hood Energy outfit – the Simpson review will be watched very carefully.
Elliot Colburn, the Conservative MP for Carshalton and Wallington, whose constituency includes NMQ, is unimpressed with what he has seen so far.
“A comprehensive, independent inquiry is needed to get to the bottom of this, but I am sceptical that this review will have any real outcomes,” Colburn told Inside Sutton.
Over the rainbow: SDEN’s monopoly supply to New Mill Quarter has delivered sky-high heating and hot water bills
“Ultimately, residents have no faith that the LibDems care about them and are still waiting for the promised ‘resilient’ heating system and for a compensation package worth the paper it’s written on.
“The SDEN project has been another catastrophic failure of the LibDem-run Sutton Council.
“Residents were promised 100per cent resilience and competitive pricing. Instead, they’ve had to suffer regular heating and hot water blackouts, multiple Fire Brigade callouts, and above market average pricing.
“Now the failing council-owned project could be in for huge financial losses from its potential mismanagement of millions of pounds of public money, which has caused misery to residents on New Mill Quarter.”
Nick Mattey: Sutton Council ‘lied, cheated and deceived’ over SDEN
Nick Mattey, the outspoken independent councillor for Beddington North, has already confronted Simpson over the nature of his review.
“The scope of the investigation is designed to sweep the key issues under the carpet and to maximise the chances of the Liberal Democrats getting elected again in 2022 by avoiding a proper look at the dishonest way this business was ever allowed to be set up,” Mattey wrote in an email to the council’s Section 151 officer.
“As Sutton Council officers were the people responsible for lying about SDEN’s potential to fight fuel poverty, in authorising payments to barristers to hide the company’s crooked plans from scrutiny and in the negotiations with Barratts, those officers should have no say in what an investigation can or cannot investigate.”
Mattey claims that Barratts and NMQ home-owners are struggling to sell properties in the development because of the sky-high fuel bills from monopoly suppliers SDEN.
“It is completely unacceptable that a local council has lied, cheated and deceived in order to exploit residents in New Mill Quarter,” Mattey said this week.
Read more: Sutton accused of ‘misleading’ over SDEN and the Heat Trust
Read more: SDEN: A timeline of council bungling and sky-high fuel prices
Read more: Thousands left freezing as council heating network fails again
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