Heat network’s plan depends on 75 homes that don’t exist

THE SUTTON COVER-UP: While opposition councillors ask the LibDem-controlled council ‘What have you got to hide?’ over the suppressed findings of a fraud investigation, we can reveal that the business ‘plan’ for the misfiring heating network included 75 homes that were never built.

Calamity: Jayne McCoy has claimed independent investigation raised ‘no material issues’

The business plan for SDEN, Sutton Decentralised Energy Network Ltd, deliberately overstated the likely income from the greenwashing business’s heat sales by including “customers” from 75 homes at New Mill Quarter that have never existed.

Sutton’s Liberal Democrat-controlled council this week blocked opposition councillors from seeing a report commissioned from the Chartered Institute of Public Finance and Accountancy, CIPFA, who were investigating allegations of fraud and other misdeeds around the loss-making council-owned SDEN.

The Sutton Shareholdings Board is the council committee which is supposed to exercise oversight of all council-owned businesses, including SDEN. But the council went to such lengths to suppress the CIPFA findings that Helen Bailey, the council chief exec, and LibDem councillor Sunita Gordon, the chair of the shareholdings board, erased SDEN from the board meeting’s agenda this week.

There are growing suspicions around Sutton’s Civic Centre that the CIPFA investigators, during their review of SDEN’s financial model and viability, have found further damning evidence of questionable conduct by council officials and LibDem councilors.

CIPFA’s terms of reference when commissioned. Opposition councillors have been blocked from seeing their report

CIPFA is the second independent review of SDEN, and follows the 2017 report by KPMG, which the council suppressed before being forced to release it following a three-year battle with independent councillor Nick Mattey and the Information Commissioner.

SDEN was established to provide environmentally-friendly cover for the polluting waste incinerator at Beddington. Energy generated at the incinerator while burning the rubbish from four boroughs, including Croydon, would be harnessed as hot water, which SDEN would pipe to its customers.

Trouble is, to this day, SDEN has only managed to snare a single customer, with house-builders Barratts agreeing a sweetheart planning deal with Sutton Council over its New Mill Quarter development in Hackbridge, where all residents have been forced to sign up to a monopoly heating and hot water supplier.

“Calamity” Jayne McCoy, the council deputy leader who has responsibility for SDEN, has repeatedly claimed that KPMG raised “no material issues” about the business’s financial model or the assumptions.

Erasure: Sunita Gordon had SDEN wiped off the shareholding board’s agenda

But that financial model included 75 homes that did not exist, and which had no application for planning permission. This single manipulation of the model increased the projected income from domestic heat sales by more than 10 per cent.

The composition of the build-out of what became known as New Mill Quarter was set in September 2016 by Sutton’s planning committee. It allowed for 725 homes to be built on the former Felnex site, plus a retail unit and an 80-unit assisted living block. Without further applications, this cannot be changed.

Yet SDEN’s financial plans claim to supply 800 homes – an increase of 75 over the planning permission – plus a non-existent care home (rather than assisted living units). The assisted living units would use much less heat than a care home, yet SDEN still included in their business model the care home that had been replaced in the planning application. KPMG did not challenge these assumptions on build-out in the SDEN model.

Planning is a quasi-judicial matter that is supposed to sits aside from other council business. “Serious questions need to be asked about who knew what was going on and when,” a council insider said this week.

Not all there: New Mill Quarter has 725 homes. SDEN’s financial plans are based on 800

“Councillor McCoy had delegated responsibility for the business case, so she must explain what she knew. If she didn’t know, she was failing to do her job and SDEN was out of control.

“It was not for SDEN or the council to assume that 75 extra units would be built that weren’t in the planning permission. There is not even a planning application for these extra homes.

“This reeks of predetermination in planning, especially as the non-existent homes were in a financial model that was used to justify the borrowing of millions of pounds by SDEN from the council.”

There were other elements of SDEN’s business plan which Sutton’s KPMG consultants advised against.

The SDEN plans also included a “Renewable Heat Initiative”. The KPMG report warned that this was unlikely to materialise. Over the life of the business plan, SDEN claimed that the Renewable Heat Initiative would provide £430,000 of income. KPMG advised against including it in the business plan, but SDEN went ahead and included it anyway.

Read more: Sutton chiefs block opposition from seeing fraud report
Read more: Sutton heat network director quits as fraud inquiry begins
Read more: SDEN: A timeline of council bungling and sky-high fuel prices

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1 Response to Heat network’s plan depends on 75 homes that don’t exist

  1. Michael Griffiths says:

    Sutton council are deliberately involved in competition with Croydon to see who wants to appear to be the most corrupt and should be investigated be a government body over the way they conduct their business. Ratepayers deserve better!

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