INSIDE SUTTON: Chief exec and company director refuse to explain why £265,000 has been paid in ‘consultancy’ fees to the authority’s own energy company. EXCLUSIVE by DAVE BURTON
Sutton Council’s official registers of payments include 10 invoices, paid between February 2024 and March this year, which suggest the authority has been trying to keep its failed heat network company afloat.
SDEN, Sutton Decentralised Energy Network Ltd, is the council-owned heating company. Since 2024 it has been paid £265,000 of public cash for “consultancy services”. It’s just that no one at SDEN or in the council offices is prepared to say what services the company has provided to the local authority.
SDEN has been controversial since Day One, with CIPFA, the public accountancy body, finding that it was established by the council based on false financial assumptions with “income” from 75 homes that didn’t actually exist and funding from non-existent government grants.
There were even questions raised in the House of Commons.
SDEN was, from the start, a sham.
It was set up in 2016 to sell the energy generated by the Beddington incinerator. To date, SDEN has managed to convince just one developer, Barratts, to plug their properties into their network, at the New Mill Quarter in Hackbridge, where residents have been plagued with persistent problems.
Unplugged: Clarion’s Lavender Walk homes remain unconnected to the SDEN network, despite seven years of negotiations
SDEN will soon be supplying billing services to a heat network in Kingston, but the proposed extension for a heat-only supply to Clarion’s Lavender Walk development in Carshalton is struggling. Seven years after being proposed, no agreements have been signed. SDEN has obtained some grants to subsidise the scheme, but there’s no action.
And for the time being, that means SDEN cannot access the £300,000 Clarion has been asked to pay as a “connection fee”.
After a decade of trying to flog the over-priced heating generated from the polluting incinerator, council officials and the company’s managers know SDEN is a lame duck. And now they want to offload it.
Last November, SDEN received council permission to spend £120,000 on consultants Hermetica Black to find an “investment partner”. The additional investment is needed to underpin the vast sums required to extend the heat network, including, possibly, to the Cancer Hub in Belmont. Whoever provides that investment would be expected to takeover SDEN.
“The driver is to bring capital to the table and take risks,” Richard Simpson, the council’s finance director, said six months ago. “They will want a return for that.”
At the same council meeting, David McIntyre, SDEN’s managing director, noted that “investors want to see the council having quite a small share in the company… they want local authorities to be still very much involved in heat networks, particularly in relation to the planning authority and the benefits that come with that”.
Was McIntyre really suggesting that the supposedly independent, quasi-judicial council planning teams may be open to certain influences?
What chance that Sutton’s Liberal Democrat-dominated planning committee might break the rules over the installation of an ugly pipeline across a picturesque section of the River Wandle, just as they did to grant planning permission to the Beddington incinerator itself?
Looking for a buyer: SDEN director David McIntyre at a council committee last year
SDEN’s latest business plan and reports to the council include grossly over-optimistic projections.
According to SDEN, one likely new customer is St Helier Hospital. Yet it was 2019 when Inside Sutton revealed that St Helier had dismissed any SDEN connection when it spent millions to install its own heat and power system.
The promised connection to the Clarion homes by the Wandle has been “imminent” for seven years. That such schemes are being dusted off for mention now is just bluster, intended to attract investors or buyers. The SDEN accounts show the true status of the company.
The full accounts are presented in draft form to the council’s Sutton Shareholdings Board every year. The accounts for 2024-2025 show administrative costs of £500,000 and cost of sales of £213,000. With income from the core business of just £542,000, there isn’t any profit to be had.
In previous years, the SDEN balance sheets were boosted by “other income”, a line in the accounts relating to business income not related its energy network. SDEN had an agreement with New Mill Quarter developer Barratt Homes, whereby Barratt paid SDEN a “connection fee” – around £1,500 a time – for every property that joined the heat network. Businesses based there would also pay a connection fee.
In November 2023, at a meeting of the Sutton Shareholdings Board, Tim Crowley, the then Tory councillor, questioned McIntyre about the specific nature of this income and whether it was sustainable. He was referring to payments received up to March 2023.
Concerned: former councillor Tim Crowley says he is worried that SDEN deals won’t be scrutinised by the LibDem-dominated council
McIntyre confirmed what the “other income” was, and admitted it was not sustainable, as all of the “other income” came from one-off connection agreements and settlements with Barratt Homes. “The income is a combination of connection charges, recharges to Barratt Homes and also the settlement with Barratt Homes.”
Back then, there was no mention of SDEN providing “consultancy services”.
By mid-2023, all 800 homes and businesses at New Mill Quarter had been connected. SDEN’s income stream was drying up. The income peaked in the 2023 accounts with £786,000 of “other income”.
Somehow, in subsequent years, SDEN has kept reporting significant “other income”, usually just enough to make the accounts look respectable.
In the 2024 accounts, “other income” amounted to £152,000, with the last dribbles of Barratt money coming in. There was one payment from Sutton Council for “consultancy services” of nearly £19,000.
In the 2025 accounts, SDEN reported £127,000 in “other income”. More than £115,000 of that £127,000 was from council, for more “consultancy services”. That helped the first draft of the accounts show a positive balance sheet of £130,000.
Sutton Council payments to SDEN for mystery ‘consultancy services’
16 Mar 2026 £8,320
2 Dec 2025 £23,920
10 Sep 2025 £17,280
16 Jul 2025 £37,510.50
16 Jul 2025 £37,510.50
16 Jul 2025 £6,120
28 Mar 2025 £59,207.50
11 Jun 2024 £18,890.40
21 May 2024 £37,351
8 Feb 2024 £18,750Total paid by Sutton Council to SDEN 2024-2026: £264,859.90
One of the invoices paid by the council, for nearly £60,000, was dated just three days before the financial year end.
A subsequent non-impacting financial provision for tax likely on disposal of the business took £195,000 off the balance sheet, but this was only discovered afterwards when amended accounts were produced. Without the income from this “consultancy work”, SDEN’s balance sheet would change from a deficit of £65,529 to a deficit of £180,978.
The 2026 financial year for SDEN finished in March. In the past year, SDEN has been paid a further £131,000 by Sutton Council for “consultancy services”. These accounts will not be published until at least November.
In total, therefore, in three years, Sutton Council has paid £264,859.90 to its wholly-owned energy network for “consultancy”.
SDEN’s “consultancy” work only began when connection fees began to dry up. The fees seem very generous. There is no indication of what “consultancy” was provided by SDEN, who at the council commissioned it, or who carried out the work for SDEN.
SDEN is effectively a one-man company, run by MD McIntyre. SDEN’s only function is to manage the heat network and invoice its clients.
“I’m waiting with bated breath to discover exactly what kind of consultancy expertise SDEN could have provided on such a scale to Sutton Council,” said Nick Mattey, the Beddington independent councillor whose doggedness exposed SDEN’s fraudulent original business plan.
“This concerns me deeply,” Crowley told Inside Sutton. “I was told the ‘other income’ was not sustainable. I hope there’s a sensible explanation for the new source of income.
“With the LibDems’ huge majority, proper scrutiny of the council’s arms-length companies will become increasingly difficult.”
Blot by blot: Sutton finance director Richard Simpson helped set-up Brick by Brick when working in Croydon
Of most concern is that the published SDEN accounts failed to identify these “consultancy services” as “related party transactions”. Although the law differs for small companies, and transactions within wholly-owned subsidiaries, these transactions would appear to be anything but undertaken under “normal market conditions”, and would seem to require disclosure.
Company directors are expected to disclose such transactions if they feel they would support a true and fair view of the financial statements.
Information that is disclosed by SDEN in the published accounts as related party transactions includes amounts owed to and from the Sutton Council. So can the omission of the “consultancy” fees as related party transactions really just be accidental?
The director of finance at Sutton Council is Richard Simpson, who was reported to his professional body CIPFA – the Chartered Institute of Public Finance and Accountancy – by his former employers, Croydon Council, for his role in the dubious funding model for Brick by Brick, the council’s wholly-owned housing company that bankrupted the borough.
Inside Sutton understands that CIPFA’s examination of Simpson’s part in Croydon’s financial collapse is ongoing.
There is no evidence, at present, that anything unlawful has taken place over the consultancy fees paid to SDEN by Sutton Council.
However, when Inside Sutton put a series of questions to Helen Bailey, the Sutton CEO, and SDEN’s McIntyre over the nature of the “consultancy services” supplied to the council, what competitive tendering took place, who commissioned the work and who delivered the services, answers came there none.
Read more: Sutton’s Simpson show can’t account for £2m SDEN subsidy
Read more: Heat network’s plan depends on 75 homes that don’t exist
Read more: St Helier’s new boilers take steam out of Sutton’s heat network
Read more: Man behind failing SDEN’s plan is re-hired on £800 per day
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