The leader of the city council has said he will not be demanding resignations over the council’s handling of Robin Hood Energy.
More than 230 people have been made redundant, £24 million in losses has already been written off by the council, and further losses are expected.
The final sale price is not fixed, and will be affected by how many customers switch providers before the sale is complete.
Speaking today (Friday, September 4) at Loxley House, after the news was officially confirmed this morning, council leader David Mellen apologised to staff who had lost their jobs, but insisted that demanding resignations from councillors on the board of Robin Hood Energy was not the right direction to take.
He also said ‘you can’t expect councillors to be experts on running a fuel business,’ and that more expertise should have been added to the board earlier than it was.
He said: “I’m sorry that people who have taken employment with RHE with the best intentions are now in a situation where they’re in a redundancy process.
“We will try to support them as much as we can.
“I don’t think any of them will lose their jobs until mid November, but losing a job is losing a job isn’t it. It’s not a good time for that to happen.
“We’re looking to add in some enhancements to the redundancy programme, using a small proportion of the money we get from the sale to enhance the conditions.
“I can’t pretend that makes up for people losing their jobs, but we also know in post-COVID times getting new jobs is going to be perhaps more difficult than it would have been a year ago. “
Asked whether he understood why some people were angry that there had not been resignations, when warnings about the financial instability of the company were ignored for years he said: “I can understand that.
“I can account for the period I’ve been leader, 15 months.
“During that period I’ve sought to do something about it, and we are today announcing the ultimate ‘something about it’ in terms of finishing the trading of RHE and passing those customers to another company.
“That’s what I’ve done. You could argue that should have been done earlier.
“There was always a sense of ‘if we just get over this bit then we will get to a stage where the company will be balanced’.
“Three years ago the loss was very small, but next year the loss got bigger because of huge volatility in the price of fuel, and the Government-imposed price cap, which actually is a good thing in terms of individual people, no one can be exploited in the way they were when we started the company, but for a company that had significant debt, it then was not going to be able to make the money to pay back that date.
“So yes, a very difficult industry to work in, in hindsight, but hindsight is not something you have in advance.”
Asked to explain as clearly as possible why he would not be demanding resignations, he said: “It’s about doing something about the situation, and making a change so that actually the situation we were in is no longer continuing.
“It’s natural for our political opponents to be asking for resignations, that’s what we might do if we were in the opposite situation.
“I don’t know that that makes things any better, when actually for the last year I’ve been putting things in place as the new leader to try to change the situation.”
On the way the company was managed, he said: “There were certain things pointed out by the auditor about the management and the grip that the company had and we had of the oversight of (staffing) which has been criticised and rightly so.
“There wasn’t enough expertise on that board. You can’t expect councillors to understand the intricacies of the running of a fuel business. They relied on the staff and the information wasn’t there in the way that it should be.
“We strengthened the board by bringing in a board adviser, very experienced, and we put another councillor on the board who’s a qualified accountant, and since then things have been more robust, but sadly not soon enough.”
Asked whether he thought there was a cultural problem in terms of a lack of transparency at the council, he said: “I’m sure you’ll have read the auditor’s (Public Interest Report) and while being secretive isn’t a major thrust of what he says, there is a theme of that running through the report that there was a sense of supporting RHE no matter what.
“Clearly there has been a commitment to the company, and it’s the balance between being committed to the company but also having the right balance between the other processes and the other demands on our money.
“We are, as an organisation, pretty open. People can see lots of things about our accounts. They are published, they are scrutinised. I think we are very open.
“No one would expect the details of a commercial agreement before it’s concluded to be out there in the open.
“We have to secure the best deal here and we can’t have the details of that deal being discussed by all and sundry before it’s concluded.
“We will, at the end of this process be able to give the public and the media a figure of how much RHE has cost the people of Nottingham.
“We’re not going to shy away from that, we’re just not at that stage yet, and wouldn’t want to not be able to conclude this deal which we think is in the best interests of the people of Nottingham, given the situation we’re in.”
When asked about the debt situation at council-owned Enviroenergy, and what lessons from RHE could be put in place to avoid a repeat of the situation, he said: “I think that’s a really fair question.
“There is the immediate response to RHE and then there’s the learning lessons.
“What we can’t do is expose councillors without the support and the knowledge and understanding of experts alongside them on the board.
“We need to address some stuff with Enviroenergy.”
The most recent accounts for Enviroenergy (Financial year to March 2019) shows interest free debt of £11.9 million from the council to the company.
Councillor Mellen said he expected the strategic review into RHE to be published ‘at some stage’.