The independent review into Sutton Council's heat network project has revealed catastrophic failings.
The report found that the Sutton Decentralised Energy Network (SDEN) is "not financially stable" without steep price hikes for customers and taxpayer bailouts.
SDEN provides heating and hot water to hundreds of properties on the New Mill Quarter estate in Hackbridge. After months of service issues on the estate, Sutton Council agreed to commission an independent review into the financial model of SDEN during the summer.
The Chartered Institute of Public Finance & Accountancy conducted the review and revealed that the financial model for SDEN was based upon false assumptions, including the inclusion of 75 dwellings that do not exist and funding grants that were not obtained. The basis on which the project was approved “was not to the standard it should have been” and the governance “was not what should have been expected for such a novel project”, according to the report.
This damning independent report is clear: Sutton Council created SDEN on false pretences and they have failed to manage the company since its inception.
Residents on New Mill Quarter are now facing potential increases in their bills and all taxpayers in the London Borough of Sutton are going to be cleaning up this mess for decades to come.
Sutton Council’s management of this project has been a total, catastrophic failure and they should be utterly ashamed of the distress they have inflicted upon residents.
According the Chartered Institute of Public Finance & Accountancy, the 2015 business case for SDEN was not sufficiently rigorous to enable effective scrutiny:
“the reliance on delegated authority to Officers and the Chair of Housing, Economy and Business [Lib Dem Cllr Jayne McCoy] to review the 2017 financial model nurtured a motivation to ensure that the project remained within the parameters that gave rise to delegated authority and thus to progress the project without taking sufficient account of the known risks.”
In order to improve the financial resilience of SDEN in the short term, the report suggests the need to increase tariffs charged to customers (and further impact residents on New Mill Quarter) and revise the funding available to SDEN by making taxpayers pick up the pieces.
The findings of the review and recommendations will be examined by a meeting of the Council’s cross-party Strategy and Resources Committee on Monday 1 November 2021.
I have written to the Government to highlight what is going on here and will continue fighting on behalf of residents on this issue.
