Agenda item

Robin Hood Energy Results

 

Councillor Jim Armstrong asked the following question of the Portfolio Holder for Energy and Sustainability:

 

Can the Portfolio Holder offer reassurance to the customers of Robin Hood Energy that its recent results will have no effect on ongoing supply?

 

Councillor Dave Liversidge replied as follows:

 

Thank you Councillor Armstrong, I certainly can.

 

Evicted Nottingham City Homes Tenants

 

Councillor Jim Armstrong asked the following question of the Portfolio Holder for Planning, Housing and Heritage:

 

Can the Portfolio Holder comment on what steps the City Council takes to ensure that tenants evicted from properties managed by Nottingham City Homes do not become homeless?

 

Councillor Jane Urquhart replied as follows:

 

Thank you Councillor Armstrong. Of course, as will become clear from the debate that we have later on in the agenda, the largest cause of homelessness both locally in Nottingham and nationally, is through eviction from private rented homes; eviction from socially rented houses makes a very small contribution, both nationally and locally. However, even though it’s a very small part of the homelessness picture in Nottingham, Nottingham City Homes and Nottingham City Council have in place a protocol to manage the risk that tenants evicted from Nottingham City Homes properties might become homeless. This involves close working between officers within relevant departments and early intervention to prevent tenants getting into problems in the first place.

 

It is, of course, important that Nottingham City takes action when tenants are unwilling to pay their rent, or when their behaviour breaks their tenancy agreement. But it is, of course, equally important that Nottingham City Homes and ourselves take action to support and sustain tenancies in those cases where tenants become unable to pay their rent. That is why Nottingham City Homes have Tenancy Sustainment Officers, and why we work so closely with them to prevent homelessness wherever we can. We have been monitoring the effectiveness of the protocol in recent months, as part of our drive to reduce the use of temporary bed and breakfast accommodation, which I alluded to earlier in response to a public question. And therefore, I am able to say that since this active monitoring of the protocol began at the back end of last year, the number of evictees being made homeless has been zero.

 

Chargeable Parking Permit Schemes

 

Councillor Andrew Rule asked the following question of the Portfolio Holder for Neighbourhood Services and Local Transport:

 

Can the Portfolio Holder update the Chamber on what progress has been made with the review on chargeable permit schemes currently being undertaken by officers within her Portfolio?

 

Councillor Sally Longford replied as follows:

 

Thank you Councillor Rule for your question. The current adopted policy for residents parking schemes dates back to 1999, and is in need of a refresh. I have tasked officers with undertaking a review of the existing policy and to bring forward a revised policy for adoption as soon as practicable. I am expecting the review to be completed very soon.

 

Support from the Council for Robin Hood Energy

 

Councillor Andrew Rule asked the following question of the Deputy Leader:

 

Can the Deputy Leader confirm what impact the reliance that Robin Hood Energy’s board have placed on ongoing support from the Council will have on the Council’s forthcoming budget; what form it is envisaged this support will take; and what information has been provided by the company to justify the business case for providing this additional support?

 

Councillor Graham Chapman replied as follows:

 

Can I thank Councillor Rule for his question. To answer this question directly; One: The effect on the Council budget will be positive, in that the Council is charging a higher rate for loans than our pooled borrowing rates, and the Council will also receive a payment for the guarantee. The interest charged, which is commercially confidential, conforms to State Aid Regulations. In short, there is no subsidy, which I presume is the assumption underlying the question. On the contrary, there is benefit. Two: the support will take the form of a draw down loan facility, and a guarantee to enable hedging, which is sensible. Three: we have received considerable information in carrying out due diligence, indeed we’ve got external verification from Price Waterhouse Cooper prior to agreeing the loan.

 

But I would then remind him that although Robin Hood Energy reported a loss at the end of March 2017, I am informed that the company is on track to break even by the end of March 2018, and move into profitability thereafter, that is, in the third and fourth year.  I will also remind the Councillor that it took Co-op Energy and First Utility four years to break even. In addition, Bristol Energy is set to take five years to break even, and Ovo Energy hasn’t reached break even yet, despite being set up in 2009. So Robin Hood Energy is ahead of the curve, so we are assured.

 

One of the reasons debt has been incurred is the actual rapid expansion of the company. In a sense, it is due to success. If you are new and expanding in an industry where you have both set up costs and many payments are in arrears, and you are hedging your stock purchase, then you will inevitably get high levels of borrowing, and I would expect the Councillor to understand that given his background.

 

So I fully expect it will go through the normal cycle of a new firm, and move into profit, which will obviously benefit the shareholder, which is the Council. Moreover, Robin Hood Energy has developed quite rapidly, and it’s worth reminding him – currently it has 118,000 customers and 187 supply points and, just as a matter of interest, the last time I looked at these figures there were 109,000, so it’s gone up by 9,000 within a short period of time. Robin Hood Energy has also saved customers an average of £150 per annum, compared to the big six standard tariffs. In addition, since starting up, Robin Hood Energy has continued to create jobs locally, with employees who wouldn’t probably otherwise be employed. Robin Hood Energy has taken on six additional white label partners to help tackle fuel poverty across the country, with more in the pipeline. It has done an enormous amount for the reputation of the Council. Robin Hood Energy has installed over 20,000 smart meters.

 

Robin Hood Energy is paying business rates, in addition to interest to the Council. Robin Hood Energy has contributed to opening up the market and reducing rates right across the board nationally. Therefore, can I thank the Councillor for the interest he is taking in Robin Hood Energy, and I will remind him that the last time municipalities moved in to energy was not in 1974, but 1874, by one Joseph Chamberlain, the leader at Birmingham, who ended up as a Tory. He purchased gas companies on behalf of the Council, and no doubt initially he accumulated debt, but in the long run it was to the benefit of the citizens of Birmingham, and set an example to the rest of the country. So municipal enterprise has a long and honourable pedigree, all we are doing now in Nottingham is reviving 1874 Tory policies. You might actually say, that we in this chamber in that respect are old Tories, and I’m also sure that Councillor Battlemuch who is Chair of Robin Hood Energy, will be the first to agree. Thank you.

 

100 Years of Women’s Suffrage

 

Councillor Linda Woodings asked the following question of the Portfolio Holder for Planning, Housing and Heritage:

 

Following the good news that the City Council has been awarded funding to help mark 100 years of women’s suffrage, could the Portfolio Holder for Planning, Housing and Heritage tell Council how this money will be used to celebrate Nottingham’s heritage as a city of suffrage?

 

Councillor Jane Urquhart replied as follows:

 

Thank you Councillor Woodings for your question. Of course, in Nottingham we know that heritage is not only about buildings and physical assets, it is also about our shared history, and the lived experiences that our city collectively has. As the Chief Executive announced earlier in the meeting, Nottingham will benefit from a share of £1,200,000 from the government to celebrate the centenary of the 1918 Representation of the People Act. We are in that alongside six other centenary cities: Bolton, Bristol, Leeds, Leicester, London and Manchester. As the Chief Executive outlined, we are working in partnership in order to deliver celebratory events and engagement events for this year, and in fact Councillor Woodings will be taking a leading role in delivering some of this work.

 

Activities will range across a wide range of themes, community, history, art and politics, and will be aiming to reach out to as many of our communities across our city as we are able to. We will be looking to have some public art and street theatre in the city centre to engage citizens who may well be unaware of the centenary; a 7 day festival celebrating women in performance, including drama workshops for young women to build their confidence so that they can get their voices heard and to look at what the political climate currently means for them; focus groups and workshops to encourage women to share some of the issues they’re facing today to help them to better understand again how their issues can be heard; and we will be looking at the unveiling of a Blue Plaque linked to Nottingham’s suffrage movement.

 

We will be working with our schools as well to promote knowledge and understanding of women’s suffrage, and hosting discussions in this very building on the subject as well. Our community centres too will be involved, looking to the future to say, “Well what should our democracies look like in a further 100 years’ time?” We will also be looking at having exhibitions in local libraries which would celebrate the history of women’s suffrage in the city, as well as extensive online and social media campaigns. So we are hoping to engage and support a diverse mixture of people within the city through these community base activities, ensuring that there is a legacy far beyond these activities for generations to come.

 

We hope that by recognising both the people and the places that have contributed to women’s suffrage across the years, this will be an engaging programme, and will engage with women who may feel excluded from political processes. Because we know that even now, 100 years on from women’s suffrage, we know that women often don’t feel empowered to even register to vote, let alone go out to vote. And when we look around our chamber today we can see that we have not achieved 50% of women councillors in our city yet, so there remains a way to go. I hope that this awarded funding will help us take some of those additional steps along the way.

 

Collapse of Carillion

 

Councillor Jackie Morris asked the following question of the Deputy Leader:

 

Could the Deputy Leader comment on what the impact of the collapse of Carillion will be on Nottingham?

 

Councillor Graham Chapman replied as follows:

 

Can I thank the Councillor for the question, thank you Lord Mayor as well. So what has happened? What we have just witnessed is the collapse of a major outsourcing firm; Carillion. It leaves behind it a train of debtors, shareholders with major losses, unfinished projects, employees without jobs, a pension’s deficit, and a scandal of directors who have rewarded themselves excessively before the firm went bust. We also have a number of other major outsourcing firms in difficulty. As for the effect on Nottingham, in terms of the Council, then Carillion is indirectly involved with us in three ways.

 

We have involvement in three schools only, under PFI (Private Finance Initiative) - Oak Wood, Oak Field and Farnborough, where Carillion is a sub sub-contractor for facilities management. Our schools have remained open and no disruption to service has been reported. The PFI provider, the intermediary which manages the contracts, has been putting contingency plans into operation which will ensure these services continue in the medium to long term.

 

Where we have joint services operating through the LIFT (Local Improvement Finance Trust) process, which is the second category – Mary Potter, Riverside and Cornerstone, then Carillion is the sub-contractor to what is called the LIFTco, which manages the contract. As with schools, the centres have remained open and there is no disruption to service. Again, LIFTco has implemented contingency plans to ensure that service continues.

 

At Highfields Park the Council has a £5,000,000 Heritage Lottery funded project on site, sub-contracted to Carillion as far back as 2013. It involves de-silting parts of the lake and carrying out some restoration work. The Council’s contract is with the Local Education Partnership, perversely enough, who sub-contract the work to Carillion. Work is continuing on this site at present and there are discussions between the various parties to ensure the project can be completed.

 

Council officers will monitor the implementation of all of these contingency plans to ensure that there is no disruption to service in all three categories. In terms of the wider Nottingham economy, we do not know what the implications are, even though we’ve tried to find out, other than at the QMC, where the Council has already taken over the grounds maintenance contract, and I believe cleansing and car park supervision are being brought in-house. Should there be any serious threats to other sectors, then we will work through Nottingham Jobs and the Growth Hub with employees and businesses to provide practical support.

 

What this crisis has done is bring into question the concept of outsourcing. Now, some will say there is no role for the private sector on delivering public services. Clearly this is not the case. For large schemes such as the tram or the Broadmarsh car park rebuilding, even the dredging of Highfields Lake, it is appropriate for the private sector, we have not got the capacity or expertise. Another category where we need the private sector is for overflow. There are occasions where we have to go to the private sector because we are overstretched - Legal for example. And then there are specialist facilities which only the private sector can provide, for example the due diligence on Robin Hood Energy was done by PWC (Price Waterhouse Cooper), and those are very proper roles. However, I do not believe the private sector should be other than tangentially involved in people based services, such as probation in particular, and in core services such as waste and public transport, and even some utilities. Anywhere where subsidies are required and long-term investment and commitment is required. There is not the motivation from the private sector to direct cash into the service, as opposed to in shareholding. A structural and not necessarily personal issue. There is not the motivation to put individual clients first, and often these clients are amongst the most vulnerable.

 

Carillion is a microcosm of the problem. Once it got into those areas, and away from its core function, which I’ll remind some of you used to be tarmac, it struggled. There is a myth that outsourcing and PFI makes a mint for the private sector. For some, the lawyers and accountants who help arrange the deal, it can do so. In some cases, individual contracts have also made huge profits. But in many cases, it does not, hence the problems that private providers are having in surviving. Quite simply, the rate of return does not materialise, and there is less public sector money by the year to provide that margin. Yet they are still taking on contracts, because they have, for example, contracting units which get paid bonuses and get into bid fever. I’ve seen it first-hand. They underestimate how complicated running the public sector is. They take on the myth that the public sector is so inefficient that they can’t fail to do a better job and make a profit, which is patently untrue. They go into areas with insufficient experience, and then on top there is an expectation of dividend distribution and reward which they cannot fulfil, but which they do, at the expense of the viability of the firm.

 

PFI in particular creates complex structures, which as we have seen with the public sector contractors, through sub-contracting that I’ve just described – you’ve got a sub-contractor plus a sub-contractor, and often that is then sub-contracted thereafter. So everyone loses, public and private sector. And certainly everyone, apart from a few cynical board members, has lost in this case. So it is not simply a matter of private bad, public good; it is that the whole structure and relationships and perceptions within the outsourcing and PFI sector are deeply flawed. Not to mention, and don’t get me on this, is the stubbornness of HM Treasury and it’s attitude to debt and accounting, which has tried to keep debt off the national books through PFI, which doesn’t work. But I get very irritated with the Treasury, I could spend hours telling you why, but you’d probably all fall asleep.

 

And it was for all of these reasons that Nottingham has been so skeptical. This City Council has been so skeptical about outsourcing, and we have kept services in-house, and brought services which were outsourced back in. NCT, Nottingham City Transport, the best bus company in the country, and why? Because it’s in the public sector and it’s re-invested. It was mentioned today in a national newspaper as being a wonderful example of municipal enterprise. Grounds maintenance and selling plants to other councils, we have brought catering back in-house. We have brought building maintenance back in house, it saved £800,000 in one year. Parking enforcement we have brought back and it’s more effective and it’s actually more responsive. We’ve brought security back in and given people better conditions, and there is one more to come, but I’m not revealing which one it is. And this is despite enormous pressure over the years from all governments, and I would add CPA Inspectors who thought they knew better, telling us that we should be outsourcing more.

 

Indeed, one of the reasons we have been so financially resilient up until this year, is that we have economies of scale afforded by keeping so many services in-house, and the flexibility this provides. It is also one of the reasons why a number of Conservative councils are so financially fragile. I’ll give you the example of Northamptonshire, which is the most fragile council in the country, and one of the reasons is that it is excessively outsourced, and it’s got nowhere else to go for its savings because most of the contracts are fixed. But before we get complacent, the above only works in the public sector with good management, with motivated staff, and with trade unions who understand the long term implications. It only works if there is also capacity to invest, and that is becoming a real problem at the moment with the incessant cuts. This brings me on to my final point.

 

If the government wants decent public services, and its preferred option, privatisation, is beginning to fall apart, then we need one thing, they need to do one thing. They need to fund us properly, and to fund us in a way which allows us to invest in the long term for the public good. And it can only do that in one way, which is further tax rises, and I would advise them very strongly to start with corporation tax and bringing it back to the sensible level it was under the Labour government. That way we can invest in our economy, and that way the private sector will benefit from a healthy public sector.

 

Metro Strategy Summit

 

Councillor Josh Cook asked the following question of the Leader:

 

Could the Leader give an update on the progress of the Metro Strategy following the Metro Strategy Summit in Derby last week?

 

Councillor Jon Collins replied as follows:

 

Thank you Lord Mayor. Members will know the Metro Strategy was launched in May last year, providing a framework for how Nottingham and Derby councils can drive economic growth for the two cities and provide direct benefits to our citizens.

 

Since last May various teams across the two councils have been working together to deliver the strategy with a number of very early wins to demonstrate how working together can offer better services to people across both cities.

 

These include travel discounts through Trent Barton, when residents attend particular events in each other’s cities, access to gym and swim facilities for those with gym memberships in either city, a joined up library service where books can be borrowed or returned in both cities, and more recently an agreement for Nottingham to start delivering trade waste services in and on behalf of Derby City Council. Finally, a Metro careers campaign, which is due to start in March this year, will aim to raise the profile of job opportunities across both cities, and at the same time aiming to raise aspirations of young people and their parents.

 

Over last summer we commissioned a report by a company called Metro Dynamics, which is an independent consultancy, to review the potential for closer working links between the two cities. Their findings suggested that there is significant economic benefit to be gained by both cities through the expansion and this joined up approach. The Metro Strategy Summit held earlier last week, provided the opportunity to discuss the findings of this work with a wider group of stakeholders, and to see whether there was an appetite for working alongside the two councils. Over 100 representatives, from local businesses and other organisations attended the event, which resulted in a very positive commitment from the private sector, education sector and councils to explore this further.

 

Our next step is to establish a Metro Growth Board, made up of businesses leaders, alongside the leaders of both councils, who want to be part of what I call a ‘coalition of the willing’, and alongside the Vice Chancellors of our Universities, to develop and take forward the Metro Strategy. Transport links between the two cities, skills and education, the development of place, and business growth and innovation were all identified as priorities

 

Funding for Social Care

 

Councillor Carole McCulloch asked the following question of the Portfolio Holder for Adults and Health:

 

Will the Portfolio Holder for Adults and Health call upon the Government to give the funding needed for social care to help deal with pressure on our local hospitals, staff and our residents?

 

Councillor Nick McDonald replied as follows:

 

Thank you Lord Mayor, and thank you Councillor McCulloch for your question. I am pleased to be able to answer that question, it is also an opportunity to talk to the chamber about the nature of the issues that we face this winter, and absolutely to call upon the government to respond to it better so that we can respond to it better.

 

So just to give you an outline of the picture Lord Mayor. Last week our hospital was facing unprecedented pressures. The health and social care system across Nottinghamshire has also been under enormous pressure since Christmas, following an increase in the number of seriously unwell patients and confirmed cases of flu. Last week the system declared a business continuity incident, so that extraordinary action could be taken to restore flow, ensure patient safety and maximise discharges. 75 additional beds were initially made available, and then a further 45. All partners continue to prioritise emergency, urgent and cancer care. Additional appointments were made at some GP surgeries, and staff across the health and social care system worked over and above to keep patients safe.

 

The public were asked to help us by choosing the right advice for them, making use of pharmacies, urgent care centres and the 111 service where possible, and as a result the system was able to step down the Greater Nottingham health and social care business continuity incident on Thursday, as a result of the exceptional actions taken across the system. Pressures were expected to continue this week, and indeed that appears to be the case, and the tremendous effort from all staff in the NHS and across social care and across the council I think should be applauded.

 

But this is something we’re seeing routinely now, I get informed when we have black alerts at our hospitals, and that is becoming an almost daily occurrence. That is a bleak picture, but it is a bleak picture not just in relation to our hospitals, but also in relation to our adult social care services, the services that this council runs. Many older people need care at home when they leave hospital. We are seeing an increase both in the number of people needing homecare and the amount of homecare that they need. In addition due to our work with NHS partners to get people out of hospital more quickly when they no longer need to be there, people are coming out sooner with higher need. People are getting out of hospital more quickly when they don’t need to be there and that is a good thing, it is the right thing to do for that person in most cases, and it is also good for the public purse because it costs less to help people in the community than it does in consultant led A&E beds. But there is insufficient money in the system passed to social care to make that happen.

 

Whilst for many councils the additional funding provided by the Chancellor in the Spring Budget of 2017 enabled them to invest in new services, and we’re talking inevitably about rural types of authorities with less need, our additional £7,200,000 had to be used to stop us cutting services that year; we weren’t able to provide anything additional, and as a result we went into winter unable to fund additional services that are so clearly needed. Last week instead of people going home, people were having to move into residential care and nursing beds whilst they were waiting for community services they so desperately need. Not only is this bad for patients, because 78% of people that go into short term residential care never come out, it also comes at a greater cost to the public system.

 

Now, we know that NHS England is making money available to systems, but it’s way too little, and it’s way too late. Short term funding provided in the middle of a winter crisis does not help develop the sustainable solution, and it is not what Nottingham’s citizens deserve. We are in a particularly difficult position in Nottingham, we have very high levels of deprivation, we are unable to raise high levels of council tax and we have low levels of self-funders – that is people who can fully fund or partly fund their own social care. We need funding that takes account of those factors.

 

Of course it’s absolutely the case that the system needs to change and modernise; people have been saying that for decades. The integration of adult social care and health is absolutely fundamental, particularly as demand rises, as it has been doing for a long time; this is not a new issue, it’s been the case for many years that this growing crisis was inevitable absent change. But it needs to be properly funded.

 

There is an absence of national policy, it has been left to local areas to try and sort it out, with declining amounts of money. And if the position doesn’t change, the funding doesn’t change, if it’s not properly invested in and adult social care is not properly invested in, not only is that going to be bad for people in this city and elsewhere, it’s going to result in rising costs to the system and a tipping point that will; cause a huge national crisis, not just a crisis in Nottingham. We should be calling that out at a local level. We should be calling that out at a local level, because despite doing our best working with our partners to deliver that change that is needed, we cannot do it if the money is not provided by government, and at the moment that is the case.