The offices of Laser Energy HQ, a company run by KCC

Exclusive by political editor Paul Francis

A damning review of the energy-buying company run by Kent County Council identified major shortcomings in the way it was overseen by councillors and senior officials.

A previously unpublished report obtained by the KM Group reveals consultants called in to examine the way LASER was run raised serious concerns about how it was monitored.

KCC commissioned the report from consultants KPMG after the arrest of the man in charge of what is the largest local authority energy-buying group in the UK.

Ross Knowles, the former head of energy procurement at KCC, was convicted after being found guilty of a £2m fraud in which he took money from British Gas over a 14-month period through increasing management fees.

He was jailed for seven years yesterday.

The report commissioned by council chiefs was produced a year ago, but has never been publicly discussed.

It reveals the council’s arrangements for overseeing the arms-length company, which supplies energy to 104 different councils, fell short of industry standards.

In particular, it found the governance arrangements for checking Laser’s activities were “not…designed to act as a robust monitor of performance against its objectives, nor as a monitor of risk management arrangements.”

KPMG also found the arrangements did not provide “the necessary assurances to KCC…that commercial services arrangements are well governed with risks appropriately managed.”

Among the report’s most damaging findings was that no procedures were in place to review and authorise final contract prices or review any variation in those prices.

“There is no review or sign off process by the LASER manager or the director of commercial services,” it said.

The report also found:

• The council’s legal department were not involved in the procurement process for a four-year contract between 2012-16.
• Only limited information was shared with councillors and it was informal and on an ad hoc basis
• Senior managers had only a limited understanding of the company.

It said an urgent review and a comprehensive and detailed risk assessment was needed to ensure the authority was aware of the “risks inherent to its activities” - something KCC has now carried out.

KCC said in a statement it accepted all the findings and had implemented the report’s recommendations - including the establishment of more robust governance and reporting arrangements.

Asked if it had reviewed whether LASER was securing value for money, the council said: “The members of LASER who purchase their energy through it are the best judge of LASER'S value for money and market competitiveness.

"The Cabinet Office has also independently reviewed LASER and it has been assessed as providing excellent value for money by saving members millions of pounds every year.”