Sutton Council have vowed action after a report into an energy scheme to heat homes in the borough found serious financial issues with the project.

The council said they would act after a report into the Sutton Decentralised Energy Network (SDEN), created by the council in 2016, found it was "not financially sustainable until 2033-34 without further financial support from Sutton Council".

The scheme provides low-carbon heating and hot water to hundreds of properties on the New Mill Quarter estate in Hackbridge.

However, the detailed findings of the report, which was agreed to at a council meeting in July, showed significant shortfall in the financial viability of SDEN of which the council is a 100 per cent stakeholder.

"The report has noted that the financial model was inevitably founded on a number of assumptions. With hindsight, many of those assumptions have proved to be optimistic with clear consequences for the company. It is also clear that there are some governance issues which should be addressed in this context," one section of the opening section of the report read, adding that "the review has not found evidence that there was any wrongdoing underlying that optimism or any other facet of the company."

Among the assumptions uncovered by the Chartered Institute of Public Finance and Accountancy review was the inclusion of homes on the estate that were not yet occupied.

Responding to the findings of the report and a request from the Sutton Guardian, Sutton Council Leader Ruth Dombey said:

"The Sutton Decentralised Energy Network is a ground breaking project providing an innovative way to get heat from waste and which, in the light of COP26, is a very important contribution to reducing our carbon footprint. There is no doubt that there are some lessons to be learnt for the Council from this report and we will be discussing them at the Council meeting on Monday evening."

In addition council issued a more detailed response to the findings which said that the council were acting on the findings and that they were "strengthening our scrutiny and governance processes, especially in respect of major capital projects".

The MP for the area Elliot Colburn responded angrily to the findings in the report.

"The damning independent report is clear: Sutton Council created SDEN on false pretences and they have failed to manage the company since its inception," he said. "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. I have written to the Government to highlight what is going on here and will continue fighting on behalf of residents on this issue."

Click here to read the full report.