Doubt over 'misguided' energy company plan by Birmingham City Council

Doubt over ‘misguided’ energy company plan by Birmingham City Council

Birmingham City Council has backed away from a proposal to establish its own energy company due to the level of risk and the time they take to make money.

The ruling Labour administration made a pre-election pledge to create a municipal firm to ‘tackle the evils of fuel poverty and rip-off tariffs’ but has now cast doubts of the idea.

Leader Ian Ward said the authority was looking to learn from Bristol and Nottingham city councils whose energy companies made multi-million pound losses in the first few years.

The latter authority has also been criticised over failing to declare a further £7.5m investment in time.

Conservative Cllr Meirion Jenkins (Sutton Mere Green) brought up the issue at cabinet on Tuesday (September 18) as the council’s new utilities procurement strategy was approved.



Birmingham City Council house

He branded the idea to launch a council energy company ‘misguided’ and said: “Can I just check that, cognisant with what’s been going on in Bristol and Nottingham in terms of problems they have been having with loss-making energy companies, in a market that is really tough do we really, really think we have the wherewithal to form a successful and profitable energy company that isn’t going to be a drain on finances?”

In response Cllr Ward said: “We have done a lot of detailed work on how an energy company might work here in Birmingham.

“We know there are significant risks attached to that and we know the time before you see a return on investment is quite a long period of time.

“So what we are now doing, as you have suggested, is looking very, very closely at what is going on at Bristol and Nottingham before making any decision ourselves,

“I think it would be wise in this instance to learn from the experience of both Nottingham and Bristol before making a commitment here on behalf of the taxpayers of Birmingham.”

Cllr Jenkins has been a regular critic of the council’s ability to run subsidiary companies in light of its construction and property services firm Acivico making a £9.5m loss last year.

He recently called for the authority to halt any future private enterprises arguing the council was not ‘capable’ of running them.

Those comments came in July after external auditors Grant Thornton also criticised how the council operated subsidiaries stating there has been a lack of transparency over financial performance and understanding around the authority’s liabilities.

The auditors recently issued a second stern warning to the council over its finances in as many years in the form of seven specific recommendations.

One of them was to ensure that ’emerging risks’ concerning subsidiary bodies are ‘monitored, reported and managed properly’.

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