The Conservative Group on Birmingham City Council have welcomed the announcement by the Leader of the Council that Labour will be abandoning their manifesto commitment to establish a council owned energy company that would have placed enormous risks on council finances.
Cllr Robert Alden (Con, Erdington) said:
“The Council have been investigating this since at least 2016 and despite repeated warnings from our group of the risk to tax payers money they recommitted to it in the manifesto published last year, despite ruling it out 6 months beforehand. It is welcome that the Leader has finally listened to sense, but all this time, their misguided focus, has meant they have delayed plans to implement strategies to reduce the council’s own energy bill, failed to meet their statutory responsibilities to produce a two yearly Home Energy Conservation Act report and failed to produce a simple local statement of intent for the Government’s Energy Company Obligation (ECO) initiative which has meant that thousands of homes at risk of fuel poverty have potentially missed out on much needed funding which energy companies have spent in other areas instead.”
The risks of entering the energy market - for both local authorities and private sector companies have been laid bare in recent years, including:
- Robin Hood Energy (Nottingham City Council) posted losses of £713k in 2015, £2.5m in 2016 and £7.2m in 2017, a small profit of £202k in 2018 was only achieved after a £7.5m debt to equity swap which they failed to declare in time, without this they would again have made a loss.
- Victory Energy (Portsmouth Council) was wound up last year without ever signing a single customer, costing Portsmouth tax payers an estimated £4m
- Bristol Energy has received £29m from local taxpayers and made a loss of £11.2m last year. The council had to impair it by around £17m on last year’s accounts following their audit.
- The Scottish Government’s Our Power went bust in January having received around £10m
- 11 private sector energy companies have gone bust since January 2018
- Even established private sector companies are struggling in this market due to high wholesale prices, SSE declared this half year profits have halved and Npower is reported to be considering closing down its UK arm to stem losses.
Cllr Meirion Jenkins (Con, Sutton Mere Green) said:
“When you look at what has happened elsewhere, the idea of a council that cannot even empty the bins pouring tens of millions of pounds of tax payer money into entering this complex, fragile and competitive market simply to be able to offer mid-priced energy tariffs with council branding is so wrong-headed it is terrifying. That the Leader has now listened to proof that this kind of scheme is un-affordable and bad for residents is a relief but I hope that others in his party follow suit.”
Robert concluded "Sadly Labour promised they would run an energy company knowing it was un-affordable and could lead to higher prices just to appeal to Momentum supporters. Labour's focus on ideology, instead of deliver-ability, has meant they have failed to cut emissions and save money that many other Councils have easily delivered.
It is no surprise they have now had to drop the scheme after all Birmingham Labour can't even get the bins collected on time what made them think they could run an energy company!"
