Speculation is mounting about the future of Bristol Energy after city council leaders hinted they might have to throw even more money at the loss-making company.
Opposition councillors expressed “very grave doubt” that the budget passed by full council on Tuesday (February 25) is legal amid fears it could mess up the balance sheet, and by law, local authorities must set balanced budgets.
The concerns stem from an “urgent” confidential report to next week’s cabinet which overview & scrutiny management board (OSMB) chairman and Tory Cllr Geoff Gollop said was “of such significance” that the budget meeting should have been postponed to allow all 70 councillors to read it.
Labour deputy mayor Craig Cheney insisted the mystery papers, whose details were not revealed, “did not materially affect the budget”.
He told the full council meeting: “We have adequate risk reserves should we need to draw down on them should we need to deal with any issues arising from that paper.”
It comes just a month after cabinet members approved the energy firm’s five-year business plan amid assurances that it did not need any further public cash.
Bristol City Council has already pumped £37million into the company.
However, the business has posted total losses so far of £29.7million, including £10.1million in 2018/19, its third year of trading.
It was initially expected to be in profit by 2019/20. But in December, Peter Beange, executive chairman of Bristol Holding, which oversees Bristol Energy, told OSMB councillors that the firm’s break-even point remained 2023/24 .
He told members: “Bristol Energy is not seeking any investments nor increased collateral within this business plan. However, its risks remain significant.
“The key risks to Bristol Energy are not dissimilar from a lot of energy companies in that it needs to secure its customer base, there is tremendous volatility of the energy sector and that might lead to a credit gap and dependency on the council for collateral coverage.”
Whether the situation has changed within a matter of weeks is now open to speculation with an exempt report, thought to contain commercially sensitive information, going to cabinet on March 3, that has alarmed Cllr Gollop.
He told full council: “The implications of the item on the cabinet agenda are of such significance that all members of this council should access it before full council considers this budget, not just members of cabinet.
“To have not had access could risk the setting of an ultra vires budget [without legal authority].
“I understand the sudden urgency of this cabinet item but to not refer to it in the (full council) papers is appalling, and for the mayor and deputy mayor to have not alluded to it in their presentations is unacceptable.”
He said he had only received access to the report minutes before full council began.
“It is inappropriate that the only time members can read something of such significance is actually during the debate when they are setting the budget,” Cllr Gollop said.
“I am not allowed in public session to explain my concerns further, so I apologise to members of the public that I’m talking in riddles but I cannot breach confidentiality.”
Cllr Cheney said: “I have been assured that that paper does not materially affect the budget.
“We have adequate risk reserves should we need to draw down on them should we need to deal with any issues arising from that paper.”
Cllr Gollop replied: “I understand why Cllr Cheney is saying that but if we could have a debate about it, I could explain why I believe it is significant and why members need at least to be aware of the potential significance when deciding whether to approve the budget today or not.
“If that budget is potentially illegal then I think that will be very dangerous.”
City council finance director Denise Murray said: “I have reviewed the details and been party to the drafting of the report.
“There is sufficient contingency risk reserves to deal with any risk to which the council is exposed.
“The budget itself is robust and the paper does not impact on the budget.”
Legal and democratic services director Tim O’Gara said: “I have also been privy to the drafting of the report and I’m satisfied that the council can proceed to set a lawful budget this afternoon without further consideration of a report which will be duly considered by cabinet next week.”
Cllr Gollop said: “Professionally I have a different interpretation of the financial position and I believe there is a potential impact fundamentally on the council’s budget and balance sheet.
“I find it very frustrating that we can’t have a debate about it because I cannot explain why I have those concerns.
“But I cannot let a budget go through without registering my very grave doubt.”
Cllr Cheney said: “The paper will go to OSMB next week so there is the opportunity for councillors to scrutinise and review that paperwork.”
Tory group leader Cllr Mark Weston said: “I don’t know what is in that report but the fact we’re having to get assurance that even if the worst happened it wouldn’t affect the budget makes me wonder what the hell is in there.