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Plans by England’s biggest local authority to set up an energy supply company have been branded a “vanity project” by an opposition councillor.
Birmingham city council announced in June that it is drawing up a business plan for an energy company that would offer better value-for-money tariffs than those on offer in the existing market.
But shadow cabinet member for commercialism, commissioning and contract management, Cllr Meirion Jenkins, has warned that the venture could end up hitting the city’s council tax payers in the pocket.
The Conservative councillor said: “The city council should concentrate on its core activities and not expand into areas where it has no expertise and where there is already adequate private sector provision.”
He pointed to a recently published auditor’s report, which he said had raised “severe doubts” about Bristol city council’s venture, Bristol Energy.
He said: “It is clear from the experience in Bristol that the move to create an energy company would present a very real risk to the revenue budget in Birmingham which may impact on core services.
“Birmingham residents would receive no real benefit over what they could achieve through active switching in the energy market but may lose out from reduced services and perhaps an increase in council tax to subsidise this Labour vanity project.”
Jenkins said the report, which had submitted by auditors BDO to Bristol council in September, showed that its wholly-owned energy company’s losses had undermined the authority’s wider financial performance.
The auditor’s report said that Bristol Energy had suffered “significantly” bigger losses than had been anticipated when the company’s business plan had been drawn up in 2015.
While acknowledging that energy is a “complex and volatile business”, the auditors said they had “significant concerns” about Bristol Energy, which has had to push back its breakeven year beyond the planned 2018/19 date.
Speaking to Utility Week in May, Bristol Energy’s managing director, Peter Haigh, said it aims to make a profit by 2021.
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