BALLPARK FIGURE: Bristol Energy cost £43m
Bristol Energy cost city council taxpayers an estimated £43million, it has been revealed.
Councillors were told the ballpark figure, which is subject to change, after pressing senior finance officers at a public meeting, although the final total will not be fully known until liquidators have finished winding up the catastrophic venture next year.
But despite the massive losses, the local authority’s external auditors revealed they have decided not to issue a public interest report, which would have carried legal powers and been sent to the Secretary of State for Housing, Communities and Local Government.
Instead the “full story” of the failed company, including recommendations and “critical comments” from auditors Grant Thornton of council decisions, from setting it up in 2016 to its break-up and sale last year, will be a standard audit report to be published next month.
Bristol City Council audit committee members were told that the £36.5million the authority had invested in the energy firm was “fully impaired” – lost – and that a further £2.7million of taxpayers’ money was drawn down from an indemnity fund in 2020/21, plus £3.7million in April this year, to cover the business’s remaining costs, giving a total of £42.9million.
Director of finance Denise Murray told the meeting that these were the “best estimates” to Bristol Energy’s total costs but that a final amount could not be provided until liquidators’ work to determine how much it still owed or was due to be paid – liabilities and receipts – had been completed.
Answering a series of questions from Conservative Cllr Geoff Gollop to pin down the figures, she said: “Cabinet previously agreed an indemnity agreement of up to £7.3million to meet future costs.
“In terms of the winding-up of the business, we know it will continue to be a movable feast and we cannot provide an exact figure until all the transactions have been concluded, hence we have an indemnity.
“We believe that is an appropriate and sufficient indemnity and we have made a provision in the accounts for any liability that could be associated.
“But it will continue to move and transactions will continue to be concluded until we are right at the end of the process.
“While transactions continue to be transacted and the liquidators act on our behalf, we cannot provide you with a total figure, but our best estimates are in there,” Ms Murray said, referring to the £36,5million investment and the additional £2.7million and £3.7million which was based on the “potential forecasted movements”.
Bristol Energy is being wound up through a voluntary liquidation, which means the council has set aside enough money to settle all creditors.
A spokeswoman for the liquidators, FRP Advisory Trading Ltd, who were appointed on June 30, told the Local Democracy Reporting Service that the company in liquidation, now called BE 2020, was the legal entity that remained following the sale of the domestic and business customers last year.
She said: “The company has no assets to sell. The company’s assets consist of cash in the bank, debtor balances and security cash deposit balances.
“These are in the process of being collected by the liquidators.
“A directors’ declaration of solvency has been issued, which is a document that confirms the company has sufficient assets to meet its financial obligations.
“The process of agreeing and paying the outstanding creditors is ongoing.
“Further updates will be provided in the liquidators’ progress report on a yearly basis.”
Meanwhile, Grant Thornton partner Jon Roberts, who is preparing report into the key decisions in Bristol Energy, told the audit committee meeting on Monday, July 26: “One of the options I’ve been considering is whether I report the whole position as a public interest report and the formal legal powers that I have at my disposal.
“At this stage I am of the mind not to issue a report in the public interest but to issue it as a formal audit report which will then go through the audit committee.
“It’s important for me to report now quite quickly, and a report in the public interest has a legal status that means it takes a lot longer to get through the consultation and finalisation of the report.
“The other reason which is even more persuasive is that public interest reports tend to be reported to get a public body to sit up and take notice of an issue, and I certainly don’t see that as a problem with Bristol Energy.
“It has been very well debated at different parts of the council, and in particular the fact that the council took it to full council for debate when we issued our value-for-money report gives me encouragement that this will be treated with the importance it deserves.
“It will still be an important report, and in the draft we still make a number of critical comments and recommendations, so we are not shying away from the matter by choosing not to report it as a public interest report.”
The final report will be published in time for September’s audit committee meeting.
Words: Adam Postans, Local Democracy Reporter
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