Bristol Energy, which was sold by Bristol City Council in 2020, has revealed that it made losses of £14.8m in the year to March 2020.
An annual report made public on 10 January 2021 illustrated that Bristol Energy posted adjusted operating losses of £8.5m. This figure does not account for the company’s bad debts of £3.3m and other associated costs, which include a restructuring fee of more than £200,000. When all additional costs, tax and interest are accounted for, the total loss is a hefty £14.8m.
In 2017, Bristol Energy made a loss of £8.4m, a figure that rose to £11.2m in 2018 and £12.1m in 2019.
Bristol Energy was established in 2015 before the council was taken over by its present Labour administration the following year. It was created to deliver low-cost, ethically-sourced energy whilst also providing the local authority with a profit. The council has, to date, invested more than £37m into the business but since 2018, Bristol Energy has reported losses in excess of £10m every year despite successfully managing to increase its customer base.
Mark Weston, the Conservative group leader at Bristol City Council has called the losses ‘truly shocking’ and went on to state that he expects the final loss total to exceed £50m. Mr Weston believes that the project should have been terminated long ago and the subsequent squandering of millions of pounds illustrates that the city is being subjected to both financial mismanagement and poor political judgement, something rebuked by the Mayor of Bristol, Marvin Rees.
Response from the council
After many years of losses, the local authority finally sold the energy company for £15.3m. It asked Grant Thornton, its external auditor, to determine the extent of the losses to taxpayers and identify what went so badly wrong. The report was damning, with the council’s decision-making process deemed ‘inadequate’.
Grant Thornton has not yet decided whether a public interest report will be undertaken, however, it did make 12 separate recommendations with regard to openness, scrutiny and governance of companies in the council’s control. For example, it was noted that “audit committee members should have had a closer involvement with the issues relating to the council’s investment in BE during the year.”
In the six years before Bristol Energy was sold, it made losses of almost £50m. In response to the criticism the council has received, the head of Bristol City Council and the Mayor of Bristol, Marvin Rees, has defended Labour’s handling of the situation, blaming failure on the previous Conservative administration and several other factors including the Covid-19 pandemic.
Green, Conservative and Liberal Democrat councillors sounded repeated warnings that continued investment in the company was a misjudgement and now they are broadly condemning Mr Rees, with some even calling for his resignation. Rees has not responded to these calls, but has released a statement noting that his administration worked to take “reasonable, well-governed decisions informed by independent advice and scrutiny, trying to protect taxpayers throughout a high-risk endeavour; one which was inherited from a previous administration along with a flawed business plan.”
Controversially, when managing director Marek Majewicz left Bristol Energy, he was awarded a payout worth £94,879 in addition to his £228,081 salary.
