BLAMING Labour Cllrs for the “risky investment” in Together Energy Warrington South MP Andy Carter and opposition Tories have called for a halt to the council’s “reckless policy” of high-risk investments.
More than 350 jobs are understood to now be at risk, including 15 in Warrington, following the collapse of the company, despite millions of pounds of investment from the Labour controlled council.
Following the collapse of the company 50 per cent owned by the council yesterday, with more than £40m at risk, Mr Carter said: “Having highlighted this risky investment many times in Parliament over the last two years it was only a matter of time before the inevitable happened, I’m sorry to see that Together Energy has gone into administration and I recognise this will be a concerning time for those people who’s jobs are now immediately at risk.
“Labour Councillors simply should not have made this investment decision, the level of scrutiny needed, expertise in managing tricky energy markets and experience in commercial governance are simply not present within the council. I understand Councillors were advised not to make this investment but decided to press on in any case. Labour’s line will be to blame everyone else but it is clear this decision was taken by Labour Councillors and they must be held to account for the losses which will inevitably follow.
“They’ve known for weeks that this investment is at risk yet they’ve continued to support further loans to private companies. I call on them to halt this reckless policy and focus on delivering services to local people.
“I’ve already met with the Energy Minister to try and minimise losses for people in Warrington, I understand the process of administration will take some time and I will be looking to recover as much of the £52m public money invested in this business.”
Opposition finance spokesperson Cllr. Ken Critchley added: “Within less than 2 1/2 years from the Council investing £18 million, of public money, to purchase 50% off Together Energy, the company has now entered administration with a potential liability for the Council standing at some £52 million. It’s the taxpayers and residents of Warrington who are going to bear the consequences of this ill-judged investment by the labour led Council.
“The Conservative Group have been consistent and vocal in its opposition to the high-risk, high borrowing, strategy of the Labour-led Council. Now we have a failure of one of the Council’s high profile investments.
“Even before the turmoil in the energy supply market, the Company was loss-making, racking up over £23 million of cumulative losses by the 31 October 2020.
“This failure of a flagship investment raises the most serious questions about the quality of the due diligence, decision-making, corporate governance, sufficiency of information and the secretive way in which this Labour-led Council operate, with key information been kept from Council Members by the use of the restricted part two papers by the Cabinet.
“This failure comes on the back of the revelation last week at the Audit and Corporate Governance committee meeting that the Council had been forced to write down 50% of its £32 million investment in Redwood Bank.
“The Council is also braced for more bad news as it is going to have to explain the implications, for its property investment portfolio’s returns, after having to accept the External Auditors (Grant Thornton) requirements to properly account for MRP. This accounting change may well have the effect of eliminating the returns on a number of the Council’s property investments.
Cllr, Critchley added, “The failure of Together Energy is a failure of the investment processes of this Labour-led council. The sooner this high-risk, high borrowing, strategy of the Council is brought under control and put into reverse the better for everyone living in Warrington. Within the space of seven days the two of the most high-profile external investments Together Energy and Redwood Bank have both had financial news that undermines the credibility of the decisions taken by the Council to invest in these companies.”
Councillor Mark Jervis (Con) commented, “This announcement is a clear demonstration of Labour’s total lack of expertise, due diligence and oversight from the outset of these high risk investments and it is the Council Taxpayers of Warrington who will bear the financial consequences of this flawed decision making by Labour Councillors”.
Cllr Kath Buckley (Conservative Group Leader) commented, “We have called for an Extraordinary meeting of the Full Council. This meeting is now to be held on the 9th of February. At this meeting we will be holding this Labour-led Council to account for its appalling decision to invest in and, subsequently, its failure to manage this investment. The tragedy is that this is public money that this council have been playing with and the implications for these failures are felt most keenly by the most vulnerable people living in Warrington.”
A statement on the Warrington Borough Council website read: “We’re very disappointed that Together Energy will be ceasing to trade due to the current energy crisis, which has already resulted in the closure of several energy companies.
“Our vision was to be part of a company that tackles the climate emergency by delivering 100% green energy to customers, contributes to reducing fuel poverty and provides local jobs in Warrington – particularly for those out of work or without formal qualifications – but the current market conditions are sadly not sustainable.
“We know that Together Energy’s operating model was resilient and our approach to hedging extremely robust, but the enormous and sustained wholesale price rises mean that it is now one of many companies that has had to leave the market.
“We know this will be a difficult time for Together Energy customers and staff. We also know that Together Energy’s closure will have an impact on our residents. Whilst it is our absolute priority to minimise any and all exposures we have as a council, we must first, as a priority, ensure that the independent administration process completes in a timely manner, and that Together Energy’s customers are seamlessly transferred to another provider.
Deputy leader of the council Cllr. Cathy Mitchell, was approached for comment. But she said that due to the ongoing process she was unable to comment to protect the council’s position.
But she did refer to her previous comments on the reasons councils need to seek alternative investments due to 10 years of austerity enforced by the Tories.
Around 350 jobs are understood to be now at risk following the collapse of the Clydebank-based energy supplier, which prided itself in employing more than 90 per cent of its staff from Scotland’s most deprived areas.
In a statement on its website, Together Energy said the “sustained increase in wholesale prices and the securities required to continue to forward purchase the energy, made the firm’s situation “untenable”.
The energy regulator Ofgem said a new supplier would be found for the company’s customers and that energy supply would continue.
Together Energy has 15 members of staff in Warrington and other staff in Bristol. It had plans to recruit another 80 customer service roles, both in Clydebank and Warrington, funded by the Kickstart scheme.