OPPOSITION Tories on Warrington Borough Council say they will not allow the council’s controversial investment in Together Energy to be “brushed under the carpet” and aim to hold the Labour leadership to account.
In what Tories describe as a “bruising evening for the Labour leadership of Warrington Borough Council”, the Conservative group held Labour’s decision-making to account for the failure of Together Energy and the failure of the council’s investment strategy, and called for a vote of no confidence in the Labour Leader and Deputy Leader.
Conservative Councillors strongly challenged the decision to invest in Together Energy, the diligence supporting that decision and the ongoing corporate governance of the investment.
Quoting from the paper that went to the council’s Cabinet in September 2019 which stated that “Together is seen as a minimum to long-term play for the council“, finance spokesperson Cllr. Ken Critchley, stated: “In less than 2 1/2 years of the “play”, an initial investment of £18 million in preference shares and the accompanying £4 million credit facility had grown to a potential exposure to the council of £52 million. The eventual exposure is now to be determined by the Administrator and the creditors of the company.”
“This was an investment in a small energy trading company with virtually no tangible assets, a direct investment in share capital in a market that has many similar aggressively competing companies. This should have been a major red flag for those considering the investment of public money in such an organisation.”
Tory Councillors commented that publicly available information, at the time investment was made, should have provided sufficient doubt about the financial sustainability of Together Energy for the council to have made the decision not to invest.
Conservative Councillors also strongly challenged the wisdom of the council continuing with its high-risk, high-debt, low-return investment strategy.
Cllr. Critchley cadded: “Warrington Borough Council is not set up to be a hedge fund of high-risk venture capital organisation. The council exists to provide services to the people of Warrington, not to speculate with public money.“
He also commented, on the recent investment failures of the council saying: “Let’s consider what has happened. Together Energy has entered administration, with potentially millions of pounds of public money at risk.”
“The investment in Redwood Bank has been impaired by between £15 and £16 million. Why? Because the latest valuation says it’s only worth half the £32 million invested by this council. More public money at risk.”
“And the council has been forced to adopt a prudent approach to MRP provisioning after being in conflict with its external auditor, who had to resort to threatening the council with using statutory powers and issuing a public interest report for the council to finally see sense.”
It is the Conservative Group’s belief that the investment strategy of the council cannot continue, the level of financial risk that the residents of Warrington are now exposed to is far too high.
The Tories also held the Leader and Deputy Leader responsible for the fiasco of Together Energy and called for a vote of “no confidence” in the Leader and Deputy Leader.
They also rejected as “absurd” the idea that the opposition group should produce an alternative budget. The Conservative Group were resolute in their determination to hold the Labour leadership to account when they present the council’s budget on 28 February.
Following the meeting Cllr Critchley added: “Although our motions were defeated by the Labour group voting en bloc, we believe an important principle was established. Any investment failure on the scale of that for Together Energy, cannot simply be brushed under the carpet or kicked into the long grass. The Labour leadership will be held to account by the Conservative Group.”
Cllr Nigel Balding, noted that it was unfortunate that, even though six Labour Councillors stayed away from the meeting on Wednesday night, it was not quite enough to enable the Tory motions to pass.
The Leader of the Council did, however, announce that the council is having a review of its investment in Together Energy. Cllr Balding welcomed the review and said: “At least the Leader of the Council has recognised the importance of reviewing our investment in Together Energy and he did not rule out having an inquiry at a later date. I hope that this review has already started and it should help that, on 24 January 2022, we made a detailed request for previously unpublished information and formally asked 42 questions of the Cabinet Member for Corporate Resources. We have no answers to date but we have published this letter on Facebook today.”
“As a Councillor, I’m happy to take an active part in the review if asked and I am very much hoping to see the results or report as soon as it is available. I’m also happy to help with reviewing, in confidence, any drafts.”
Councillor Kath Buckley (Group Leader) commented: “On Wednesday night we put motions forward to ask the council and its Leadership to account for the worrying state of the finances of WBC. We also challenged the leadership, or rather the lack of it, that got us here.“
“We, as the creditable opposition, have done more in eight months than others have done in eight years. We are doing what a true opposition should do – holding this council to account. Our constant demands, via our questions and motions, for transparency and accountability have been ignored, voted against and ridiculed by Labour, yet it is Labour and its Leadership that got us here.“
“As for an alternative budget – one of their own Cabinet said on Wednesday night that for the last ten years an alternative budget has never been presented. Other parties have said it is nonsensical, so why the repeated calls for it now in a situation when FOI requests on finance are ignored – it is a mere smokescreen, a deflection.”
