Portsmouth City Council loses more than £3m as it fails to find buyer for Victory Energy

Leader, Councillor Gerald Vernon-Jackson, branded Victory Energy a 'harebrained' venture after he said there was no choice but to pull the plug today.

The process to wind down the company, in which the council has so far invested a total of £3,150,873, will now begin.

After two attempts to shut down the Tory-led scheme by the authority's Lib Dem administration, a final decision was made in November last year to dispose of Victory and look for buyers.

But despite what the council has described as 'an extensive process to sell the company', no sale was completed.

Cllr Vernon-Jackson said: 'We couldn't even sell this company for £1. Nobody would take it off our hands.

'We had both councils and private companies looking at Victory but when the private sector companies looked at the details they ran a million miles in the other direction.

'Millions of pounds have been wasted on this harebrained scheme, which both Labour and the Conservatives said was brilliant. We should have shut it down when we first tried in the summer.'

The company's nine employees have been given redundancy notices and their settlements are expected to cost a total of £88,500.

Notice periods for three consultants for Victory, whose roles have now ended, will cost approximately £24,000.

However, former council leader Cllr Donna Jones who sat as a director on Victory Energy, said scrapping it was a 'mistake,' referencing two reports that were considered by the council last year.

'One of these showed a maximum outlay of £6m before the profits started coming in,’ the Tory boss said.

‘£2.5m had already been spent by last year, so we are talking about a fairly small further investment needed to build a functioning business that would have provided cheaper electricity to customers and made a profit to pay for services like bin collections and park maintenance.’

The council confirmed two potential buyers made offers but would not disclose how much, only that one would be a 'financial risk' and the other withdrew.

A total cost of the wind-down operation is not yet known.