Portsmouth City Council will scrap a company that has already seen over £1m of investment due to further risk to public money.
Council leader Cllr Gerald Vernon-Jackson described it as a ‘great sadness’ as he recommended that Victory Energy should not go forward, with his cabinet voting unanimously in his favour.
The company, which had yet to start operating, would have required a further multi-million pound loan to get going as well as around 44,000 households to sign up in the first year to break even.
Council officers referred to their guidelines of the business needing proof of having strong governance, a talented senior management team, an agile business plan and a robust risk management framework to be successful.
Cllr Vernon-Jackson was not convinced these were present in a report compiled by independent reviewers PricewaterhouseCoopers (PwC) and feared more of taxpayers’ money could be lost in the future as a result. He said: ‘I’ve not been able to be persuaded that there are any of those four things in place. I think it’s really unfortunate for the city council, and for the people of the city.
‘So it is with enormous regret and great sadness and I wish we weren’t in this place but I think I’m going to be recommending with the cabinet that we do not proceed further with this.’
The report detailed that abandoning the company would lead to between £2.5m and £3.5m loss for the council, which councillors were keen to keep to a minimum.
Lib Dem Cllr Steve Pitt explained what will happen next. He added: ‘The next step will be to get an independent person in to make sure the company is wound up with the minimum possible cost to the council and then to explore other options perhaps around a ‘white label’ company as other authorities have chosen to use to replace some of that income and with any luck provide a net benefit to the city.’
But former leader of the council and director of Victory, Cllr Donna Jones, slammed the decision. Speaking after the meeting she said: ‘This company would have helped the people of this city in two ways: firstly it would have allowed them the opportunity to purchase 100 per cent renewable energy helping our environment and secondly it would have generated £2m of new income a year to protect our public services. The costs so far spent on developing the company and contracts agreed are around £3m.
‘In deciding not to proceed today the Lib Dems have wasted £3m of public money. This is shameful and proves that they are not fit to run our council.This is a poor poor decision.’