Harry Fone: Local authorities should not start or invest in energy companies

2 Nov

Harry Fone is the Grassroots Campaign Manager for the TaxPayers’ Alliance.

New research by the TaxPayers’ Alliance has revealed the shocking amounts of taxpayers’ cash that has almost literally gone up in smoke due to underperforming investments in energy companies by local authorities. Thanks to the work of our superb research team we revealed that 13 energy companies in receipt of council investment had a net loss of over £74 million between 2016-17 and 2019-20. Of these eight were council-owned and their losses totalled £114 million in the same period.

Perhaps not unsurprisingly, three of those companies are now either in administration or liquidation; Bristol’s BE 2020, Nottingham’s Robin Hood Energy, and Portsmouth’s Victory Energy Supply. This may not be surprising to anyone who has followed this issue; the writing has been on the wall for years now. But the huge sums of taxpayers’ money that have gone down the drain is astonishing.

Between 2016-17 and 2019-20, BE 2020 experienced the largest cumulative losses of any energy company at £46.5 million. Robin Hood Energy lost the most money in a single year at nearly £23.1 million in 2018-19, with total losses coming in at £31.6 million over a four year period. In those same four years, £132.3 million of public investment has been plunged into energy firms by local authorities.

Now at this point, we shouldn’t lose sight of the fact that the UK energy market is incredibly competitive and volatile, the latter being especially true at the moment. So there could be more bad news to come given recent news that a number of firms are on the brink of financial collapse. But – is there any good news? Have any council-owned or council-invested energy companies made a profit? The answer is yes but with some big caveats.

Five councils invested money in energy suppliers that were independently operated. Of these, four made a profit between 2016-17 and 2018-19. So it could be argued that if councils are desperate to get into the energy market then this is the better option based on the data available.

Of the eight council-owned companies, only one registered a profit – but dive a little deeper into the numbers and a fuller picture emerges. B&D Energy is owned by Barking and Dagenham council. Over the four year period (2016-17 to 2018-19) it posted profits of nearly £300,000. However, it received the largest amount of capital investment from taxpayers at £38.8 million. This consisted of £30.2 million in loans from the council with the rest coming in grant form thanks to the Department of Business, Energy and Industrial Strategy. Also interesting to note – that as of 2020-21, B&D Energy only has 477 customers so they shouldn’t count their chickens just yet.

But why do local authorities start or invest in energy companies in the first place? Many do it for the same reasons as Bristol Energy which said it would “provide ethically sourced, low-cost energy and with the aim of returning a profit for council tax payers.” This would have been wonderful had it paid off; perhaps council tax bills would have been lower as a result?

Sadly this hasn’t happened and Bristol now has the third-highest band D council tax bill in the South West. Nottingham has the highest bill in the entire country. Similarly, Gateshead council – which owns Gateshead Energy Company and made total losses of £1.9 million – has the highest rates in the North East and ninth-highest in England. I could go on but you get the picture.

There is a glimmer of hope in the fact that of the 391 local authorities that responded to our freedom of information requests, 94 per cent did not own an energy company. For those authorities thinking about risking public money in this market they should heed our warnings. Their grand visions for publicly-owned energy companies that will supply cheaper energy and plough profits back into frontline services rarely materialise. Instead, many taxpayers are being left in the dark with failed firms and a big bill to boot.

Kate Willard: Why I, as the Government’s Thames Estuary Envoy, back Thames Freeport

25 Jan

Kate Willard OBE is the Thames Estuary Envoy & Chair at the Thames Estuary Growth Board. This is a sponsored post by Thames Freeport.

The Thames Estuary is brimming with untapped potential.

In 2018, the Thames Estuary 2050 Growth Commission recognised that in its ground-breaking report, concluding this place could contribute £115 billion to the national economy by 2050 and 1.5 million new jobs if fulfilled.

That’s our challenge now. As the Government-backed Thames Estuary Envoy, I lead a private/public board charged with delivering an ambitious, transformative plan to evolve this region of blurred edges comprising north Kent, south Essex, east London and the river itself, by turbo-charging growth.

Called “The Green Blue” – our blueprint begins to realise the enormous potential of the Thames Estuary by stimulating, endorsing and enabling a substantial range of infrastructural, technological, environmental and cultural projects.

Everything from enhanced transport hubs, river crossings, roads, rail, ports and airports to super-fast digital infrastructure, innovative business parks and a world-class theme park. All backed-up with strategies around skills, employment and housing so people can genuinely access emerging opportunities, and with emphasis on “good green growth”.

Our exceptional private/public growth board is working to leverage significant amounts of private sector investment and make the Estuary the most compelling investment proposition in the world. Each board member is brilliant: possessing a high level of expertise in their area. They are at the razor-sharp, cutting edge of business and high-calibre place leaders, and all are crystal clear about the Thames Estuary we want to create.

Securing a freeport for the Thames is crucial to us. Our plans hinge upon the advantages, benefits and opportunities that freeport status would unlock.

We have played a role in shaping the bid by making it clear to bidding partners the outcomes we needed from a Thames Freeport. We called these our “principles” and set out our requirements under six thematic areas; economic, investment, innovation, environment, regeneration and community. The bid is progressing strongly against all of them.

The last one of our principles is the most important to us.

The Estuary is one of the poorest and most deprived areas in the UK; a situation exacerbated by the pandemic and Brexit uncertainty. The east London borough of Barking and Dagenham itself is ranked in the top five local authorities for deprivation. Its unemployment rate is 74 per cent higher than the national average – one of the highest rates in the country. Thurrock’s unemployment rate is above the national average. It is among the country’s top 25 most skills-deprived areas and the neighbourhoods surrounding Tilbury are among the top 10 per cent of overall deprivation.

Getting a freeport is an essential part of the Estuary’s recovery and will help it to level-up. A freeport would be a major shot-in-the-arm for communities along the river, unlocking £400 million of port investment in deprived areas and creating more than 25,000 well-paid jobs, with significant investment in up-skilling opportunities ultimately boosting ravaged local economies. A skills-accelerator programme would bring local education providers and employers together to ensure local people can capitalise on new career opportunities.

DP World, Forth Ports, Ford Dagenham and Thames Enterprise Park will deliver a pioneering world-class freeport, which will be a magnet for inward investment. No other port cluster in the south of England has the global connectivity and capacity to substantially expand its operational area. The zone will be a catalyst for commerce, creativity and prosperity unrivalled by other regions in the UK.

The environment is at the front-and-centre of our plans. We want to create the greenest estuary on the planet. A Thames Freeport will support that ambition through investment in clean energy generation, including hydrogen fuel production, storage and fuelling infrastructure. Ford plans to trial new and green technology initiatives at its Dagenham site. This will further support local and national net-zero targets.

We want to take freight off the region’s roads and shift it to the river. Securing freeport status would be a positive step in that direction. The freeport will link sites along the Thames Estuary by river into the Capital via operational wharves. This will reduce the time and cost of transporting goods, alleviating road congestion and reducing pollution along the A13 corridor.

The Estuary has excellent links into central London and major European cities and vast swathes of riverside and brownfield sites, many with planning consents in place, shovel-ready for building on. As the UK looks outward for new trading partners and brokers deals with other countries, the Estuary is ready to play its part. We have everything an international business needs to set-up base in, or close to, our global capital city. Those advantages would be significantly boosted by freeport status. It would make us the most attractive investment prospect anywhere on these islands.

We’re confident our world-class bidding partners have an irresistible pitch. The Government is cognisant of the wide-ranging advantages of this place to its global trading ambitions. It must act now to capitalise by backing the Thames Freeport bid.

Thames Freeport: River regeneration – an economic opportunity not to be missed

5 Jan

This is a sponsored post by Thames Freeport.

“Regeneration through job creation” is the vision for a Thames Freeport being unveiled today.

DP World and Forth Ports are bidding for a Thames Freeport, with London Gateway, the Port of Tilbury and Ford’s Dagenham engine plant at its heart – highlighting the role of the River Thames in a prosperous, global Britain.

This comes after decades of government initiatives targeting growth and regeneration across the largest development area in the UK, the Thames Gateway.

Now is the time to use the freeport policy’s special economic measures to turbocharge the best of the private sector to level up the left behind communities along the estuary.

Our Thurrock-based freeport will deliver dispersed wealth, just as the old Port of London did in the past.

Parts of the estuary are in desperate need of this support.

Thurrock is among the country’s top 25 most skills-deprived areas and the neighbourhoods surrounding Tilbury are among the top 10 per cent of overall deprivation.

Barking and Dagenham is ranked in the top five local authorities for deprivation – the borough’s unemployment rate is 74 per cent higher than the national average.

Initial modelling suggests that a freeport will unlock more than 20,000 new, better paid jobs and many more through local supply chains, while securing over £400 million in port infrastructure, which will lead to a doubling of port capacity.

The pandemic shockwaves continue to reverberate and have brought every element of the economy into stark focus.

Our proposal will re-connect Britain’s biggest market with its industrial engine.

A Thames Freeport will be a magnet for new investment, jobs, skills development and the adoption of greener technology.

This will drive innovation and transformational productivity gains by turbocharging regional clusters in next generation logistics, automation, clean energy, and advanced manufacturing centred around two global hubs – London Gateway and Tilbury – supporting regeneration in Thurrock and economic growth across the Thames Estuary.

The zone will be a catalyst for commerce, creativity and prosperity.

For example, Ford plans to build on its advanced technology capabilities to electrify, connect and automate vehicle solutions in-and-around the freeport to reduce pollution and ease congestion.

More than ever, size matters for UK plc.

With almost 1,000 acres of land ready for development – much with planning consent secured – no other port cluster in the south of England can come close to matching our offer to deliver meaningful economic change and linked community benefits in the lifetime of this Parliament.

Our speed of delivery is matched by our global connectivity, with direct shipping routes to every continent for exporters to get their goods to market at speed.

The freeport will link sites along the estuary to the heart of the largest market in Europe via operational wharves helping to reshape urban logistics, alleviating road congestion, and reducing pollution along the A13 corridor.

This is where road and river dovetail – seamless integration of global freight into local supply chains – as Ford builds on its advanced technology capabilities to electrify, connect and automate vehicle solutions in-and-around the freeport.

The freeport will be key to catalysing the Thames’ net zero transformation, including the promotion of investments in clean energy generation, such as hydrogen fuel production, storage and fuelling infrastructure.

This is not uncharted territory, freeports are in our DNA.

DP World began as a free trade zone in Jebel Ali, while Tilbury was a freeport until 2012.

Harnessing our customs expertise, we intend to link the Thames’ trade hubs and manufacturing sites using our track-and-trace technology.

This tried-and-tested system will provide a viable technology platform to ensure the freeports policy is a success at ports across the country.

The Thames Freeport will be a new centre of excellence for the country as we electrify, automate and digitise our future.

We are confident we can replicate that success today to boost the economic prospects of global Britain.

The Thames has historically been a trading and industrial powerhouse, serving the whole UK.

A Thames Freeport will draw on this proud history and established expertise as the catalyst for a green revolution founded on new technology and new trading links, bringing new skills to communities otherwise left behind.