Peterborough taxpayers ‘protected’ despite collapse of £23m solar power loan
Peterborough taxpayers have been protected despite the collapse of a £23 million solar power loan from the city council, according to the authority’s head of finance.
Cllr Andy Coles was speaking to the Peterborough Telegraph after the authority terminated its contract with social enterprise Empower Community Management LLP which is alleged to have defaulted on its repayments.
At the time the scheme was lauded as being the first of its type in the country, with residents and the council able to both make money from it.
It was also anticipated that Empower would find a buyer to take on the scheme and repay the loan to the council in 2017, but despite being granted several time extensions this has yet to happen.
A final attempt to extend the loan’s repayment over a 15 year period has now also failed.
Cllr Coles has taken on the Empower loan as part of his portfolio after recently being installed as the new cabinet member for finance.
He told the PT that the value of the loan has reduced by £2.6 million, on top of a “write-off” of £430,000, but that the council has made a profit of £4.4 million so far from interest payments.
Now, the council has to decide whether to take over the solar panel scheme itself (for which it has no expertise), or try to sell it to another party, although this is likely to prove difficult due to the coronavirus pandemic.
Moreover, selling off the scheme may only bring in an estimated £15.4 million, according to analysis by Deloitte LLP.
The situation is complicated by the fact that the council is unsure how much money it can generate in profit from running the scheme itself, Cllr Coles said.
Asked if he would have approved the loan if he had been the responsible Cabinet member at the time, he replied: ”If it were me making the decision I wouldn’t have approved a 100 per cent loan.
“If there had been more coming from Empower at the beginning the risk would have been more widely balanced between Empower and ourselves.
“This scheme will be providing income (going forward), and the added benefit is its green power which can contribute to our zero carbon ambition for 2030.”
Addressing the council’s dire financial situation, following years of government funding cuts and the coronavirus pandemic, Cllr Coles added: “We are going to have think like a business to bring in profits to benefit the people of Peterborough.
“We have to take a commercial view, but a 100 per cent loan is not one I’d do in the future as there’s no shared risk.”
Under the deal with Empower, the council was always able to take over the scheme if the loan was not repaid - a decision it has now taken while it weighs up its long-term options.
The authority had granted several extensions to the repayment of the loan with a buyer for the scheme said to be imminent, but Covid is said to have scuppered any potential deal.
A spokesperson from Empower denied there had been a “collapse” of the loan, adding: “It is important to understand that all interest due on the loan up until March 31, 2021 (£5.8m during the life of the loan so far) has been fully paid to the council under the current loan arrangements.
“We were surprised to read that the recommendation to Monday’s cabinet is to try to bring the portfolio in-house, as this has always been advised to the cabinet as not favourable due to lack of experience, skills and resources.
“The 7,700 rooftop solar portfolio (of which five per cent are in Peterborough) is a complex management proposition with hundreds of contracts and many moving parts.
“We await the outcome of Monday’s Cabinet.”
Leader of the council’s Labour group Cllr Shaz Nawaz criticised the decision to offer Empower a 100 per cent loan and said heads should roll.
He added: “We’ll be sold a story about how much interest we’ve earned, how it was someone else who made the decision, how they will not repeat it, how they’ve learnt from it, how hindsight is a wonderful thing, so on and so forth.
“They have a long book of excuses because they’ve mastered how to deflect and detach themselves from the many, many mistakes they’ve made over the years. They’re getting quite good at a huge cost to the taxpayer.
“This is another blow from the Conservatives following a number of dismal decisions in the past which have cumulatively cost the taxpayers millions of pounds over the years. The Conservatives should have taken tougher action promptly. There’s no hiding place here.
“The blame for this failures rests squarely with the Conservatives and it is the taxpayer that will inevitably suffer the financial consequence.”