The £12-billion-City-Leap questions the administration are ignoring

Bristol City Council approved a 20-year joint venture with Ameresco and Vattenfall on 7 December, estimated at £12 billion.

On the 5th of December, Overview and Scrutiny Management Board had a chance to question the cabinet member, Cllr Kye Dudd, officers, and representatives from both companies about the project.

The following questions about City Leap, were raised by Cllr Geoff Gollop. The video below contains the full questions being asked. I highlight the key points below the video.

“These are really complex issues,” Cllr Gollop pointed out, so it’s worrying that none of them received an answer.

The following are the issues and concerns that were raised. I have summarised and highlighted key issues.

There has not been enough information for cllrs to be able to assess the full package

1. Comments and questions over a period of time have not had adequate answers.

2. All the scrutiny meetings listed in the report were all delayed, deferred, or cancelled and reorganised because the information wasn’t available.

3. Even this meeting had the report presented the day before cabinet; a briefing was rescheduled and couldn’t be attended by some members, such as Geoff.

There has been little information about City Leap, and little attempt to assuage councillors’ concerns. What doesn’t come up in Cllr Gollop’s points in the video but does in the meeting is that the risk register for the project is confidential and not available to read.

A concern about the amount of money that we have spent on advice

1. The money we have spent on advice is more than the concession payment we get over five years;

2. £1.4m in legal fees and £1.25m of accountancy fees

3. £8m+ on two rounds of procurement

Inflation

The City Leap project is meant to be a £424m-investment over five years

1. There was no information about inflation in the covering report; there was some mention in the appendices.

2. There is no indication of when the inflation calculation starts from;

3. That £424m has been in place for some time without accounting for inflation so we’re already starting at a loss.

A thousand jobs

There has been mention of the joint venture creating 1000 jobs.

However:

1. There is no indication of the full-time equivalents

2. No indication of what those jobs are – what is the profile of the jobs? What are the benefits?

3. Where are those jobs?

   1. There are 400 in Bristol; so 600 not in Bristol?

Governance Issues

On 30 November 2020, at an OSMB meeting, now-chief exec Stephen Peacock said that “a way to get £1b in investment is to make it attractive to heavyweight companies” effectively this means giving them an opportunity to make money. He went on to say that it will be difficult to regulate any City Leap partnership too much because the way the city gets £1billion investment is by allowing big companies to make money.

Joanna Booth @stillawake

@SageAndOnion @KyeDudd “A way to get £1b in investment is to make it attractive to heavyweight companies” effectively this means giving them an opportunity to make money. @bristol_citizen He seems so clear.

In the OSMB meeting in December 2022, Cllr Gollop raised the following points:

1. Cllrs weren’t able to look at the detailed agreement about governance. As the report indicates, however, there’s enormous complexity involved;

2. If something goes wrong, trying to enforce that agreement will be a nightmare

3. How workable will it all be, trying to enforce the processes for approval?

4. What might Bristol City Council be precluded from doing in the future because they have to offer it to a joint venture company?

Bristol Heat Networks

The heat networks that Bristol residents own, are being transferred to the new joint venture at cost price.

However,

1. All references to transfer at cost have been removed from the body of the report; there is now no reference to how the figure for the transfer has been made;

2. Avoiding putting a figure to transfer in the report isn’t an acceptable way to comply with best value.

3. Is the sale being made at undervalue?

4. If we’ve paid £2.6m for people to advise us, I would have expected them to come up with some form of valuation that was a start point.

If we’ve been investing over a period of five, six or seven years in a project that is now more valuable than it was when we started, there should be some benefit of that uplift accruing to the city council as the investor who undertook that risk.

If there is no benefit, then where did we go wrong because “we clearly haven’t spent the money wisely or invested it well”.

There should be an explanation.

What happens to the loss in Bristol Heat Networks?

1. Up to 31 March 2022, there was a loss of £1m to the Bristol Heat Networks, as shown on Companies House.

2. No member has been briefed on that loss.

3. Who is paying that? The council tax payer? Vattenfall?

   1. It’s really important to understand who’s borne that loss.

4. Who is bearing the loss between 1st of April 2022 and the time the agreement is signed.

“If this is really as good as I want to believe it is, as the spin on the report says, why are we concealing these things and not actually responding to them openly?”

Kye Dudd is the cabinet officer responsible for City Leap. When Cllr Gollop had finished talking, his response was: “You said we’ve said…” and then he stopped, seemed to be laughing, and indicated he wouldn’t be saying anything else.

There was no answer to any of these questions.

The City Leap venture is a 20 year deal signed off on 7 December 2021. The awarded value is £12 billion. That is 25 years worth of the council’s revenue budget.

It’s not trivial. If things go bad, the £43m lost to Bristol Energy will seem like halcyon days of prudent financial management.

We need to start paying attention.