At its Governance and Audit Committee meeting on 21 January, Colchester City Council addressed recent changes to its commercial companies, to help their recovery from the trading disruption caused by the pandemic. These measures included the write-off of a heat network loan to Amphora Energy Limited (CAEL), as part of a strategy to streamline operations, which has drawn criticism due to the associated tax implications.
Cllr David King, Leader of Colchester City Council, said: “Following independent external advice, the council agreed to write off a heat network loan to Amphora Energy Limited (CAEL) as part of a wider strategy to simplify our commercial operations, a decision supported by our Governance and Audit Committee.
“The heat network has a residual value and may yet be developed further, but the write-off decision resulted in a surplus for CAEL, as reflected in its 2023-24 accounts, and a corporation tax charge of £375,451.
“While we must meet our tax obligations to fund vital public services, we understand questions raised about whether this charge could have been minimised. That is being reviewed and may yet be adjusted.
“The decision was made in the council's best interest, providing a clearer financial position for our commercial companies, which have proved to be a huge asset. They continue to deliver essential services and financial support and are becoming increasingly profitable post-pandemic.
“We must recognise the huge pressures local government faces today, as we respond to rising demands and costs and significant reductions in central government funding. The Government has encouraged councils to be more commercial and it follows that we must accept challenges, risks, and rewards.
“The good news is that despite economic pressures, our companies are profitable and performing well, helping us to deliver vital projects. With Colchester Helpline providing an essential care service to some 3,000 residents, and Colchester Events delivering over 900 events that attracted over 200,000 attendees to Colchester venues. These activities not only support our local economy – boosting hotels and businesses – but also generate income that we invest into council services.
“We will however continue to learn and adapt, seeking advice where necessary, to ensure robust financial management, and to maximise the benefits of our commercial companies for the residents of Colchester.”
Page last reviewed: 23 January 2025