Merton calls for Government support around Gazprom costs

Merton Council will seek a direct conversation with ministers around financial support after confirming it has cancelled plans to contract with Russian gas firm Gazprom and switched to a new supplier, a decision carrying significant financial implications. 

It comes after the council called for urgent changes to the Local Government Act to prevent Russian firms from being able to bid their way into public sector contracts worth millions of pounds in the future.  

At a special Cabinet meeting on Thursday, the authority agreed to award a one-year contract to Corona Energy to manage the supply of gas to public buildings across the borough, including council offices, libraries, leisure centres and some schools. The contract begins in April 2022 with an option to extend for a further year. 

The council had previously been obliged to consider a one-year contract with Gazprom, under local government legislation which prevents councils from taking into account any non-commercial issues, such as moral concerns or political affiliations, when awarding contracts. 

However in light of the current situation in Ukraine, Merton chose to undertake a fresh process for gas supply and has now agreed to award a contract to Corona Energy. 

The switch in suppliers, alongside current rising energy prices, means the move will see increased costs for the authority, and Council Leader Mark Allison urged the Government to help councils ensure the cost doesn’t impact local services. 

Cllr Allison said: “I’m proud that our council has stepped up and taken swift action to ensure that not one penny of our residents’ money goes towards supporting the Russian state or its invasion of Ukraine. 

“However, there is no doubt that with energy prices rising and the costs of starting a new contract at short notice, this is going to impact the council’s finances.  

“The change in supply management will save us money; but overall, the current steep rise in energy prices means we will still pay more next year.  We are asking the Government to discuss a package of support which would ensure those increased costs don’t impact our residents.

Cllr Allison also called on Levelling Up and Communities Secretary Michael Gove to amend Section 17 of the Local Government Act and give councils powers to reject bids from companies such as Gazprom in the future. 

“Councils like ours continue to be at risk of this law leaving the door wide open for firms like Gazprom to come back in at the next attempt. Changing the Local Government Act to allow us to take into account non-commercial considerations would change that permanently.”

Cllr Allison will be writing to Mr Gove seeking discussions on financial support for affected councils. 

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