Blog: 11/03/2022 - Dennis Hall, LLG Bulletin Editor

The world is being turned ‘upside down’ following the Russian invasion of Ukraine…

These world events are having a significant impact upon our sector too, as Councils rapidly disengage from Russian connections, (see the report about the Welsh authorities and also Suffolk CC in the last Bulletin, Merton LBC and Salford reported elsewhere in the news)…there will be more. The LLG guidance is timely…

Yet more local authority pension funds will also be thinking about divesting themselves from any Russian investments too….so how do Councils disengage and what are the risks? 

As reported, many are demanding rapid changes to current Bills before Parliament to permit immediate sequestration of oligarchs’ assets…

What should/could local authorities be doing? What is the role of ‘due process’ and the law in this situation as they withdraw from dealing with Russian companies? 

As relief is being organised across the country, can local authorities do more in terms of humanitarian support? What powers are there?

Let me focus here upon the issues concerning local authorities and the Russian energy supplier Gazprom…

It was reported last week that Merton Council is to write to the Government to ask for urgent changes to the laws around who councils can choose to do business with, as the London Borough seeks to terminate a gas contract with Russian energy supplier Gazprom.

Leader Mark Allison said: “Under the law, all council contracts are commercially-driven. We need the ability to refuse to do business with such firms based upon their moral or social suitability, not just their commercial offer.”

Earlier this week Suffolk County Council said that it would end a contract with the Russian energy company…

Merton is set to follow suit, saying its move was “in response to the atrocities being committed by the Russian State in Ukraine."

Gazprom was due to begin a new one-year, £1m contract to supply gas across Merton’s buildings, including leisure centres, libraries, and some schools…

Merton said: “The council had no choice but to enter a contract with Gazprom, which has supplied the authority for eight years, after they were the only bidder to respond to the procurement of the contract.”

Others are reported as suggesting that sanctioning Gazprom would make it easier for councils to exclude them from the usual contract tendering processes…

Salford City’s Paul Dennett has called on the government to clarify if councils can lawfully refuse to deal with Russian state-owned firms.

LLG has already published guidance to assist Councils in making these decisions in this difficult and uncertain area…

More guidance will follow over the coming weeks as our focus continues on this tragic situation.

Dennis Hall

Bulletin Editor