UK government under fire for Bulb’s ‘inexplicable’ decision

UK government under fire for Bulb’s ‘inexplicable’ decision
UK government under fire for Bulb’s ‘inexplicable’ decision

The UK government has been accused of costing energy bill payers more than £200 per household following its ‘inexplicable’ decision to ban nationalized retailer Bulb from covering energy purchases for its customers.

The Office for Budget Responsibility, the budget watchdog, revealed this week that the projected cost of bailing out Bulb has soared by £6.5billion, most of which will eventually have to be repaid by nearly every household in the country. The government predicted in March that it would total around £1.7billion.

Ed Miliband, the former Labor leader, said the spiraling cost of Bulb’s effective nationalization a year ago was “staggering” – and stemmed not just from the company’s mistakes, but from the way whose government had managed his bailout.

Treasury guidelines prevent government-controlled companies from hedging themselves or pre-purchasing gas and electricity for their customers. In a year of extremely volatile energy prices, this has driven up Bulb’s rescue bill.

“The government should hang their heads in shame at the light bulb fiasco and the huge costs it imposes on the British people of over £200 per household,” Miliband said.

The Department for Business, Energy and Industrial Strategy, BEIS, disputed the OBR figures on Friday, saying the government’s independent forecaster had no visibility on the deal to sell Bulb to its old rival Octopus.

BEIS said the total could be lower because it did not include the sale price of the company or potential repayments Octopus could make to the Treasury over time. The government has yet to reveal details of the sale, which has seen rival energy retailers consider launching a judicial review.

A senior Tory MP said the government was facing increasing pressure to reveal details of the planned sale to Octopus.

“It would be ridiculous if the government didn’t come clean and publish the details of the deal, the sooner the better,” the MP said. “It’s not something they can keep secret forever.”

Under the sale announced last month, Octopus would absorb Bulb’s 1.6 million customers to become one of the biggest companies in the retail energy sector, rivaling Centrica’s British Gas.

BEIS did not deny that the bill for the rescue of Bulb would have to be largely absorbed by households through their energy bills. Households are already paying around £94 each to cover the cost of transferring customers from other failing small energy providers.

Michael Lewis, chief executive of energy supplier E.ON UK, pointed out that the projected £6.5billion cost of bailing out Bulb was higher than the £6billion allocated by Chancellor Jeremy Hunt for projects energy efficiency schemes such as insulating homes over three years from 2025. He warned that a “frightening number of customers” risk going into debt next year, putting more pressure on “an industry already brittle”.

“A lot of money is being spent on fighting the symptoms of this crisis,” Lewis said. “The underlying causes – the inefficient use of energy and our reliance on imported fossil fuels – are still not being addressed on a large scale.”

Darren Jones, the Labor MP who chairs the Commons Business, Energy and Industrial Strategy Committee, said members had “long been concerned about the cost of the Bulb administration”. He added that there were particular concerns about “the ministers’ decision to prevent directors from hedging against future energy price rises”.

“It looks like the bill payers are footing the bill while a lot of those who created the problem are getting away with it,” Jones added.

Hayden Wood, the co-founding CEO of Bulb, stayed with the company for more than six months after the government bailout and continued to receive his £240,000-a-year salary during that time. He has since joined London-based Giant Ventures as a venture capital partner.

Tory MP Kwasi Kwarteng, who had a brief stint as chancellor under the short-lived leadership of Liz Truss, was business secretary during Bulb’s initial stint in administration. He said in May that the government had avoided hedging Bulb’s future energy sales because hedging was seen as “risky”.

Gillian Cooper, energy policy manager at Citizens Advice, said the charity fears Bulb’s costs will be passed on to households at a time when typical energy bills are already expected to rise to around £3,000 l next year from £2,500 this winter as the government cuts its support for the bills.

“From the start, there hasn’t been enough transparency about the costs involved and how they will be paid,” she said.

. government british under fire decision inexplicable Bulb

. government fire Bulbs inexplicable decision

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