Taxpayers face astronomical £9.2bn bill for collapsed energy firms

Taxpayers face astronomical £9.2billion bill for collapsed energy firms as MPs demand to know where money has gone

  • Taxpayer has spent £9.2bn bailing out energy suppliers over the past 18 months
  • It has £2.7bn to transfer the customers of 28 collapsed companies to rival firms
  • The price paid for Bulb alone is equal to every household in Brittan paying £230
  • MP Tobias Ellwood called for a public inquiry into what happened to the cash

The beleaguered energy watchdog is under fire after it emerged the taxpayer has spent £9.2billion bailing out failed suppliers over the past 18 months.

MPs have taken aim at Ofgem for the huge bill following the collapse of Bulb and 28 other firms.

It has cost an astonishing £2.7billion – or £94 for every UK household – to transfer the customers of 28 collapsed companies to rival firms.

But that sum pales in comparison to the £6.5billion required for Bulb alone, making it the largest state rescue since the Royal Bank of Scotland in 2008. The price being paid for the Bulb debacle is the equivalent of every household in Britain coughing up £230 to prop up the business.

Tory MP Tobias Ellwood yesterday called for a public inquiry into what has happened to the taxpayer cash. He said: ‘I think they should all be called in – Bulb, Ofgem and the other suppliers – to explain what has happened and where the money has gone.

‘Energy suppliers should not just come and go. The structure in place was not robust enough.’

The UK energy market was upended in 2018 following a decision to try to increase competition in the sector. The change saw licences handed out to hundreds of new suppliers.

£4million each: Hayden Wood and Amit Gudka, pictured at their east London offices, founded Bulb in 2014. The taxpayer has spent £9.2billion bailing out failed suppliers over the past 18 months, with Bulb costing £6.5billion alone

£4million each: Hayden Wood and Amit Gudka, pictured at their east London offices, founded Bulb in 2014. The taxpayer has spent £9.2billion bailing out failed suppliers over the past 18 months, with Bulb costing £6.5billion alone

The vulnerabilities of many of these small firms were finally exposed last year when Russia invaded Ukraine and the wholesale gas and oil markets were thrown into turmoil.

This triggered a wave of administrations, beginning with Hub Energy in August last year, but the biggest by far has been Bulb.

The scandal has put Ofgem in the spotlight because it is supposed to protect energy consumers.

MPs now say the watchdog is not fit to govern the industry. They have accused it of being ‘too slow to act’ to ensure suppliers were financially resilient, even before the energy crisis hit, and have said the regulator’s lack of action is ‘disgraceful’.

Labour MP Dame Angela Eagle, a member of the Commons Treasury committee, said: ‘There needs to be some transparency and accountability for what’s gone wrong. The suppliers have crashed and burned leaving behind the liabilities. It is disgraceful.’

The multi-millionaire founders of Bulb are also under intense scrutiny after being accused by MPs of walking off ‘scot-free’ following the company’s collapse.

Hayden Wood and Amit Gudka founded Bulb in 2014 and it was once the fastest-growing company in Europe, but it imploded a year ago and was put under government control until a takeover was agreed last month with its bigger rival Octopus Energy.

Mr Wood and Mr Gudka pocketed £4million each after selling shares in a 2018 fundraising.

This spring, it was revealed that Mr Wood was still earning a £250,000 salary five months after the firm was seized by administrators.

The price being paid for the Bulb debacle is the equivalent of every household in Britain coughing up £230 to prop up the business. Tory MP Tobias Ellwood yesterday called for a public inquiry into what has happened to the taxpayer cash

The price being paid for the Bulb debacle is the equivalent of every household in Britain coughing up £230 to prop up the business. Tory MP Tobias Ellwood yesterday called for a public inquiry into what has happened to the taxpayer cash

Dame Angela said if the pair had ‘any shame’ they would return the cash. She criticised entrepreneurs who ‘dip in and then bugger off, leaving their liabilities to the public’.

Earlier this month, a report by the Commons public accounts committee said Ofgem had failed to regulate energy suppliers ‘at a considerable cost to 4million households’.

Labour MP Dame Meg Hillier MP, the committee chairman, said: ‘Problems in the energy supply market were apparent in 2018, and Ofgem was too slow to act.

‘Households will pay dear, with the cost of bailouts added to record and rising bills.’

The committee report added that it is ‘not convinced that Ofgem yet has the skills and capacity it needs to take a more proactive role in regulating the energy supplier market’.

Joe Malinowski, founder of The Energy Shop consultancy, said: ‘Ofgem didn’t do enough due diligence. There was a determination to introduce competition into the market, but no thought given as to how this would be done.’

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