Fury goes up to over £6.5billion.
- The company was effectively nationalized after it was unable to buy power
- The cost of the bailout has soared to £6.5billion, three times higher than the estimate
- Bill, worth £230 per household, biggest bailout since RBS and HBOS bailouts
The ‘monstrous’ cost of bailing out struggling energy supplier Bulb has prompted calls for a fresh inquiry into the scandal amid a growing backlash against ministers.
The company was effectively nationalized last November as soaring gas and electricity prices left it unable to afford to buy the energy it owed its 1.6 million customers.
Figures buried in documents released alongside this week’s autumn statement showed the cost of the bailout had soared to £6.5billion, three times higher than an earlier estimate of £2.2billion. pound sterling.
Spotlight: Bulb Founders Amit Gudka and Hayden Wood
The bill – worth £230 per household and the biggest government bailout since bailing out the Royal Bank of Scotland and HBOS during the financial crisis – will be borne by taxpayers.
This will add to the pain for those already struggling with the rising cost of living and rising taxes.
Campaigners and MPs said last night the scandal raises questions about how the industry is regulated and why the cost of the bailout has risen so high. The Balloon Bill also puts Bulb founders Hayden Wood and Amit Gudka back in the spotlight. The duo founded Bulb in 2014 and pocketed £4million each from a fundraiser in 2018.
Wood was criticized earlier this year after it emerged he was still receiving £250,000 a year even after he collapsed and was bailed out by the government.
As MPs called for an investigation into the debacle, Gillian Cooper, energy policy manager at Citizens Advice, said: ‘The staggering cost of Bulb Energy’s failure is deeply worrying given the enormous pressures on the cost of life that people face. We need urgent confirmation that this will not increase customers’ already exorbitant bills.
“From the start, there has not been enough transparency about the costs involved and how they will be paid. Urgent lessons must be learned to ensure that taxpayers never again pay water in their eyes due to an energy market failure.
John O’Connell, chief executive of the TaxPayers’ Alliance, said: “Taxpayers will be appalled by this monstrous bill, especially at a time when budgets are stretched.” A protracted intervention process has seen costs soar, which should give politicians pause before pushing for bailouts.
“Ministers must ensure that taxpayers’ money is never again put on the line in this way.”
A series of energy companies have collapsed in recent years, with customers of 28 other suppliers transferred to competitors. But Bulb’s customer base was deemed too large and it has been under “special administration” since being bailed out before being sold to Octopus Energy last month for an undisclosed sum.
Labor MP Dame Angela Eagle, a member of the Commons Treasury Committee, said the cost of the scandal should trigger an investigation.
“It shouldn’t be kept a secret,” she said. ‘Six billion pounds is a lot of money.
“During the period, there was tremendous volatility in energy prices and there was the cost of continuing to serve these customers.
“Maybe that’s the explanation. But whatever the explanation, we should have it.
The works council has already sounded out the costs around Bulb, which collapsed late last year. He is now awaiting confirmation from Whitehall as to how he is being paid.
Labor MP Darren Jones, chairman of the committee, said: “We have long been concerned about the cost of the Bulb administration, particularly given the decision by ministers to prevent directors from hedging against future rises in energy price.
“This whole saga – sparked by a seismic failure of effective regulation – is now the costliest market failure since the 2008 banking crisis.
“Once again it looks like the bill payers are paying the tab while many of those who created the problem are leaving Scot for free.”