UK Government Rules out Bailout for ‘Badly Run’ Energy Firms

By Alexander Zhang
Alexander Zhang
Alexander Zhang
September 21, 2021 Updated: September 21, 2021

The British government has said it has no intention to bail out energy firms that are struggling amid rising wholesale gas prices.

Wholesale gas prices have increased by 250 percent since January, with a 70 percent rise since August alone, leading to the demise of some smaller energy firms.

Business Secretary Kwasi Kwarteng said on Tuesday he does not want to spend taxpayers’ money on failing energy companies.

“I don’t believe that taxpayers’ money should be funnelled into companies that have been badly run,” he told Times Radio. “The way that markets work is the badly-run companies often go out of business, that’s a natural process.”

The government is considering providing support to large energy companies which will be taking on customers from firms that have collapsed, but Kwarteng said it will not be “a blank cheque.”

“Any support for those larger companies will be in terms of working capital, will be a loan, it won’t be just a grant, it won’t be just a blank cheque,” he told BBC Breakfast. “If we do have this policy, they will be expected to pay back the loans.”

Addressing the House of Commons on Monday, Kwarteng said there needed to be an acceptance that gas prices “could be high for longer than people anticipate.” But he said: “There is absolutely no question of the lights going out or people being unable to heat their homes.”

The government and the UK’s energy regulator Ofgem have emphasised that energy supply is not an issue.

“We want to be clear that this is not an issue of supply—the United Kingdom benefits from having a diverse range of gas supply sources with capacity that can more than meet demand,” Kwarteng and Ofgem chief executive Jonathan Brearley said in a joint statement on Monday.

There have been calls from the industry that the energy price cap should be scrapped. But the government and Ofgem said they had taken a unified position to keep the price ceiling to protect consumers.

Some energy companies have called for green levies, which fund renewable energy subsidy schemes, to be dropped to ease pressure in the industry. But Kwarteng said he had not considered doing away with the scheme.

“I think the green levies is pretty much in its infancy and, actually, we’ve been very successful at moving away from fossil fuels to renewable sources of power, and that’s a British success story,” he told Sky News.

PA contributed to this report.