ALEX BRUMMER: Raising the standing charge is an unapproved tax hike

Britain is known for the integrity of its economic and financial management. That’s why Trussonomics came as a shock to the markets last year.

As we enter 2023, the concern should be that transparency and trust in how the government and regulator Ofgem are handling the serial collapses at energy companies is scandalously opaque.

The fixed levy on household energy bills is being used by the regulator to recover some of the costs associated with the failure of more than 30 energy suppliers in the volatile energy market in recent times, as The Mail on Sunday reported in announced over the weekend.

This silent bailout, paid for by households hard-pressed by the rising cost of living, has never been publicly scrutinized. It is effectively a tax jump that was never formally approved in the House of Commons.

We shouldn’t be surprised. The attempt to introduce an element of competition into our energy markets has proven to be an outright failure.

The lack of control by the regulator Ofgem has turned the energy market into a playground for the unscrupulous and has cost the public dear.

Choice has been swallowed up, customers have moved with no certainty about future rates, and previously segregated customer funds are being misused. The bill falls with the households, but we do not know exactly what amounts are involved.

Gordon Brown’s government paid a heavy political price for the 2008 banking bailout. The bailout, organized by the Treasury and the Bank of England, was fully reimbursed.

It was accompanied by rapid management changes and restrictions on the payment of dividends and bonuses to bankers. That clarity does not exist in the energy market.

THE most extreme example of obscurity and contempt for the taxpayer is the Bulb rescue. Everyone understands that the wild fluctuations in energy prices have caused serious problems.

Nevertheless, when action is taken, the public has a right to know exactly what is happening.

The first suspicion that the bankruptcy of self-proclaimed purveyor of the digital age, Bulb, may be the costliest taxpayer bailout since the banks came out in a footnote in the Office for Budget Responsibility Report (OBR) in October, in which the costs were estimated to be as much as £6.5 billion.

That’s not the end, though the data is wildly confusing. At the end of December 2022, the government acknowledged it was offering £4.5bn in potential help to buyer Octopus to take on Bulb’s 1.5 million customers.

No one knows how the £6.5 billion was calculated and how it compares to the £4.5 billion. The latter appears to be a separate forward estimate of wholesale procurement costs from October 2022 to March 2023.

As critically, we still have little understanding of how Octopus became the preferred bidder despite Centrica’s challenges in court. Once again, the Department for Business, Energy & Industrial Strategy (BEIS) and Ofgem have shown contempt for public accountability.

If and when the National Audit Office sinks its teeth into this fiasco, it cannot help but find ministers, BEIS and Ofgem officials in serious breach of their responsibilities to parliament and the public.

The episode represents a deep scar on government honesty and transparency.