Fury mounts over £6.5bn Bulb bailout

The ‘monstrous’ cost of bailing out ailing energy supplier Bulb has led to calls for a new investigation into the scandal amid growing backlash against ministers.

The company was effectively nationalized last November as rising gas and electricity prices meant it couldn’t afford to buy the energy it owed its 1.6 million customers.

Figures buried in documents published alongside this week’s autumn statement showed that the cost of the bailout has risen to £6.5 billion – three times higher than a previous estimate of £2.2 billion.

The bill – worth £230 per household and the largest government bailout since the bailout of Royal Bank of Scotland and HBOS during the financial crisis – will be paid by taxpayers.

That will cause more pain for those already struggling with rising costs of living and higher taxes.

Campaigners and MPs said last night the scandal raised questions about how the industry is regulated and why the cost of the bailout has risen so high. The bill also thrusts Bulb founders Hayden Wood and Amit Gudka back into the spotlight. The duo founded Bulb in 2014 and each put £4 million into a fundraising campaign in 2018.

Wood was criticized earlier this year after it emerged he was still receiving £250,000 a year even after the government collapse and bailout.

As MPs called for an inquiry into the debacle, Gillian Cooper, head of energy policy at Citizens Advice, said: ‘The staggering cost of Bulb Energy going out is deeply concerning given the huge cost of living pressures people are facing. We urgently need confirmation that this will not add to already skyrocketing customer bills.

‘From the start there has been insufficient transparency about the costs and how they will be paid. There is an urgent need to learn lessons to ensure that taxpayers are never again confronted with the facts by a breakdown in the energy market.’

John O’Connell, chief executive of the TaxPayers’ Alliance, said: “Taxpayers will be shocked by this monstrous bill, especially at a time when budgets are being stretched. A lengthy process of intervention has sent costs soaring, which should give politicians pause for thought before pushing for bailouts.

‘Ministers must ensure that taxpayers’ money is never again at risk in this way.’

A string of energy companies has collapsed in recent years with customers switching from 28 other suppliers to rivals. But Bulb’s customer base was deemed too large and it has been in “special management” since the bailout before being sold to Octopus Energy for an undisclosed sum last month.

Labor MP Dame Angela Eagle, who is a member of the Commons Treasury committee, said the charges of the scandal should trigger an inquiry.

“It shouldn’t be kept secret,” she said. ‘Six billion pounds is a lot of money.

“During the period there was tremendous volatility in energy prices and the cost of continuing to serve those customers.

“Maybe that’s the explanation. But whatever the explanation, we should have it.’

The entrepreneurs’ committee has already assessed the costs surrounding Bulb, which collapsed at the end of last year. It is now waiting for confirmation from Whitehall on how it will be paid.

Labor MP Darren Jones, chair of the committee, said: “We have long been concerned about the cost of the Bulb administration, not least given the ministers’ decision to prevent the trustees from hedging against future energy price increases.

This whole saga – triggered by a seismic failure of effective regulation – is now the costliest market failure since the 2008 banking crisis.

“Again, it seems that bill payers are footing the bill, while many of those who caused the problem are walking away.”