UK gas crisis set to drive up cost of living, with taxpayers left to foot bill for rescuing energy firms | Eurasia Diary - ednews.net

19 October, Tuesday

UK gas crisis set to drive up cost of living, with taxpayers left to foot bill for rescuing energy firms

Taxpayers face a bill as Government continues crisis talks to ensure energy supplies continue and carbon dioxide does not run out

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Ministers are considering fresh measures to protect vulnerable consumers from a “cost of living crisis” amid the energy crisis, the Business Secretary has suggested.
 
Kwasi Kwarteng insisted there was “absolutely no question of the lights going out” this winter as the UK has sufficient capacity to meet demand despite some energy suppliers going bust.
 
But taxpayers face footing the bill with state-backed loans being considered to keep the industry going, and emergency talks being held with producers of carbon dioxide (CO2) – vital for many food and drink products – that have halted operations amid rocketing gas prices.
 
The Government is understood to be close to agreeing deals worth tens of millions of pounds with companies such as Bulb to rescue it and other energy firms from collapse.
 
A deal to allow US fertiliser firm CF Industries, the UK’s largest producer of CO2 gas, is also close to being agreed.
 
All the deals are expected to take the form of low or zero interest loans backed by taxpayers, and could involve the Government taking a stake in the energy companies that it will give up once the loans are repaid.
 
They will also allow energy firms such as Bulb more time to seek additional investment.
 
A senior Treasury source said “some or even all” the deals with the energy firms and the US fertiliser company could be announced as early as Tuesday.
 
The crisis has also sparked fears from senior Tories, opposition MPs and experts of a “cost of living crunch” as it will coincide with the scrapping of the £20 uplift to universal credit (UC) and comes after the largest increase in inflation on record.
 
Following crisis talks with the energy industry on Monday, Mr Kwarteng insisted “consumers come first” as he rejected calls from some of the big six energy suppliers to scrap the cap on household bills.
 
But with the cap still set to increase by £139 a year for consumers on default tariffs and four million pre-payment customers facing a rise of £153, he said ministers were also “looking at” how the £140 warm homes discount for low income households could continue to help those forced to a new supplier, and was in discussions with the Treasury about measures to protect people.
 
Mr Kwarteng stressed the Government would not bail out “failed” suppliers that go bust because they cannot cope with a 250 per cent surge in wholesale gas prices since January.
 
However, taxpayers could still face picking up costs if the energy crisis worsens and more suppliers go to the wall.
 
Ministers are considering three options: state-backed loans to help bigger firms take on customers from failed companies; appointing a special administrator for collapsed firms to ensure continued supply until customers can be transferred, or creating a temporary “bad bank” supplier reminiscent of the financial crisis.
 
Mr Kwarteng on Monday night met Tony Will, CF Industries boss, which supplies 60 per cent of the UK’s food-grade CO2, to get production restarted at its two fertiliser plants.
 
The Environment Secretary, George Eustice, will hold a roundtable with representatives of the food retail, processing and manufacturing sectors today amid warnings of product shortages getting worse amid the CO2 crunch.
 
In a House of Commons statement, Mr Kwarteng said he was in “constant discussion” with the Treasury about measures to protect vulnerable customers from rising bills.
 
He stressed: “I am speaking to the Chancellor all the time about all sorts of things and all sorts of measures which we can bring in to make sure people are protected from this gas price hike.”
 
Resolution Foundation chief executive Torsten Bell warned the rising energy price cap would hit poorer households harder, as they are less likely to be on fixed tariffs and so face a £14 increase in bills.
 
“The result: The autumn is looking like a cost of living crunch,” Mr Bell said.
 
Former Tory cabinet Minister Damian Green warned of a “cost of living crisis” and potentially “very, very difficult times ahead for hundreds of thousands of people in this country”.
 
“It’s (inflation) one of the things we’ve almost forgotten about because we’ve had a whole generation of low inflation, but… it can be the biggest political issue out there.”

 

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