Government won't bail out failed energy firms, says Kwarteng
Business Secretary Kwasi Kwarteng said on Monday that the government will not bail out failed energy firms amid surging wholesale gas prices.
The BBC reported earlier that the government was looking at offering state-backed loans to help keep struggling firms afloat, and to encourage companies to take on customers from rivals that collapse.
The Financial Times said the government was also considering creating a Northern Rock-style ‘bad bank’ to absorb potentially unprofitable customers from failing firms.
Citing people familiar with the matter, the newspaper said emergency calls had taken place over the weekend, with the largest energy suppliers asking government for "substantial support" to handle what could be millions of customers from failing companies.
However, after holding meetings during the day with energy firms, Kwarteng said the government will not be bailing out energy firms and that "we may well expect to see further companies exiting the market over the coming weeks".
Kwarteng told MPs earlier that there was "no question of the lights going out" and that there would be no supply emergencies this winter. He also said the UK has "sufficient capacity and more than sufficient capacity to meet demand".
The Business Secretary insisted it was "not unusual" for small energy firms to collapse when wholesale prices rise and said this was a "feature of a highly competitive market".
"There will be no reward for failure, or mismanagement," Kwarteng said. "The taxpayer should not be expected to prop up businesses which have poor business models and are not resilient to fluctuations in price."