Bulb Energy: Administration

(Urgent Question): To ask the Secretary of State for Business, Energy and Industrial Strategy if he will make a statement on Bulb Energy entering administration.

As many people in the House will know, when energy suppliers leave the market, the regulator, Ofgem, runs a competitive supplier-of-last-resort process. Last week, Bulb informed the Government and Ofgem that it would be leaving the market. Ofgem has advised that the supplier of last resort process is not viable for Bulb because of the size of its customer book. Ofgem has, with my consent, applied to the court to appoint energy administrators. If appointed by the court, the administrators will continue to operate Bulb under what is called the special administration regime, which is set out clearly in legislation.

We will update the House once the court has made its determination, but I wish to clarify a couple of points. First, a special administration regime is a temporary arrangement that provides an ultimate safety net to protect consumers and ensure continued supply. The special administration regime will keep bills at the lowest cost that it is reasonably practical to incur while ensuring that the market remains stable. The House should understand that we do not want the company to be in this temporary state for longer than is absolutely necessary. Supplies remain secure and credit balances will be protected. Finally, all domestic customers in Great Britain are, of course, protected by the energy price cap, which remains firmly in place.

It is right that the Secretary of State has been forced to come to the House: 18 companies have gone bust since he last came to the House in respect of this issue, in September, and reassured us that there was nothing to worry about.

I have a series of questions. First, what is the Secretary of State’s estimate of the scale of costs the taxpayer faces as a result of the Bulb bail-out? That was not clear from his statement, but this is a taxpayer bail-out and the public deserve to know. Will he level with people about the costs that bill payers are going to have to pick up from all the other companies that have failed since September? How much will bills increase as a result?

Secondly, we are now in a position in which companies have banked profits but losses stretching to hundreds of millions incurred by those same companies are being borne by taxpayers and bill payers. So many companies going bust in just two months—something not happening anywhere else in the world—points to a systemic failure of regulation. Firms took risky bets and were allowed to do so, and the Government and Ofgem significantly deregulated the conditions of operation in 2016. Will the Secretary of State now take responsibility for this clear failure of regulation? Does this not suggest that there needs to be a proper review of the regulation of the market?

Thirdly, there is a global dimension to gas price rises but the truth is that we are more exposed as a country because of failures on onshore wind, solar, energy efficiency and gas storage, which is just 2% of our annual demand compared with 25% in other countries. Will the Secretary of State admit that Government inaction over the past decade has left us more vulnerable?

Finally, on the cost-of-living crisis, with further energy price rises coming, why are the Government making the situation worse with cuts to universal credit, by raising national insurance and by refusing to bring some relief by cutting VAT on energy bills? With businesses being hit, too, where is the support that he indicated was coming more than a month ago for energy-intensive industries?

On a point of fact, the number is actually 22 companies, not 18, and I refer back to that—[Interruption.] No, that is the figure. That shows the incredible resilience of the systems that we have in place. We have the supplier of last resort, which has worked very effectively, and, as I outlined in my statement, we also have the special administration regime, which was designed precisely to deal with situations such as the one we are now in.

On regulation, Ofgem has launched a review of the retail market and how it operates. I will be directly involved in that and will study it very closely.

The right hon. Gentleman talks about the global market and the situation we are in post covid; he and his party predicted record levels of unemployment and recession, and of course they were completely wrong—they were absolutely wrong. We are growing the economy stronger than any other country in the G7. We are also creating jobs and creating investment, so the right hon. Gentleman’s prophecies of doom were completely misplaced, and he is completely without any firm arguments over our response to what was a global pandemic.

What action has the Secretary of State taken to ensure that, in future, there will be more UK domestic gas to replace unreliable and expensive imported gas, and what action is he taking to expand the capacity of our generating system for the days when the wind does not blow and the sun does not shine?

My right hon. Friend will know that this is the first Government in about 25 years or more who are firmly committed to nuclear power. He will understand that the Cabinet expenditure—the long-term commitment to nuclear power—will not necessarily bear fruit in a week or a month, but for the first time, we have made a very dramatic 100% commitment to increasing our nuclear capacity. That answers his point about security of supply overall.

In terms of gas, I am pleased to announce that I and the Minister of State, my right hon. Friend the Member for Chelsea and Fulham (Greg Hands), are driving the North sea transition deal. The key to that is transition—about trying to transition to net zero while securing jobs and security of supply from gas in the UK Continental Shelf. These are things of which we are apprised.

In 2018, there were more than 70 companies in the energy retail sector, but now there are fewer than 30—a reduction of 60%. Bulb is the 23rd company to go bust since August, a statistic that, somehow, the Secretary of State seemed to be happy about when he was at the Dispatch Box earlier. When are this Government going to get a grip on what is now a cost of living crisis and an energy supply crisis? As energy bills soar, the Treasury gets extra VAT, extra income on fuel duty, and, on top of the £350 billion-worth of oil and gas revenues from Scotland that it gets to squander, an extra £1.1 billion more that it predicted this year alone, because gas prices have increased, so when will it reinvest some of that money to support consumers and the sector?

Bulb was the seventh largest company, with 1.7 million customers. What is the plan for coming out of special administration, because the Secretary of State has still not told us that? When EDF, Scottish Power, Octopus Energy, Utilita and Good Energy all say that they cannot afford new customers, what will happen with these customers? Can the energy companies actually refuse to take new customers, and what discussions is the Secretary of State having on that?

The Secretary of State says that the energy cap is here to stay, but what will be the effect on consumers in fuel poverty when the cap invariably goes up by £400 to £600 in April? It is a disgrace. The Government have allocated £1.7 billion of taxpayers’ money to develop Sizewell C to final investment stage. Why not invest that money in energy efficiency and renewable energy and do stuff that actually brings down energy bills, rather than committing consumers to a 10 to 15-year contract for nuclear and six years on top of that? When will they get a grip on energy policy as a whole?

This is where the hon. Gentleman and I disagree. We are firmly committed to nuclear power; he is against it. We can do two things: we can commit to renewables, as we are doing with our 10-point plan, and commit to 40 GW of offshore wind. I hope that he recognises that we are committed to tidal for the first time in many decades—that is something that he should appreciate. He should also remember that we have the warm home discount and lots of mitigations protecting the most vulnerable customers across the winter and in the next few months.

I welcome the Secretary of State’s commitment to making sure that this temporary measure is indeed temporary, and I encourage him to make it as short as possible. I also welcome his commitment to the ongoing use of the price cap, but I urge him when the price cap legislation comes up for renewal in the next 12 months to think very carefully about reform in order to make the price cap much more fit for purpose. At the moment, it is not doing what we need it to do. We have companies going bust and an ongoing problem with the loyalty penalty, which was, after all, one of the key reasons for introducing it in the first place.

My hon. Friend will appreciate that Ofgem, as I alluded to in my statement, has already launched a consultation on precisely the issue of the retail price gap. It will be driving that forward and I am sure that his input will be welcome. We have had lots of mitigations to protect the most vulnerable consumers, but we clearly need to have a discussion about the retail market. Ofgem is leading that discussion and my Department is supporting a closer look at the retail market.

The Secretary of State mentioned the particular arrangements for Bulb customers, but constituents who have been moved from other energy suppliers that have collapsed—there were 21 when I mentioned this issue at business questions last week—are now facing long delays in being set up with suppliers of last resort, so they do not know what their bills are going to be, they face accumulating debt and they may miss out on the warm home discount. What are the Government doing to address that?

I am happy to talk to the hon. Lady about specifics in her constituency. The supplier of last resort process was set up for precisely this process. Generally, it is working, and customers have been successfully transferred to new suppliers.

I welcome my right hon. Friend’s attention to detail on this issue. One of the problems is that gas prices have dramatically increased across the world and we have to cope with that. What is he doing to ensure that we increase the supply of gas so that the market then reduces overall prices?

The House should understand that we have a security of supply. For example, in 2020, 50% of the gas was from the UK continental shelf, 30% was from Norway, 18% was essentially shipped and 2% came from interconnectors. That is a diversity and security of supply that other countries in the EU and on the continent frankly do not have. My hon. Friend will also appreciate that the supplier of last resort process and the energy price cap have protected consumers considerably through this difficult period.

Hundreds of my constituents have been in touch with me over the last few months as their energy suppliers have collapsed. As the Secretary of State said, 22 suppliers have now collapsed. We are moving back to an oligarchy of energy companies that are increasing their profits, while the supplier of last resort is socialising losses. What is he going to do to fix the broken energy market? This winter we are going to have a perfect storm of rising wholesale prices and collapsing companies. How is he going to resolve that, so that people do not end up in fuel poverty?

I do not agree with the hon. Gentleman’s characterisation; I do not think that we are going back to an oligopoly, as he said. I have always maintained that competition is essential in this market. As my hon. Friend the Member for Harrow East (Bob Blackman) alluded to, there has been a huge mismatch between the wholesale price and the retail price cap. The retail price cap is there to protect consumers, otherwise we would have seen a huge increase in consumer prices and the hon. Gentleman’s constituents would have been under even more pressure.