The Government’s loan to Bulb Energy means that every customer is being supported by the taxpayer to the tune of about £1,000.00. A new plan to help small energy companies needs to be implemented, say leading tax and advisory firm Blick Rothenberg.
Simon Rothenberg, a director at the firm, said: ‘Energy companies have struggled in the last few months due to significant increases in the cost of energy, which they cannot pass on to their customers due to the price cap. This has meant that most smaller providers, and now the seventh largest, have been unable to continue trading.’
‘The Government needs to consider setting up a special business loan scheme for small providers or resetting the price cap for a limited period,, or more energy businesses will fail. A special loan scheme would be preferable to leaving things to the last minute and then running a business through special administration.’
Simon added: ‘If the Government does not intervene, the energy market will be back to the big six providers only, and consumers will not have the flexibility that they have enjoyed up until now. This morning’s news that the Government has loaned £1.7bn to Bulb shows structural issues with the energy market. While this is a loan, it is highly unlikely to be repaid in the near term.’
‘If none of the big six energy companies could take on bulb’s customer base on a profitable basis, which is presumably why the special administration route was chosen, then the Government’s price cap, introduced to protect customers, and the desire for choice seem doomed.’