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21 Sep, 2021 11:09

State loans may be on the table for Britain’s energy companies as gas prices surge, but minister refuses bailouts for ‘failure’

State loans may be on the table for Britain’s energy companies as gas prices surge, but minister refuses bailouts for ‘failure’

Britain’s business secretary has reiterated his unwillingness to bail out ailing British energy companies as gas prices threaten to put more out of business, but he says state loans may be used to help customer absorption.

Speaking to Sky News on Tuesday, Business Secretary Kwasi Kwarteng said that while between five and eight smaller energy companies would normally leave the market every year, the figure was likely to be much larger in 2021. 

Kwarteng stated that the government would not be rushing to aid failing firms with bailouts, suggesting the companies had adopted flawed business models. “I don’t think we should be throwing taxpayers’ money at companies which have been, let’s face it, badly run,” he said.

A number of these companies have been badly run… I don’t want there to be a reward for failure.

Asked if state-backed loans were an option, the minister said there were lots of options on the table. He noted that it costs a lot of money for a firm to “absorb up to hundreds of thousands of customers from another company that’s failed,” adding that there may be a state loan to help in this instance. 

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Britain’s larger energy firms have called for government support with taking on customers of failed energy companies. One source told Sky News that each new customer would be costing the firm nearly £500 a year. Kwarteng said that customers moving to a new energy provider after their last one failed should be able to get a tariff similar to their previous one.

Soaring gas prices on the international market have strained the British energy sector, which had seen a number of new players enter the industry in recent years. While a number of firms have already gone out of business, others are now in deep trouble.

On Monday, Kwarteng dismissed talk of any economic consequences because of gas shortages.

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