ALEX BRUMMER: Raising the permanent charge is an unapproved tax increase

Britain has a reputation for the integrity of its economic and financial management. That’s why Trussonomics surprised the markets last year.

As we enter 2023, the concern must be that transparency and trust in how the government and regulator Ofgem deal with serial crashes among energy companies is embarrassingly opaque.

The regulator is using the permanent charge on household energy bills to recoup some of the costs associated with the bankruptcy of more than 30 energy providers in the volatile energy market of late, The Mail on Sunday has revealed. weekend.

This silent bailout, paid for by households pressured by the rising cost of living, has never been publicly discussed. In effect, it is a tax increase that has never been formally approved in the House of Commons.

We shouldn’t be surprised. The effort to introduce an element of competition into our energy markets has been a resounding failure.

The lack of scrutiny by regulator Ofgem has turned the energy market into a playground for the unscrupulous and has cost the public dearly.

Choice has been gobbled up, customers have moved with no certainty of future rates, and credit balances of previously protected customers are being abused. The bill is falling on households but we do not know precisely the amounts involved.

Gordon Brown’s government paid a high political price for the bank bailout in 2008. The bailout, organized by the Treasury and the Bank of England, was fully paid for.

It was accompanied by rapid management changes and limits on dividend and bonus payments to bankers. There is no such clarity in the energy market.

THE most extreme example of lack of clarity and disregard for the taxpayer is the Bulbo bailout. Everyone understands that wild swings in energy prices have caused serious problems.

However, when there is intervention the public has a right to know exactly what is happening.

The first hint that the bankruptcy of self-proclaimed digital-age provider Bulb could prove to be the costliest taxpayer bailout since the banks were featured in a footnote in the Office’s Budget Responsibility Report (OBR) in October. which estimated the costs at a whopping £6.5 billion.

That is not the end, although the data is very confusing. At the end of December 2022, the Government acknowledged that it was providing £4.5bn of potential assistance to buyer Octopus to take over Bulb’s 1.5m customers.

No one knows how the £6.5 billion was calculated and how it relates to the £4.5 billion. The latter appears to be a separate forward-looking estimate of wholesale purchase costs from October 2022 to March 2023.

Critically, we still have little understanding of how Octopus became the preferred bidder despite Centrica’s challenges in court. Once again, the Department for Business, Energy and Industrial Strategy (BEIS) and Ofgem have shown contempt for public responsibility.

If and when the National Audit Office gets into this fiasco, it cannot help but find ministers, BEIS and Ofgem officials seriously failing in their responsibilities to Parliament and the public.

The episode represents a deep scar in the probity and transparency of the government.