Brits may have to bail out energy firms & gas crisis could see 3-day week return

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Britain is facing a major gas crisis this winter, amid warnings taxpayers could face billions of pounds in bills.

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Ministers have refused to step into a rescue package for suppliers on the brink of collapse due to a jump in global prices.

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Foreign Office Minister James Chatty didn’t rule out a bailout for energy firms

Such an intervention would be the largest since the 2008 banking crash and would cost ordinary Britons billions in the long run.

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Experts have said the UK may face a return to the three-day work week of the 1970s to prevent regular blackouts for critical services.

There are also fears of food shortages before Christmas due to the lack of carbon dioxide due to high gas prices.

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Foreign Office Minister James Cleverley vowed today that ministers will do everything they can to “protect consumers.”

He added that “ideally” the government would want energy companies to “sustain organically through their efforts”.

But when pressured he has repeatedly refused to grant a massive bailout if necessary for the region.

Mr Chaturai said: “The priority is to ensure that we protect the provision for consumers and ensure that they are not affected by the significant increase in gas prices.

“Those discussions will continue. How we do it will be up for discussion, of course, but those are our priorities.”

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He also stressed that the energy price cap, which is to be raised by 12% next month, will not be abolished.

Business Secretary Quasi Quarteng is in talks with energy suppliers on how to avert a full-blown crisis this winter.

They want him to set up a “bad bank” that will take unprofitable customers from suppliers who have become worthless.

There are fears that many Britons may struggle to switch to another provider as companies will be reluctant to take them.

Such a move would reflect the action taken by the government when Northern Rock went through the onset of the financial crisis.

Large energy firms such as Eon have also called on ministers to do away with the green levy to ease pressure on the industry.

It comes as Bulb, the UK’s sixth-largest energy firm with 1.7 million customers, first sought a bailout.

Industry leaders have warned that the number of providers could drop from 70 to 10 by the start of this year.

PM fix pledge

In New York today for the annual meeting of the UN General Assembly, Boris Johnson insisted the problems facing companies would be “temporary”.

He said: “People should be reassured in the sense that there are a lot of short-term problems caused by the supply and shortage of gas around the world.

“It’s really a function of the world economy waking up post-Covid. It’s like everyone going back to pouring the kettle on at the end of a TV show.

“You are seeing a huge strain on world supply systems. We have to try to fix this as quickly as possible. We have to do everything we can.

“But it will get better as the market begins to settle itself, as the world economy gets back on its feet.”

Julian Jessop, an expert at the Institute for Economic Affairs think tank, said taxpayers should not pay the bill.

He added: “The poorest families should be protected from rising bills, but the taxpayer should not be expected to write a blank check to bail out energy companies.

“Market forces must be allowed to work and if that means changing relative prices to balance supply and demand, then so be it.

“Government debt could be the case for fundamentally strong businesses facing temporary problems as a result of global shortages.

“However, these companies should still be expected to borrow on commercial terms.

“Otherwise, there is a risk that the industry fails to adapt and it remains vulnerable to further shocks.”

Q&A: Winter Alert

Why is gas so expensive?
Wholesale gas prices have risen 75 percent this year on global demand as the world recovers from the pandemic and countries compete for reserves.

Will Britain’s gas run out?
No, the minister insists that the country has plenty, most of our supplies coming from the North Sea and topped by underwater pipelines from Norway.

How does this affect the food and beverage supply?
High gas prices forced the closure of two fertilizer factories. They produced CO2 which was supplied to meat processors and brewers. The country’s CO2 supply is set to run out in weeks.

What is the government doing about this?
Business Secretary Quasi Quarteng is in meetings to address any shortfalls.
Some green taxes may be temporarily removed to help energy suppliers.

Will this affect my bills?
The energy price range is increasing. Cheap prices can come in the market.

But industry data warned the UK could be headed for an all-out energy and food crisis this winter.

Iceland supermarket boss Richard Walker said he was “shocked” by how the UK was coping with the disruption.

He told the BBC: “It is no longer about whether Christmas will be okay or not.

“It’s more about keeping the wheels on and the lights on so we can really get to Christmas.”

Gas consultant and former government energy adviser Clive Moffatt warned that prices could go “through the roof”.

He said one consequence of this would be that some companies could “easily see a three-day work week”.

During the 1970s companies were limited to using electricity for three specified days and only a few hours.

The system was introduced to spread demand across the national grid and prevent critical services such as hospitals from becoming blackouts.

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