So we'll be bailing out the big energy companies if they crash: how likely is it anyway?

Keeping the flame alive.

As part of a team building exercise in my previous workplace, I once tried tight rope walking. Just to make the experience more exciting, I decided to do the dead-fall – something I had mastered at theatre workshops while in university – knowing there was a safety net below to catch me.

Had it not been for that safety net, I would have never tight rope walked in the first place – leave alone try the crowd pleasing antic. But my risky decision didn’t harm me or anyone around me.

Under a revised plan drawn up by the Government to avoid “market chaos”, UK consumers may be on the hook for a £4bn safety net if any of the six leading energy suppliers see a downfall.

Energy secretary Ed Davey is looking at a quick intervention with “adequate protection” if any of the ‘Big Six’ go out of business. Fair enough, but is it?

In a capitalist society such as the one we live in today, is it morally correct to ensure a safety net for corporates – such as big energy companies – to take risky decisions that could negatively affect millions in the UK market?

If the government is worried about any of these companies going out of business, the one thing it should not do is make it clear that it would be bailed out in case it does crash – providing the company with almost an incentive not to work towards keeping itself afloat.

The Big Six in the UK energy sector refer to German-owned E.On, Npower with its German parent company (RWE), France’s EDF, British Gas, Scottish and Southern Energy (SSE) and Scottish Power.

Competition is imperative to a company performing well. A safety net only reduces the need or will to compete.

A big energy company crashing would be unlike the crash of the banking sector where the crisis risked consumers losing their lives’ savings and government bail outs were imperative.

If a big energy company does go bust, the way it would affect a regular householder would be to find a new energy supplier. Would it be any more complicated than that? Why not let the private sector undertake the rescue?

Half of the Big Six are foreign owned companies, and it could perhaps make sense to draw up plans for the government to separate UK subsidiaries from foreign parents.

However, what are the chances of a big energy company on the whole going under in the first place? Highly unlikely – as Ed Davey himself accepts. Could this be anything more than a threat of nationalisation?

In January this year, a new survey by uSwitch found significant differences between satisfaction in the UK with smaller energy suppliers and the ‘Big Six’. EDF and Npower ranked at the bottom of the survey while Good Energy, the UK’s only 100 per cent renewable energy company, owned top spot.

Of the "Big Six", only two – E.ON and SSE – came in the top ten, sharing ninth place, whereas British Gas and ScottishPower came joint 11th.

Is it really justified, then, that consumers collectively face higher costs and pay up to almost £4bn to save any of the "Big Six" crashing when the satisfaction levels may not be up to mark?

Some may argue it will be better if the costs of the bail out came out of the profits of the energy firms instead of heightening the prices for householders. But ultimately it would amount to the same thing.

Albert Camus said all that he knew about morality and obligations he owed to football. Taking his cue, one thing we do know about the rules of any game is winning –not losing – should be rewarded. By that respect, the Big Six should fight to keep their heads up in stormy times instead of looking for that parachute they know the government is already making for them. And an expensive one at that.  

Photograph: Getty Images

Meghna Mukerjee is a reporter at Retail Banker International

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The government has admitted it can curb drugs without criminalising users

Under the Psychoactive Substances Act it will not be a criminal offence for someone to possess for their own consumption recreational drugs too dangerous to be legally sold to the public.

From Thursday, it may be illegal for churches to use incense. They should be safe from prosecution though, because, as the policing minister was forced to clarify, the mind-altering effects of holy smells aren’t the intended target of the Psychoactive Substances Act, which comes into force this week.

Incense-wafters aren’t the only ones wondering whether they will be criminalised by the Act. Its loose definition of psychoactive substances has been ridiculed for apparently banning, among other things, flowers, perfume and vaping.

Anyone writing about drugs can save time by creating a shortcut to insert the words “the government has ignored its advisors” and this Act was no exception. The advisory council repeatedly warned the government that its definition would both ban things that it didn’t mean to prohibit and could, at the same time, be unenforcable. You can guess how much difference these interventions made.

But, bad though the definition is – not a small problem when the entire law rests on it – the Act is actually much better than is usually admitted.

Under the law, it will not be a criminal offence for someone to possess, for their own consumption, recreational drugs that are considered too dangerous to be legally sold to the public.

That sounds like a mess, and it is. But it’s a mess that many reformers have long advocated for other drugs. Portugal decriminalised drug possession in 2001 while keeping supply illegal, and its approach is well-regarded by reformers, including the Liberal Democrats, who pledged to adopt this model in their last manifesto.

This fudge is the best option out of what was politically possible for dealing with what, until this week, were called legal highs.

Before the Act, high-street shops were free to display new drugs in their windows. With 335 head shops in the UK, the drugs were visible in everyday places – giving the impression that they couldn’t be that dangerous. As far as the data can be trusted, it’s likely that dozens of people are now dying each year after taking the drugs.

Since legal highs were being openly sold and people were thought to be dying from them, it was obvious that the government would have to act. Until it did, every death would be blamed on its inaction, even if the death rate for users of some newly banned drugs may be lower than it is for those who take part in still-legal activities like football. The only question was what the government would do.

The most exciting option would have been for it to incentivise manufacturers to come up with mind-altering drugs that are safe to take. New Zealand is allowing drug makers to run trials of psychoactive drugs, which could eventually – if proved safe enough – be sold legally. One day, this might change the world of drug-taking, but this kind of excitement was never going to appeal to Theresa May’s Home Office.

What was far more plausible was that the government would decide to treat new drugs like old ones. Just as anyone caught with cocaine or ecstasy faces a criminal record, so users of new drugs could have been hit with the same. This was how legal highs have been treated up until now when one was considered serious enough to require a ban.

But instead, the government has recognised that its aim – getting new drugs out of high-street shop windows so they don’t seem so normal – didn’t depend on criminalising users. A similar law in Ireland achieved precisely this. To its credit, the government realised it would be disproportionate to make it a criminal offence to possess the now-illegal highs.

The reality of the law will look chaotic. Users will still be able to buy new drugs online – which could open them to prosecution for import – and the law will do nothing to make drugs any safer. Some users might now be exposed to dealers who also want to sell them more dangerous other drugs. There will be few prosecutions and some head shop owners might try to pick holes in the law: the government seems to have recognised that it needed a better definition to have any chance of making the law stick.

But, most importantly for those of us who think the UK’s drug laws should be better at reducing the damage drugs cause, the government, for the first time, has decided that a class of recreational drugs are too dangerous to be sold but that it shouldn’t be a crime to possess them. The pressure on the government to act on legal highs has been relieved, without ordinary users being criminalised. For all the problems with the new law, it’s a step in the right direction.

Leo Barasi is a former Head of Communications at the UK Drug Policy Commission. He writes in a personal capacity