The taxpayer faces a £4bn bill if a "big six" energy company goes under

5 questions answered.

Under newly proposed plans by Ed Davey the tax payer could foot the bill if one of the big six energy companies goes bust. We answer five questions on the proposed contingency plans.

What is Ed Davey proposing?

Energy Secretary Ed Davey is proposing to intervene quickly should one of the big six companies - EDF of France, E.ON and npower of Germany and Scottish Power, owned by Iberdrola of Spain, Centrica and Scottish & Southern Electric – go bust.

The "worst case scenario" plans, outlined in an Energy Department consultation paper open for comments until March 15, could result in household bills rising by between £7 and £32 a year on average over the period, equivalent to a maximum contribution of £4bn on the basis of 25.5m households in the UK, according to The Telegraph.

The provisions would enable the Government to intervene and continue to fund any company about to go bust and control the cost passed onto the consumer and maintain market sustainability. The rest of the industry would be expected to maintain supplies should this happen.

What is the likely-hood one of the big six companies could going bust?

It is not thought to be very likely that one of these companies would go bust any time soon and their commitment to the UK is not being questioned. It is thought the government is brining in these extra precautions because it does not want to have a repeat of the banking fiasco in the energy sector.

Does the government not already have provisions in place?

It does in the form of the 2011 2011 Energy Act which has already introduced a special administration regime to provide protection for the National Grid and the electricity and gas distribution networks it operates, as well as for the rail and water industries. However, Davey feels these provisions are not robust enough to cope with the mayhem that would ensue in the market if one of the big energy providers went bust.

What has the Department of Energy said?

An Energy Department official told The Telegraph: “It is extremely unlikely that any of the large energy suppliers in the UK would become insolvent. None the less, the Government believes that it is prudent to have in place a framework that will ensure the continued operation of a major supplier until its customers can be transferred to other partners.”

What do the energy companies think about these new provisions?

EDF has said it is broadly supportive of the proposals, while others are yet to comment

Photograph: Getty Images

Heidi Vella is a features writer for Nridigital.com

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Want to beat child poverty? End the freeze on working-age benefits

Freezing working-age benefits at a time of rising prices is both economically and morally unsound. 

We serve in politics to change lives. Yet for too long, many people and parts of Britain have felt ignored. Our response to Brexit must respond to their concerns and match their aspirations. By doing so, we can unite the country and build a fairer Britain.

Our future success as a country depends on making the most of all our talents. So we should begin with a simple goal – that child poverty must not be a feature of our country’s future.

The Institute for Fiscal Studies projects that relative child poverty will see the biggest increase in a generation in this Parliament. That is why it is so troubling that poverty has almost disappeared from the political agenda under David Cameron, and now Theresa May.

The last Labour Government’s record reminds us what can be achieved. Labour delivered the biggest improvement of any EU nation in lifting one million children out of poverty, transforming so many lives. Child poverty should scar our conscience as much as it does our children’s futures. So we have a duty to this generation to make progress once again.

In my Barnsley constituency, we have led a campaign bringing together Labour party members, community groups, and the local Labour Council to take action. My constituency party recently published its second child poverty report, which included contributions from across our community on addressing this challenge.

Ideas ranged from new requirements on developments for affordable housing, to expanding childcare, and the great example set by retired teachers lending their expertise to tutor local students. When more than 200 children in my constituency fall behind in language skills before they even start school, that local effort must be supported at the national level.

In order to build a consensus around renewed action, I will be introducing a private member’s bill in Parliament. It will set a new child poverty target, with requirements to regularly measure progress and report against the impact of policy choices.

I hope to work on a cross-party basis to share expertise and build pressure for action. In response, I hope that the Government will make this a priority in order to meet the Prime Minister’s commitment to make Britain a country that works for everyone.

The Autumn Statement in two months’ time is an opportunity to signal a new approach. Planned changes to tax and benefits over the next four years will take more than one pound in every ten pounds from the pockets of the poorest families. That is divisive and short-sighted, particularly with prices at the tills expected to rise.

Therefore the Chancellor should make a clear commitment to those who have been left behind by ending the freeze on working-age benefits. That would not only be morally right, but also sound economics.

It is estimated that one pound in every five pounds of public spending is associated with poverty. As well as redirecting public spending, poverty worsens the key economic challenges we face. It lowers productivity and limits spending power, which undermine the strong economy we need for the future.

Yet the human cost of child poverty is the greatest of all. When a Sure Start children’s centre is lost, it closes a door on opportunity. That is penny wise but pound foolish and it must end now.

The smarter approach is to recognise that a child’s earliest years are critical to their future life chances. The weight of expert opinion in favour of early intervention is overwhelming. So that must be our priority, because it is a smart investment for the future and it will change lives today.

This is the cause of our times. To end child poverty so that no-one is locked out of the opportunity for a better future. To stand in the way of a Government that seeks to pass by on the other side. Then to be in position to replace the Tories at the next election.

By doing so, we can answer that demand for change from people across our country. And we can provide security, opportunity, and hope to those who need it most.

That is how we can begin to build a fairer Britain.
 
 

Dan Jarvis is the Labour MP for Barnsley Central and a former Major in the Parachute Regiment.