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Octopus Energy is close to clinching a takeover of stricken rival Bulb in a deal that will crystallise up to £4bn of losses for British taxpayers.

Sky News has learnt that ministers at the Treasury and the Department for Business, Energy and Industrial Strategy (BEIS) have been told that a sale of Bulb’s 1.6m-strong customer base is now the optimal outcome.

Industry sources said this weekend that the government and Bulb’s special administrator, Teneo Financial Advisory, were preparing to sign a binding agreement to sell the company to Octopus Energy by the end of this month.

The transaction, which is said to have the backing of industry regulator Ofgem, would be targeted for completion in December, according to one of those insiders.

If completed, it would end nearly a year of uncertainty over the fate of Bulb, Britain’s seventh-largest residential power supplier at the point of its collapse.

The government has already been forced to spend billions of pounds buying gas to supply Bulb customers because the company did not hedge its purchases in order to fix its cost base.

Wholesale gas prices have soared over the last year, with Vladimir Putin’s invasion of Ukraine having a particularly pronounced impact on global energy markets.

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Sky News revealed during the summer that Octopus Energy, run by Greg Jackson, was seeking a £1bn taxpayer funding package to seal the takeover of Bulb.

That would allow the buyer to secure sufficient forward supplies of gas to steer the company through the winter months.

Octopus intends to repay the roughly-£1bn government funding over a period lasting a number of months, according to sources close to the situation.

An energy industry expert said on Saturday: “Under public ownership, Bulb has been unhedged and will have cost the taxpayer billions.

“Fixing its trading in an orderly way will take several months to avoid moving the market and making things even more expensive for everyone.”

Insiders said the sale to Octopus would deliver the best achievable financial outcome for taxpayers, while also giving certainty to Bulb customers.

Mr Jackson’s company is expected to pay between £100m and £200m to take on Bulb’s customer base, with a separate profit-share agreement giving the government a return for several years on earnings from Bulb customers.

Kwasi Kwarteng, the chancellor, and Jacob Rees-Mogg, business secretary, are likely to be asked to sign off the deal in the next three weeks.

Bulb’s collapse in November 2021 was the most significant among dozens of supplier failures, with Ofgem, the industry regulator, facing heavy criticism for its approach to licensing new entrants to the market.

The independent Office for Budget Responsibility said in March that the bailout of Bulb would require more than £2bn to cover its operating losses, although that figure is since understood to have soared.

Nevertheless, it is still dwarfed by the cost of subsidising household and business energy bills for the next six months, which the Centre for Economics and Business Research, a think-tank, recently estimated at in the region of £30bn.

Liz Truss’s administration is seeking long-term gas supply deals with foreign states but has been warned by Treasury officials that it faces paying a “security premium” because of elevated current prices, reports said this week.

In Bulb’s case, the profit-share agreement, which would last several years, would enable the government to recoup a small part of the cost to taxpayers.

Some sector executives have estimated that Bulb is losing as much as £5m every day because of its failure to hedge forward gas purchases.

Octopus Energy’s swoop on its competitor in would take its customer base to approximately 5m British households and cement its status as one of the most important utilities operating in the UK.

Founded by Mr Jackson, it has raised more than £1bn from a swathe of blue-chip investors.

It recently completed a $550m fundraising, with $325m committed to support the growth of its UK and international energy technology platform, Kraken.

The accountancy firm KPMG is advising Octopus Energy on the talks about a takeover of Bulb.

Octopus Energy declined to comment on Saturday, while a government spokesman said: “The Special Administrator of Bulb is required by law to keep costs as low as possible.

“We continue to engage closely with them to ensure maximum value for money for taxpayers.”

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At least 13 people may have taken their own lives linked to Post Office scandal, public inquiry finds

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At least 13 people may have taken their own lives linked to Post Office scandal, public inquiry finds

At least 13 people may have taken their own lives after being accused of wrongdoing based on evidence from the Horizon IT system that the Post Office and developers Fujitsu knew could be false, the public inquiry has found.

A further 59 people told the inquiry they considered ending their lives, 10 of whom tried on at least one occasion, while other postmasters and family members recount suffering from alcoholism and mental health disorders including anorexia and depression, family breakup, divorce, bankruptcy and personal abuse.

Follow latest on public inquiry into Post Office scandal

Writing in the first volume of the Post Office Horizon IT Inquiry report, chairman Sir Wyn Williams concludes that this enormous personal toll came despite senior employees at the Post Office knowing the Horizon IT system could produce accounts “which were illusory rather than real” even before it was rolled out to branches.

Sir Wyn said: “I am satisfied from the evidence that I have heard that a number of senior, and not so senior, employees of the Post Office knew or, at the very least, should have known that Legacy Horizon was capable of error… Yet, for all practical purposes, throughout the lifetime of Legacy Horizon, the Post Office maintained the fiction that its data was always accurate.”

Referring to the updated version of Horizon, known as Horizon Online, which also had “bugs errors and defects” that could create illusory accounts, he said: “I am satisfied that a number of employees of Fujitsu and the Post Office knew that this was so.”

The first volume of the report focuses on what Sir Wyn calls the “disastrous” impact of false accusations made against at least 1,000 postmasters, and the various redress schemes the Post Office and government has established since miscarriages of justice were identified and proven.

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‘It stole a lot from me’

Recommendations regarding the conduct of senior management of the Post Office, Fujitsu and ministers will come in a subsequent report, but Sir Wyn is clear that unjust and flawed prosecutions were knowingly pursued.

“All of these people are properly to be regarded as victims of wholly unacceptable behaviour perpetrated by a number of individuals employed by and/or associated with the Post Office and Fujitsu from time to time and by the Post Office and Fujitsu as institutions,” he says.

What are the inquiry’s recommendations?

Calling for urgent action from government and the Post Office to ensure “full and fair compensation”, he makes 19 recommendations including:

• Government and the Post Office to agree a definition of “full and fair” compensation to be used when agreeing payouts
• Ending “unnecessarily adversarial attitude” to initial offers that have depressed the value of payouts, ⁠and ensuring consistency across all four compensation schemes
• The creation of a standing body to administer financial redress to people wronged by public bodies
• Compensation to be extended to close family members of those affected who have suffered “serious negative consequences”
• The Post Office, Fujitsu and government agreeing a programme for “restorative justice”, a process that brings together those that have suffered harm with those that have caused it

Regarding the human impact of the Post Office’s pursuit of postmasters, including its use of unique powers of prosecution, Sir Wyn writes: “I do not think it is easy to exaggerate the trauma which persons are likely to suffer when they are the subject of criminal investigation, prosecution, conviction and sentence.”

He says that even the process of being interviewed under caution by Post Office investigators “will have been troubling at best and harrowing at worst”.

Read more:
Post Office inquiry lays bare heart-breaking legacy – analysis

‘Hostile and abusive behaviour’

The report finds that those wrongfully convicted were “subject to hostile and abusive behaviour” in their local communities, felt shame and embarrassment, with some feeling forced to move.

Detailing the impact on close family members of those prosecuted, Sir Wyn writes: “Wives, husbands, children and parents endured very significant suffering in the form of distress, worry and disruption to home life, in employment and education.

“In a number of cases, relationships with spouses broke down and ended in divorce or separation.

“In the most egregious cases, family members themselves suffered psychiatric illnesses or psychological problems and very significant financial losses… their suffering has been acute.”

The report includes 17 case studies of those affected by the scandal including some who have never spoken publicly before. They include Millie Castleton, daughter of Lee Castleton, one of the first postmasters prosecuted.

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Three things you need to know about Post Office report

She told the inquiry how her family being “branded thieves and liars” affected her mental health, and contributed to a diagnosis of anorexia that forced her to drop out of university.

Her account concludes: “Even now as I go into my career, I still find it so incredibly hard to trust anyone, even subconsciously. I sabotage myself by not asking for help with anything.

“I’m trying hard to break this cycle but I’m 26 and am very conscious that I may never be able to fully commit to natural trust. But my family is still fighting. I’m still fighting, as are many hundreds involved in the Post Office trial.”

Business Secretary Jonathan Reynolds said the inquiry’s report “marks an important milestone for sub-postmasters and their families”.

He added that he was “committed to ensuring wronged sub-postmasters are given full, fair, and prompt redress”.

“The recommendations contained in Sir Wyn’s report require careful reflection, including on further action to complete the redress schemes,” Mr Reynolds said.

“Government will promptly respond to the recommendations in full in parliament.”

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Public finances in ‘relatively vulnerable position.’, OBR warns

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Public finances in 'relatively vulnerable position.', OBR warns

The UK’s public finances are in a “relatively vulnerable position”, the government’s official forecaster has warned.

The Office for Budget Responsibility (OBR) cited a drag from successive economic shocks, recent U-turns on spending cuts and higher-than-expected policy commitments.

It sounded alarm over the projected path for debt as a result, in its annual fiscal risks and sustainability report.

It saw total debt above 270% of gross domestic product (GDP) by the early 2070s – up from a current level of 96.5% – declaring that rising debts have led to “a substantial erosion of the UK’s capacity to respond to future shocks”.

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The OBR’s report highlighted damage from the COVID pandemic and cost of living crisis that followed Russia’s invasion of Ukraine.

But it raised fears that past and current government policies were further harming the sustainability of the public finances.

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The report said that the pension triple lock, for example, was now estimated to cost £15.5bn annually by 2029-30.

That was “around three times higher than initial expectations”, it said.

The lock, which rises each year in line with inflation, wage growth or 2.5% – whichever is higher – had risen by more than the 2.5% base in eight of the 13 years of operation to date, the report stated.

The watchdog said it reflected more volatile inflation than expected.

It also picked up on the latest government U-turns over planned welfare and winter fuel payment cuts in the face of rebellions by Labour MPs.

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Welfare U-turn ‘has come at cost’

The decisions are expected to leave Chancellor Rachel Reeves facing a black hole of £6.75bn while weaker-than-expected economic growth could add a further £9bn to that sum in the run-up to the autumn budget, according to Sky News projections that see a void of around £20bn.

The OBR highlighted future risks from rising defence spending and the impact of climate change.

Public sector pay demands could also prove a drag, with resident doctors voting in favour of strikes over pay.

While ministers acknowledge damage to the public purse from the U-turns, Ms Reeves has repeatedly ruled out a new wave of borrowing to fund a spending spree.

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Could the rich be taxed to fill black hole?

As such, the government has not ruled out the prospect of some form of wealth tax to help meet its commitments despite the top 1% of earners contributing almost a third of all income tax already – on top of other targeted taxes such as capital gains.

The report said: “Efforts to put the UK’s public finances on a more sustainable footing have met with only limited and temporary success in recent years in the aftermath of the shocks, debt has also continued to rise and borrowing remained elevated because governments have reversed plans to consolidate the public finances.

“Planned tax rises have been reversed, and, more significantly, planned spending reductions have been abandoned.”

Shadow chancellor Mel Stride said of the report: “The OBR’s report lays bare the damage: Britain now has the third-highest deficit and the fourth-highest debt burden in Europe, with borrowing costs among the highest in the developed world.

“Under Rachel Reeves’ economic mismanagement and Keir Starmer’s weak leadership, our public finances have become dangerously exposed – vulnerable to future shocks, welfare spending rising unsustainably, taxes rising to record highs and crippling levels of debt interest.

“Labour’s recklessness risks it all – your pension, your job, your home, your savings.”

A Number 10 spokesman said: “We recognise the realities set out in the OBR’s report and we’re taking the decisions needed to provide stability to the public finances.”

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UK to miss deadline to agree steel and aluminium tariffs

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UK to miss deadline to agree steel and aluminium tariffs

The UK will miss the White House-imposed deadline to agree a trade deal on steel and aluminium this week, according to insiders from government and industry.

Donald Trump had insisted that unless Britain could finalise the details of its metals trade deal with the US by 9 July, he would raise the tariffs faced by steel and aluminium imports from the 25% the UK currently pays to the 50% paid by other countries. If it could seal the deal, those tariffs could drop to zero.

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However, despite weeks of negotiations and promises that the deal would be completed by the end of June, talks have foundered on two key issues. First, the US is insisting that only steel “melted and poured” in the UK (in other words, forged in blast furnaces or electric arc furnaces) can be included in the deal. However, one of Britain’s biggest steel exporters to the US, Tata Steel, is not melting and pouring its UK steel because of the closure of its blast furnaces.

Second, the US is wary of the fact that while the government has taken control of British Steel, which operates Britain’s last remaining blast furnaces in Scunthorpe, the company itself still legally has Chinese owners.

Government insiders have told businesses they still expect to have a deal done by the end of this month, and that they are confident the White House will not impose the 50% tariffs for the time being. They say one of the chief challenges they face is that the administration is so overwhelmed by attempts to negotiate with other countries that they lack the bandwidth to deal with the small print on Britain’s deal.

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Inside the UK’s last blast furnaces

“As far as the Americans are concerned, the UK is already a done deal,” said one person close to the negotiations. The problem is that while a deal has been done on car and aerospace exports to the US, the metals element of the trade agreement is still some way from being signed. In the meantime, steel exports continue to incur tariffs – albeit lower than those imposed on other countries around the world.

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