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Bulb, Britain’s seventh-biggest energy supplier, is facing collapse within days amid eleventh-hour talks between the government and the company’s biggest secured creditor.

Sky News has learnt that the company, which launched in 2015 and has amassed 1.7 million customers, is expected to appoint insolvency practitioners imminently.

The precise timing remained unclear on Monday because of the complexity of the looming administration process and ongoing talks between the government and Sequoia Economic Infrastructure Income Fund, which has an outstanding secured loan of roughly £50m to Bulb’s parent company Simple Energy, according to industry sources.

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Why the energy price cap is ‘failing’ the UK

Sequoia is said to have demanded the repayment of its loan prior to Bulb being placed into administration, they added.

A range of government departments and Ofgem, the industry regulator, began accelerating contingency plans for the collapse of Bulb last month.

Bulb executives and their advisors have been working on an emergency sale of the company, with the likes of Octopus Energy, Ovo Energy, Shell Energy Retail and Centrica, the owner of British Gas, expressing varying degrees of interest.

The ‘challenger’ energy company has also made a series of requests to the government in the last few weeks to help it structure a rescue support package, but these have been rejected, according to another industry executive.

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Talks about a solvent rescue deal have also faded, they said.

Bulb’s demise would mark by far the biggest insolvency of the crisis engulfing the sector.

On today’s show, we look at how renewables could keep energy costs down this winter.
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Bulb would be the biggest company to collapse as a result of the crisis engulfing the sector

Its customer base is nearly as large in aggregate as the roughly-20 suppliers which have collapsed during the last three months.

About 2 million households have seen their energy provider succumb to soaring wholesale prices since the start of September.

Bulb’s demise may place at long-term risk the jobs of the roughly-1000 people who work for the company, which was launched in 2015 by Amit Gudka and Hayden Wood, although the bulk of its workforce will not be at risk in the short-term as they will be required to continue in their roles during the special administration.

A Bulb spokesperson said: “We’ve decided to support Bulb being placed into special administration, which means it will continue to operate with no interruption of service or supply to members.

“If you’re a Bulb member, please don’t worry as your energy supply is secure and all credit balances are protected.”

Significantly, the insolvency of Bulb will entail the first use of a resolution process called a Special Administration Regime (SAR), which would guarantee funding for Bulb from the Treasury while administrators seek a restructuring deal, buyer or transfer of the customer base.

That would mean hundreds of millions of pounds of taxpayers’ money being used to fund Bulb’s obligations in the wholesale energy markets to ensure that it can continue operating.

Sky News revealed in September that Ofgem had lined up Teneo Restructuring to oversee the insolvency of a large energy supplier, although it was unclear whether it or AlixPartners, Bulb’s restructuring advisor, would handle the administration.

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Building resiliency into the UK energy market

The largest of the suppliers to collapse during the current crisis, Avro Energy, had about 580,000 customers.

Bulb has been regarded for some time as being too large to go through Ofgem’s Supplier of Last Resort (SOLR) process – the method by which all of the UK’s other collapsed energy companies have been resolved in recent months.

In the SOLR process, a company’s operating licence is removed and bids are sought from other industry players for its customer base, with losses incurred by the acquirers of those customers then recouped through an industry levy.

Under the SAR, the administrator has a legal duty to consider the interest of customers, unlike a conventional insolvency process where the primary duty is to creditors.

In a long-established statement on its website about SAR, Ofgem said a memorandum of understanding had been drawn up between itself, the Treasury and BEIS, adding: “Provisions for this administration scheme for energy suppliers were included in the 2011 Energy Act.

“It has never been used before because a large energy supplier has never been insolvent.”

A government spokesman did not immediately comment on Monday but said three weeks ago: “Ofgem – as the expert regulator – is monitoring the situation across the energy market for the continued impacts on high worldwide wholesale gas prices.

“We have put in place the powers and robust processes to ensure customers do not experience any disruption to their energy supply and that costs are minimised if a supplier should exit the market.”

Some analysts fear the UK's energy companies could be drastically reduced over the coming months (file pic)
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About two million customers have seen their energy supplier collapse since the start of September

The regulator added in late October: “There has been an unprecedented increase in global gas prices which is putting financial pressure on suppliers.

“We know this is a worrying time for many people and our number one priority is protecting customers.

“In the event a supplier fails, Ofgem and government have robust processes in place to ensure customers’ electricity and gas supply continue and domestic customers’ credit balances are protected.”

The ongoing crisis in the energy sector has sparked demands from some executives for a removal of the industry price cap or a bailout fund to help with the rescue of smaller suppliers.

Kwasi Kwarteng, the business secretary, has rejected both demands.

Last week, Ofgem said it would seek to adjust the industry price cap more frequently as a result of recent challenges, meaning British consumers are expected to face even higher bills in the years ahead.

The collapse of one of the biggest challengers to the big players – the largest of which are British Gas, E.ON Next, EDF Energy, Scottish Power and Ovo Energy,, which acquired SSE’s retail business – would be a blow to hopes of a more varied and competitive market.

Octopus Energy, which like Bulb supplies 100% renewable energy, has established itself as an independent, well-funded challenger and now boasts 2.5 million customers across more than 4 million accounts.

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What’s going on in the markets and should we be worried?

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What's going on in the markets and should we be worried?

The chancellor is under pressure because financial market moves have pushed up the cost of government borrowing, putting Rachel Reeves’ economic plans in peril.

So what’s going on, and should we be worried?

What is a bond?

UK Treasury bonds, known as gilts because they used to literally have gold edges, are the mechanism by which the state borrows money from investors.

They pay a fixed annual return, known as a coupon, to the lender over a fixed period – five, 10 and 30 years are common durations – and are traded on international markets, which means their value changes even as the return remains fixed.

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That means their true interest rate is measured by the ‘yield’, which is calculated by dividing the annual return by the current price. So when bond prices fall, the yield – the effective interest rate – goes up.

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And for the last three months, markets have been selling off UK bonds, pushing borrowing costs higher. This week the yield on 30-year gilts reached its highest level since 1998 at 5.37%, and 10-year gilts briefly hit a level last seen after the financial crisis, sparking jitters in markets and in Westminster.

Why are investors selling UK bonds?

Bond markets are influenced by many factors but the primary domestic pressure is the prospect of persistent inflation, with interest rates staying high for longer as a consequence.

Higher inflation reduces the purchasing power of the coupon, and higher interest rates make the bond less competitive because investors can now buy bonds paying a higher rate. Both of which apply in the UK.

Inflation remains higher than the Bank of England‘s 2% target and many large companies are warning of further price rises as tax and wage rises bite in the spring.

As a result, the Bank is now expected to cut rates only twice this year, as opposed to the four reductions priced in by markets as recently as November.

Nor is there much optimism that the economic growth promised by the chancellor will save the day in the short term, with business groups warning investment will be tempered by taxes.

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Sky News’ Ed Conway on the impact of increased long-term borrowing costs as they hit their highest level in the UK since 1998

Is the UK alone?

No. Bond markets are international and in recent months the primary influence has been rising borrowing costs in the US, triggered by Donald Trump’s re-election and the assumption that tariffs and other policies will be inflationary.

The UK is not immune from those forces, and other European nations including Germany and France, facing their own political gyrations, have seen costs rise too. (The US influence could yet increase if strong labour market figures on Friday reinforce the sense that rates will remain high).

But there are specific domestic factors, particularly the prospect of stagflation. The UK is also more reliant on overseas investors than other G7 nations, which means the markets really matter.

Why does it matter to Reeves?

The cost of borrowing affects not just the issuance of new debt but the price of maintaining existing loans, and it matters because these higher costs could erode the “headroom” Ms Reeves left herself in her budget.

Headroom is a measure of how much slack she has against her self-imposed fiscal rule, itself intended to reassure markets that the UK is a stable location for investment, to fund day-to-day spending entirely from tax revenue by 2029-30.

At the budget, she had just £9.9bn of headroom and some analysts estimate market pressure has eroded all but £1bn of that.

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At the end of March the Office for Budget Responsibility will provide an update on the fiscal position and market conditions could change before then, but if they don’t then Ms Reeves may have to rewrite her plans.

The Treasury this week described the fiscal rules as “non-negotiable”, which leaves a choice between raising taxes or, more likely, cutting costs to make the numbers add up.

Why does it matter to the rest of us?

Persistently higher rates could push up consumer debt costs, increasing the burden of mortgages and other loans. Beyond that, the state of the economy matters to all of us.

The underlying challenges – persistent inflation, stagnant growth, worse productivity, ailing public services – are fundamental, and Labour has promised to address them.

Investment in infrastructure and new industries, spurred by planning and financial market reform, are all promised as medium-term solutions to the structural challenges. But politics, like financial markets, is a short-term business, and Ms Reeves could do with some relief, starting with helpful inflation and growth figures due next week.

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RMT union boss Mick Lynch announces retirement

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RMT union boss Mick Lynch announces retirement

Mick Lynch, one of the UK’s most influential union leaders in recent history, has announced he is retiring.

Mr Lynch is stepping down from the helm of the RMT (Rail Maritime and Transport Workers) union aged 63.

He served as general secretary since 2021.

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Under his leadership, the union waged years of strike action over pay and conditions before accepting a deal with the new Labour government this summer.

The rail strikes by RMT members were part of the wave of industrial action that meant 2022 had the highest number of strike days since 1989.

Walkouts began in June 2022 and did not officially conclude until September 2024.

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“It has been a privilege to serve this union for over 30 years in all capacities, but now it is time for change,” Mr Lynch said.

He will remain in post until a successor is appointed in May, the RMT said.

Why’s he retiring?

No reason was given for his departure but Mr Lynch said there was a need for change and new workers to fight.

“There has never been a more urgent need for a strong union for all transport and energy workers of all grades, but we can only maintain and build a robust organisation for these workers if there is renewal and change,” he said.

“RMT will always need a new generation of workers to take up the fight for its members and for a fairer society for all”.

A career of organising

Mr Lynch first joined the RMT in 1993 after he began working for Eurostar. Before being elected secretary general at the top of the organisation he worked as the assistant general secretary for two terms and as the union’s national executive committee executive, also for two terms.

As a qualified electrician, Mr Lynch helped set up the Electrical and Plumbing Industries Union (EPIU) in 1988, before working for Eurostar and joining the RMT.

He had worked in construction and was blacklisted for joining a union.

“This union has been through a lot of struggles in recent years, and I believe that it has only made it stronger despite all the odds,” Mr Lynch said.

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Reeves intervention ruled out as pound slides further

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Reeves intervention ruled out as pound slides further

An intervention by the chancellor to help shore up flagging financial market confidence in the UK economy has been ruled out by the government, amid further declines in the value of the pound.

Sterling fell to its lowest level against the dollar since November 2023 early on Thursday, building on recent losses.

A toxic cocktail of concerns include budget-linked flatlining growth, rising unemployment and the effects of elevated interest rates to help keep a lid on rising inflation.

They have also been borne out by a leap in UK long term borrowing costs, which hit levels not seen since 1998 earlier this week.

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It piles pressure on the chancellor because it signals that investors are demanding greater rewards in return for holding UK debt, adding unwelcome costs to Ms Reeves who is borrowing money to invest in public services in addition to the budget tax burden on business and the wealthy.

The Tories were granted an urgent question in the Commons this morning which urged her to account for the shift in the market reaction to her budget, which critics have warned will only harm investment, jobs, pay and lead to higher prices.

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Treasury minister Darren Jones, who was sent to reply on her behalf, told MPs there were no plans for further commentary beyond a Treasury statement issued on Wednesday which defended the government’s approach.

Shadow chancellor Mel Stride urged Ms Reeves to cancel her forthcoming, and long-planned, trade trip to China to allow for a change of course to recover market confidence.

He claimed Britons are having to “pay the price for yet another socialist government taxing and spending their way into trouble”.

Mr Jones responded that he would take no lessons on managing the economy from the Conservatives.

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Why is Rachel Reeves flying to China?

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Liberal Democrat leader Ed Davey demanded an emergency fiscal statement to parliament that cancelled the National Insurance hike planned for April to boost economic growth and bring interest rates down.

In addition to the strain on sterling over Mr Reeves’s tax and spending plans, the effect on the pound has been intensified by a strengthening dollar due to shifting market expectations of fewer US interest rate cuts this year.

Sterling is trading at $1.22 – a level last seen in November 2023.

The spot rate had stood as high as $1.34 in September.

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Investors ‘losing confidence’ in UK

It has also fallen sharply however against other countries’ currencies.

The pound is a cent down versus the euro at €1.19 on the start of the week, falling six tenths of a cent in today’s market moves.

Long-term bond yields, which reflect perceived risk, hit their highest level since 1998 this week and other benchmark gilt yields are heading north too.

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Cost of public borrowing at 26-year high

Additional borrowing costs make it more expensive for Rachel Reeves to service the debt she is taking on.

It may mean she faces a choice between more tax rises – something she had previously ruled out – or spending cuts as higher borrowing costs take their toll.

The Treasury said in its statement: “No one should be under any doubt that meeting the fiscal rules is non-negotiable and the Government will have an iron grip on the public finances,”

“UK debt is the second lowest in the G7 and only the OBR’s forecast can accurately predict how much headroom the government has – anything else is pure speculation.

“Kick-starting economic growth is the number one mission of this Government as we deliver on our Plan for Change. Over the coming weeks and months, the Chancellor will leave no stone unturned in her determination to deliver economic growth and fight for working people.”

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But Matthew Ryan, head of market strategy at global financial services firm Ebury, said of the market moves: “This is a damning indictment of Labour’s fiscal policies, particularly the hike to employer NI (National Insurance) contributions, which businesses have already warned will lead to higher prices and a worsening in labour market conditions.

“We see wide ranging repercussions of this bond market sell-off. On the one hand, weak demand for UK debt raises the risk of either government spending cuts or further tax hikes to balance the country’s finances, neither of which would be positive for growth.

“Elevated gilt yields are also likely to be reflected in higher mortgage rates, which would provide a further squeeze on household disposable incomes.

“These worries have placed a high premium on UK assets, and we would not rule out additional downside for sterling as a result.”

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