The UK’s energy watchdog, Ofgem, is contemplating implementing a one-off increase in energy bills of up to £17 per year to safeguard the market and protect consumers from potential supplier bankruptcies. This decision comes as energy debts surged to £2.6 billion during the summer, a consequence of rising wholesale energy prices and broader cost-of-living pressures.
Ofgem has stated that any increase in energy bills would not take effect until April of next year. Tim Jarvis, the Director General for Markets at Ofgem, acknowledged the financial challenges faced by households but emphasised the importance of addressing the escalating debt and the potential risks associated with supplier insolvencies.
The regulator highlighted that in 2021, when energy prices rose, approximately 30 suppliers went out of business. Consequently, every energy customer had to bear an additional £82 to cover the costs of ensuring uninterrupted energy supply. Ofgem believes that if a one-off rise in bills is not implemented, consumers may face even higher costs and diminished service standards if suppliers collapse.
Ofgem plans to consult with the energy industry, consumer groups, and the public to explore various options, including the distribution of any bill increase.
In other news, auditing firm KPMG has been fined a record £21 million by the Financial Reporting Council (FRC) for significant failures in its accounting work for Carillion, the construction giant that collapsed in 2018. The FRC cited the “number, range, and seriousness” of issues in KPMG’s work as the reason for the substantial penalty. Carillion’s failure resulted in the loss of thousands of jobs and disrupted 450 building projects.
Jon Holt, KPMG’s UK Chief Executive, expressed deep regret over the firm’s failures and acknowledged that the audit work on Carillion over an extended period had been subpar. Holt stated that some former partners and employees had not fulfilled their responsibilities adequately.
On the economic front, official figures from the Office for National Statistics (ONS) revealed that the UK economy grew by 0.2% in August, following a sharper decline in July. The recovery was primarily driven by the education sector rebounding from strike action. The ONS stated that, overall, the economy had experienced modest growth over the past three months.
In August, the services sector played a significant role in the 0.2% growth, with the month being relatively calm compared to previous periods. Sectors such as education, computer programming, and engineering contributed positively, while arts, entertainment, recreation, sports, and amusement activities experienced declines.
The revised data also revealed that GDP contracted by 0.6% in July, exceeding the initial estimate of a 0.5% fall.
