UK spent almost £500,000 on unused support scheme for energy firms

theguardian.com:

The Treasury spent almost half a million pounds on an unused emergency scheme for energy traders launched by Liz Truss that was quietly closed earlier this year. The energy markets financing scheme (EMFS) was devised by the Treasury and the Bank of England as a £40bn government-guaranteed backstop fund to provide stability for energy and financial markets. The scheme was designed to offer energy traders liquidity to deal with massive margin calls – demands from brokers to deposit further cash or securities to cover possible losses – but was shut in January as a sharp fall in wholesale gas prices earlier this year eased pressure on energy firms.

In response to a freedom of information request by the Guardian, the Treasury said it spent £465,000 on “external technical consultants to support the creation of the EMFS”. It said that 11 commercial banks and 20 energy firms were invited to technical video calls with the Treasury relating to the scheme. Energy firms would have applied jointly with a bank but no applications were made during a window from October to late January.

FTI Consulting, the global management consultancy, received £400,000 for its advisory role, while the law firm Hogan Lovells received £65,000. The government contract was originally worth up to £4.9m for FTI to provide market research and consultancy services, according to analysis by the data firm Tussell. Truss announced the scheme in September as part of a package of measures to prevent the energy crisis causing further damage during the winter.