This year, the Treasury and the Bank of England’s backstop fund, EMFS, was discreetly shut down.

The Treasury spent nearly a half-million pounds on an emergency scheme for energy traders launched by Liz Truss and discreetly discontinued earlier this year.

The Treasury and the Bank of England designed the energy markets financing scheme as a £40 billion government-guaranteed backstop fund to stabilise energy and financial markets.

The scheme was intended to provide energy traders with liquidity to deal with massive margin calls – requests from brokers to deposit additional cash or securities to cover potential losses – but it was discontinued in January as a result of a steep drop in wholesale petrol prices earlier this year, which relieved pressure on energy firms.

The Treasury disclosed spending £465,000 to support the creation of the EMFS.

It was stated that eleven commercial banks and twenty energy companies were invited to technical video conferences with the Treasury regarding the scheme. Between October and late January, energy companies would have applied in tandem with a bank, but applications still needed to be submitted.

FTI Consulting, a global management consulting firm, was paid £400,000 for its advisory function, while Hogan Lovells was paid £65,000.

According to an analysis, the government contract for FTI to provide market research and consulting services was initially worth up to £4.9 million.

In September, Truss announced the programme as part of a package to prevent the energy crisis from inflicting additional damage during the winter. The then-prime minister also announced assistance for households and enterprises, both of which were subsequently scaled back to reduce costs.

The Treasury stated, “The scheme was implemented as part of a suite of contingency measures designed to support the energy sector.”

Since the scheme’s inception, wholesale petrol prices have decreased significantly, alleviating some pressure on eligible energy companies.

“Due to improvements in market conditions, energy firms could obtain the essential credit lines from commercial lenders without needing a government guarantee.

“The EMFS was designed to supplement existing commercial financing, with prohibitive pricing and conditions upon drawdown, so it would only be used without commercial and competitively priced financing on the market. It was not intended to substitute for commercial lending.”

The Bank of England refused to disclose how much it invested in establishing the EMFs.

According to industry sources, stringent conditions prohibiting companies from paying bonuses to executives or dividends to shareholders after using the scheme also discouraged energy firms.

The government’s spending on energy support programmes has come under intensified scrutiny as households and businesses struggle to pay their inflated energy bills caused by the conflict in Ukraine. In his budget, Jeremy Hunt reversed a proposal to make household support less generous but maintained a 1 April reduction in financial energy aid for businesses.

The support for businesses has been dubbed “sprawl” by business organisations, which have warned that many are now contemplating closure due to unaffordable expenses. The chief executive of UKHospitality, representing pubs, restaurants, and hotels, Kate Nicholls, stated, “Thousands of hospitality businesses are already struggling with extortionate energy bills which are double what they were last year.”