British Gas price hike - backlash from MPs and campaigners

Anger as British Gas announces energy price increase.
Anger as British Gas announces energy price increase.
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Cash-strapped consumers have been dealt a fresh blow after the owner of Scottish Gas has announced a 5.5 per cent, or £60 a year hike in energy bills.

British Gas, the UK’s largest energy supplier, is to increase energy bills for 4.1 million dual fuel customers on its standard variable tariff (SVT) from 29 May blaming rising wholesale energy and Government policy costs.

Energy minister Claire Perry has branded the increase as “unjustified”.

Meanwhile Ofgem, describing the move as “unwelcome” says householders should shop around for their fuel.

The price of British Gas’s SVT will rise to £1,161 a year for a typical dual fuel customer, the company’s owner, Centrica, said.

British Gas cited increased wholesale gas and electricity costs and the price of Tory policies as being behind its latest hike.

It blamed initiatives such as the smart meter roll-out and schemes to reduce carbon emissions, and argued that the funding of “all Government policy costs should be paid for in a fairer way such as through general taxation”.

SVTs, where the price varies from to month, are the usually the most expensive plans offered by energy providers.

British Gas announced plans in November to scrap SVTs for new customers ahead of Government plans to impose a price cap on costly energy products, which Centrica warned could have “unintended consequences” for the market.

British Gas said its SVT “default tariff” was withdrawn for new customers last month and all existing customers are being “contacted to encourage them to choose one of our fixed-term deals”.

The price hike will not hit the 3.7 million customers who are on fixed-term contracts, prepayment meters or classed as vulnerable.

Mark Hodges, chief executive of Centrica Consumer, said: “We fully understand that any price increase adds extra pressure on customers’ household bills. This increase we are announcing today is reflective of the costs we are seeing which are beyond our control.

“Government policies, intended to transform the energy system, are important but they are putting pressure on customers’ bills. We believe Government should level the playing field so the customers of all suppliers pay a fair share of energy policy costs.”

Craig Salter, energy spokesman for Citizens Advice Scotland’s consumer futures unit, said: “Consumers will find it hard to understand how a 5.5 per cent price hike on their fuel bills, on top of a 7.3 per cent increase for dual fuel customers less than 9 months ago, can be justified.

“This will see fuel bills rise at several times the rate of inflation for a significant number of customers, with an increase of 13.2 per cent over just 10 months for those on dual fuel tariffs.

“While increases in suppliers’ costs are likely to lead to higher prices for consumers, any reductions in costs should also be reflected in household bills. If costs do not rise as forecast, we would expect these increases to be quickly reversed for consumers.

“We also know that households that rely on electric heating, of which there are 282,000 in Scotland, are highly vulnerable to fuel poverty.”

Norman Kerr, director of Energy Action Scotland, which campaigns to end fuel poverty in Scotland, said: “We’ve seen a continuing upward trend in fuel prices that push on to consumers who are not active in the market place and puts them at a further disadvantage.

“This means they are paying more than market savvy consumers. This puts a significant strain on budgets which are already stretched. They then need to find a way of reducing their consumption which results in a choice of food on the table or having the heating on.”
Alan Whitehead, MP, Labour shadow minister, department for business, energy and industrial strategy, said: “This price hike is yet another example of the Tories failing consumers and not addressing the broken energy market.

“British Gas is rushing out an increase before the price cap comes in and the government has done nothing to stop this happening.

“That is why Labour would do much more, introducing an immediate cap on bills so that there is no return to the kind of behaviour we are seeing here, and bringing key parts of our energy system back into public ownership to deliver energy that is fairer and more accountable.”