Gas clampdown on late payers
Tuesday 09 May 1995
British Gas is planning a range of tariffs intended to clamp down on people who refuse to pay their bills. Industry sources say the company is set to introduce discounts for all customers who pay promptly, building on 5 per cent price cuts announced last year for those opting to pay by monthly direct debit.
The monthly direct debit scheme attracted criticism from consumer groups because it appeared to discriminate against those who pay on time but have no bank or building society account - often the less well off.
Five million people benefit from the direct debit discount and a further 8 million or more could get discounts for prompt payment under schemes being discussed with the regulator, Ofgas. The speed with which new packages are introduced depends largely on upgrading the computer system.
British Gas has 18 million domestic customers, of whom 2.5 million are thought to "play the system" when paying bills, and it is these who are likely to foot the bill for the discounts. Industry sources say that deliberate late payers are often wealthier people who are subsidised by the more conscientious, including the elderly and poor.
British Gas declined to comment on the changes in tarrifs. However one source said: "The implementation of the privatisation that took place in 1986 is actually coming through now. The emphasis is totally changed and we cannot operate in a social manner as we did before.
"There was enormous cross-subsidy. People took great advantage of the system and there are a number who will not pay as opposed to cannot pay."
He said that with the advent of competition in the domestic market, the company risked losing those customers who at present subsidised others.
Once British Gas has its computer system in place to handle multiple charging for different customers, the company may broaden its approach, varying prices with the type of service customers require. This emphasis on tailored service packages is also expected to be used by rivals, including North Sea producers and electricity firms.
In order to protect the less well off and the disabled in the new open market, British Gas is lobbying for a levy - perhaps on all companies using its pipelines - to help foot the bill for people who genuinely have problems paying or who need special services.
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