Government aims to tackle 'cost of living crisis': New deal struck with mobile phone operators follows energy companies' promise to cut bills

Culture Secretary says ministers are 'ensuring hardworking families are not hit with shock bills through no fault of their own'

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Mobile phone users will no longer be liable for huge bills if their handsets are stolen and they fail to report the loss promptly, the Government will announce today.

Under a deal struck with mobile phone operators, such customers will be liable for only about £50 worth of additional call charges. The agreement is similar to the one already in place for credit and debit card users whose responsibility for fraudulent transactions is limited.

In addition, phone companies have agreed to allow customers to exit their contracts early without a penalty if their call charges are put up.

Ministers had been concerned that some firms were luring new business with cheap deals locking in customers for several years and then putting up charges mid-way through the agreement. Under the new plan, companies that increase charges will be obliged to write and inform customers - allowing them to leave penalty-free.

UK mobile operators have agreed to support the Government in EU negotiations designed to remove roaming charges across Europe entirely by 2016.

The agreement covers all four major UK mobile networks: EE, Three, Virgin Media and Vodafone. Maria Miller, the Culture Secretary, said ministers were “ensuring hardworking families are not hit with shock bills through no fault of their own”. Jo Swinson, the Liberal Democrat Consumer Affairs Minister, added: “The last thing you need after the hassle of a stolen mobile is to find that someone has used it and landed you with a sky high bill too.”

The moves are designed to show that ministers are tackling the “cost of living crisis” on which Labour has campaigned since Ed Miliband pledged in September to freeze energy bills for 20 months if his party wins the next election.

Yesterday energy firms agreed to pass on to customers the £50 average cut in bills this winter negotiated by the Government. The warm homes discount worth £135 for pensioners and vulnerable groups is being transferred from energy charges to general taxation. Ministers have relaxed some of the firms' obligations to insulate homes under the Energy Companies Obligation (ECO) scheme. The target for reducing carbon emissions has been cut by 30 per cent; the date for completing the work delayed from 2015 to 2017 and there will be a switch away from expensive solid-wall insulation, which costs an average £10,000 per home, towards £300-per-home loft insulation and £1,000-per-home cavity wall insulation. 

Industry sources said means more homes would be insulated at a lower cost - although the “hardest-to-treat” buildings would not be tackled. Neil Marshall, chief executive of the National Insulation Association, expressed “serious concerns” that the number of solid wall installations would fall from 65,000 to 25,000 a year. “Half of those households in fuel poverty live  in properties with solid walls and therefore this cut could have a very serious impact,” he said.

The Government insisted there would be no overall rise in carbon emissions because of new measures such as a £1,000 grant for insulation work to home-buyers.

Ed Davey, the Energy and Climate Change Secretary, told MPs: “All of the major energy suppliers have confirmed that they will pass the benefits of this package on to their customers…. these cost reductions will ensure that average energy bills are lower in 2014 than they otherwise would have been - on average by £50 per household.” However, he admitted that bills could rise next year if wholesale energy prices or network costs increased.

Labour said the average household bill would still increase by about £70 this winter even after the £50 average cut. Caroline Flint, the shadow Energy Secretary, told Mr Davey: “If you genuinely want to get bills down, nothing less than a price freeze, and action to stop the energy companies over-charging, will do.” She added: “There is not a single measure [in the Government's package] that will cost the energy companies a single penny.”

Your new bill: Energy price changes

Centrica, owner of British Gas Dual-fuel bills to be cut by average £53 on 1 January, after a £123 rise last month.

EDF No plan to raise prices again before 2015. 3.9 per cent rise last month will remain.

SSE Will pass on savings of around £50 by April next year.

RWE npower No price rises to spring 2015 unless wholesale costs go up. Recent 10.4 per cent increase will be reduced.

E.On Will take account of the Government’s package when it announces its winter price rise.

Scottish Power Will pass on full £50 cut, but said wholesale costs could still affect bills.