Editorial: The easy way for British Gas to avoid prices rises

Consumers are bound to suspect that the company is enriching itself at their expense

Related Topics

The announcement from British Gas that it is raising prices by an average of six per cent in nice time for the onset of winter provokes a mixture of anger and weary resignation. The only consolation – for its customers – is that another company, SSE, is raising its prices by an average of nine per cent from next week. But British Gas is Britain's biggest energy supplier and the distinctly unimpressive manner in which its managing director, Philip Bentley, approached his interview yesterday on the BBC Today programme hardly did the company any favours. The best that can be said is that at least Mr Bentley showed up – unlike, say, anyone from the BBC to tackle revelations about Jimmy Savile on Thursday's Newsnight, but that is another story.

Of course, no price rises are ever popular, and they are especially unpopular in the present economic climate when they affect goods or services most people would regard as essential and wages have not kept pace with inflation. Nor can the argument repeatedly advanced by the energy companies – that the price of energy reflects the state of the global market – be dismissed out of hand. But when the price rise is so clearly out of kilter with inflation generally – a rise of six per cent as against an inflation rate of 2.5 per cent – and when British Gas is at the same time reporting half-year profits of £345m, up by 23 per cent, and a dividend of eight per cent for its shareholders, customers are entitled to feel aggrieved. Over the past 15 months they have seen gas prices increase by 18 per cent, and electricity prices by a net 11 per cent. The cards seem to be stacked against them in every way.

Nor is it any real answer to the central contradiction – hefty price rises for consumers and a whacking profit for the company – to talk at length, as Mr Bentley did yesterday, about insulation and seeking out a more suitable tariff. Yes, British homes could do with being better insulated and British Gas's offer of free insulation is welcome. But the gain from insulation is a one-off, while price rises seem eternal, and shopping around, either for a better tariff or for an alternative supplier, all too often seems to reap rewards that are paltry compared with the quantities of time and effort involved.

With price differences between suppliers so relatively small and the various schemes so complex, consumers can be forgiven for their cynicism about the benefits – for them – of energy deregulation. The less well-off have even greater cause for complaint, as their energy needs are often greater than average and they may have no choice but to use prepaid meters. For most people, the surest way to cut costs is to cut consumption, which may have negative effects on quality of life and health.

British Gas and the other utilities companies have arguments on their side. With North Sea oil drying up, the UK has no choice but to buy on the global market, and our infrastructure is in sore need of more investment. A greener and more modern energy supply comes, initially, at a price. Consumers should expect to find such expenses on the balance sheet. A profitable company should also be good for jobs and for shareholders – which include big pension funds.

So there is something to be said in mitigation. But if British Gas is to avoid the charge that it is enriching itself at the expense of hard-pressed consumers, it will have to do a much better job of arguing its case. Unless it can, consumers will draw their own conclusion from the mismatch between price rises and profits, and calls for changes, such as a cap on profits or the creation of a tougher competitive environment, could be hard for any government to resist.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Recruitment Genius: Area Sales Manager

£25000 per annum: Recruitment Genius: This is an exciting opportunity to join ...

Recruitment Genius: Freight Forward Senior Operator

£22000 - £26000 per annum: Recruitment Genius: This logistics firm are looking...

Recruitment Genius: Lead Marketing Specialist

£34500 per annum: Recruitment Genius: A lead marketing specialist is required ...

Recruitment Genius: IT Support Technician - 2nd / 3rd Line

£26000 - £32000 per annum: Recruitment Genius: An IT Support Technician is req...

Day In a Page

Read Next
The message displayed on the monitor of a Piraeus Bank ATM in Athens. The Bank of Greece has recommended imposing restrictions on bank withdrawals  

Get off your high horses, lefties – Big Government, not 'austerity', has brought Greece to its knees

Kristian Niemietz
A church in South Carolina burns after a fire breaks out on June 30, 2015  

America knows who has been burning black churches, but it refuses to say

Robert Lee Mitchell III
Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

Making of a killer

What motivated a shy student to kill 38 holidaymakers in Tunisia?
UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

Just when you thought your commute couldn't get any worse...

Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

The Real Stories of Migrant Britain

Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
Cheaper energy on the way, but it's not all sunshine and rainbows

Cheaper energy on the way, but it's not all sunshine and rainbows

Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most
Katy Perry prevented from buying California convent for $14.5m after nuns sell to local businesswoman instead

No grace of God for Katy Perry as sisters act to stop her buying convent

Archdiocese sues nuns who turned down star’s $14.5m because they don’t approve of her
Ajmer: The ancient Indian metropolis chosen to be a 'smart city' where residents would just be happy to have power and running water

Residents just want water and power in a city chosen to be a ‘smart’ metropolis

The Indian Government has launched an ambitious plan to transform 100 of its crumbling cities
Michael Fassbender in 'Macbeth': The Scottish play on film, from Welles to Cheggers

Something wicked?

Films of Macbeth don’t always end well - just ask Orson Welles... and Keith Chegwin
10 best sun creams for body

10 best sun creams for body

Make sure you’re protected from head to toe in the heatwave
Wimbledon 2015: Nick Bollettieri - Milos Raonic has ability to get to the top but he must learn to handle pressure in big games

Nick Bollettieri's Wimbledon files

Milos Raonic has ability to get to the top but he must learn to handle pressure in big games
Women's World Cup 2015: How England's semi-final success could do wonders for both sexes

There is more than a shiny trophy to be won by England’s World Cup women

The success of the decidedly non-famous females wearing the Three Lions could do wonders for a ‘man’s game’ riddled with cynicism and greed
How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

How to stop an asteroid hitting Earth

Would people cooperate to face a global peril?
Just one day to find €1.6bn: Greece edges nearer euro exit

One day to find €1.6bn

Greece is edging inexorably towards an exit from the euro
New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

'Iron Man' augmented reality technology could become reality

Holographic projections would provide extra information on objects in a person's visual field in real time
Sugary drinks 'are killing 184,000 adults around the world every year'

Sugary drinks are killing 184,000 adults around the world every year

The drinks that should be eliminated from people's diets
Pride of Place: Historians map out untold LGBT histories of locations throughout UK

Historians map out untold LGBT histories

Public are being asked to help improve the map