Simon Read: 'British Gas criticised for 'underwhelming' cut in prices'

The company cut prices by 5 per cent, but Moneysupermarket said the cut was underwhelming compared to how low wholesale prices are

Great news from British Gas this week when it announced that it will cut gas prices by 5 per cent. It can only be a matter of time before its Big Six rivals announce a similar reduction.

The move will mean lower gas bills for 6.9 million British Gas customers from 27 August, with the average customer set to save £35 a year.

But despite the good news, the firm came in for a storm of criticism. Moneysupermarket said the cut was "underwhelming compared to how low wholesale prices are" before pointing out that while customers have to be notified 30 days before any increase to price, a cut in bills can be brought in immediately. Given that there was no need for British Gas to make its customers wait more than a month before being given a price cut, apart from, presumably, the extra profits for the energy giant.

Moneysavingexpert founder Martin Lewis said: "The true revelation of this announcement is that it shines a light on the fact that most households in the UK are massively overpaying for their energy.

That notion was reinforced last week when the Competition and Markets Authority reported that consumers were being overcharged by around 5 per cent for four years by the Big Six firms. Is it just a coincidence that the latest planned cut is similarly 5 per cent?

Jonathan Reynolds, Labour's shadow energy minister, expressed the view of many when he said the cut was long overdue. He said: "Wholesale energy costs are at a five-year low and this still isn't fully reflected in household bills."

British Gas attempted to deflect the criticism by suggesting that its bills don't just reflect wholesale prices. There's an element of truth in that but, rather than looking for excuses, the company should be looking for ways to significantly improve its services and products for customers over the long-term.

Having been caught out overcharging – along with its Big Six rivals – by Britain's competition watchdog, British Gas really needs to start taking seriously its responsibility to giving us all fair prices that we can easily understand.

s.read@independent.co.uk

twitter: @simonnread