Scrap competition plan for gas supply, MP urges Government

PETER HAIN MP, chairman of Labour's backbench trade and industry committee, has called on the Government to abandon plans for competition in the domestic gas market after warnings by British Gas that prices for many customers will rise.

Mr Hain is concerned that competition will be introduced without a full debate in Parliament and he has demanded clarification of the issue from Michael Heseltine, President of the Board of Trade.

Legislation for the introduction of competition in gas supply to 18 million households has been shelved because of lack of parliamentary time. Ofgas, the industry regulator, is looking at other ways in which ministers could introduce competition. The main alternative is to lower the threshold at which new suppliers, including electricity companies and North Sea producers, may sell gas. At the moment the level is set at an annual consumption of 2,500 therms, which precludes all but the largest households.

Mr Hain said that lowering the threshold would encourage suppliers to sell to better-off homes. British Gas has said it loses money in supplying the smallest users and in a competitive market prices would have to rise to reflect the true cost of supply.

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