British Gas puts energy bills up

8 July 2011 Last updated at 11:31 GMT British Gas director Ian Peters said the rises were fair and justified

British Gas, owned by Centrica, is putting up its domestic gas and electricity prices from 18 August.

Gas bills will rise by an average of 18% and electricity bills by an average of 16%.

The change will affect nine million households with the average dual fuel customer paying an extra ?190 a year.

The company blamed the rising wholesale cost of gas, which has gone up by 30% since last winter.

British Gas managing director Phil Bentley said its bills were being driven higher by the fact that the company buys 50% of its gas on the international wholesale market.

"We are buying in a global energy market and have to pay the market rate," he said.

"Rising wholesale costs is an issue facing all energy suppliers," he added.

The company said it had been selling energy at a loss for the past three or four months.

"After we put these prices up we will be making a fair return," Ian Peters, a British Gas director told BBC News.

"We are investing in the future energy supply of the UK... and energy efficiency in our customers' homes," he added.

'Healthy profits'

Centrica had already warned that it was likely to raise prices this year.

In May, the company said its customers were not paying enough to reflect the increased cost of gas on the wholesale markets, and that this would depress its profits for the first half of the year.

But this argument was rejected by Mike O'Connor, the chief executive of Consumer Focus.

"Wholesale costs have gone up but they are still around a third lower than their 2008 peak," he said.

"Yet in this time British Gas' prices alone have risen by around 44% on gas and 21% on electricity and suppliers have made healthy profits."

Last year, British Gas' residential business made ?740m.

Spending squeeze

In June, Scottish Power became the first of the big-six energy suppliers to announce another set of price increases.

It said it would raise the cost of gas by 19% and the cost of electricity by 10% at the start of August.

The latest increase in energy bills, which is likely to be followed by other big energy suppliers, comes after a round of increases last winter which saw British Gas put its charges up by 7% in December.

"Average household bill for a dual fuel British Gas customer will now go up from ?1,096 to ?1,288," said the price comparison service Uswitch.

"In total, British Gas customers will have seen their bills shoot up by ?258 or 25% within a year, taking them from ?1,030 a year to ?1,288," Uswitch added.

Richard Lloyd, of the consumers' association Which?, said the energy firm's announcement was an unwelcome move.

"Many people are already having to cut back on essentials because of the rising cost of living, and with energy bills rising further, this could be a cold winter for many," he said.

The Energy and Climate Change Secretary, Chris Huhne, said the increasing burden of energy bills highlighted the need to move away from generating electricity by burning gas and coal.

"The UK electricity market has to change, so that we escape the cycle of fossil fuel addiction," Mr Huhne said.

"Alternatives like renewables and nuclear power must be allowed to become the dominant component of our energy mix. "

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Go for British staff, firms urged

1 July 2011 Last updated at 15:58 GMT Iain Duncan Smith: "We have to ensure that our immigration system works in the interests of Britain"

Work and Pensions Secretary Iain Duncan Smith has urged UK businesses to "give a chance" to unemployed young Britons, rather than relying on foreign workers.

In a speech in Spain he said a "realistic promise" of work formed part of the government's "contract" with the British people.

Business groups said firms needed the "best people" and migrants often had a better work ethic and skills.

And Labour said what was needed was "proper action" rather than talk.

Under European Union labour laws, most EU citizens can work in the UK without restriction.

The government has introduced a cap on the number of skilled workers from outside the EU, in an effort to reduce net migration from about 200,000 a year to the "tens of thousands".

In a speech to the Spanish Foundation for Analysis and Social Studies in Madrid, Mr Duncan Smith said that more than half of newly filled jobs in the last year were taken by foreign nationals.

'Vulnerable group'

He warned that there is a "serious risk" that British people will not benefit as the economy recovers if firms "look elsewhere" for workers.

"If we do not get this right then we risk leaving more British citizens out of work, and the most vulnerable group who will be the most affected are young people," he said.

Continue reading the main story Most citizens of EU countries, as well as Switzerland, face no restrictions on working in the UKBulgarian and Romanian nationals need authorisation to work, with some exceptionsBritish firms are not allowed to discriminate against non-UK nationals from the EU over terms of employment, pay and working conditionsThere is a 21,700 annual cap on the number of skilled non-EU workers allowed into UKA points-based system is used to determine which skilled non-EU workers can enter UKThe cap excludes employees transferred by companies from abroad "But government cannot do it all. As we work hard to break welfare dependency and get young people ready for the labour market, we need businesses to give them a chance, and not just fall back on labour from abroad."

He said that while immigration played a "vital role" in helping bridge skills gaps, there were many foreign nationals in low-skilled or semi-skilled jobs that could easily be done by unemployed Britons.

"We have to ensure that our immigration system works in the interests of Britain, enabling us to make a realistic promise to our young school leavers," he said.

He said the immigration system must give unemployed people "a level playing field."

In 2007, then Prime Minister Gordon Brown pledged to create "British jobs for British workers" - but the Conservatives said that was illegal under EU law. Official figures suggested that most of the new jobs created since 1997 had gone to people who were not born in the UK.

The unemployment rate among 16 to 24-year-olds fell by 79,000 to 895,000 in the three months to this April but youth unemployment rates still stand at above 19%.

Labour say, after a year in his job, Mr Duncan Smith "should stop talking and start delivering".

'Great tragedy' Continue reading the main story

I do not think it is the role of employers to discriminate on that basis, it is the role of employers to take on the best person for the job”

End Quote Andrew Cave Federation of Small Businesses Shadow work and pensions secretary Liam Byrne told the BBC his party would increase taxes on bank bonuses to help pay for new work opportunities for 60,000 young people and reverse cuts to Border Agency staff which he said created the conditions for "illegal immigration to flourish".

"There are simply not enough jobs because the government is cutting back too far and too fast," he added.

"The great tragedy of all of this is that young people lose the habits of work and we as taxpayers have to pick up the bill."

Mr Duncan Smith was backed by Migrationwatch chairman Sir Andrew Green, who said he was "absolutely right".

"Employers have a responsibility to give young British workers a chance and the government must get a grip of immigration if they are to avoid abandoning a whole generation of young Britons on the dole."

'Glib'

But Andrew Cave, from the Federation of Small Businesses, told the BBC it was "quite a glib, throwaway political comment" from the minister.

He said for decades governments had removed links between the education system and business - and school leavers often did not have the skills or training needed.

"If you are an EU citizen you have a right to work here. If an employer discriminates against somebody on the basis of their nationality, and they are from within the EU, they could end up in legal deep water.

He added: "I do not think it is the role of employers to discriminate on that basis, it is the role of employers to take on the best person for the job."

Director General of the British Chambers of Commerce, David Frost, told BBC Radio 4's Today programme that employers needed the "best people".

"They expect young people to come forward to them who are able to read, write, communicate and have a strong work ethic and too often that's not the case," he said.

And Habib Rahman, of the Joint Council for the Welfare of Immigrants, said Mr Duncan Smith was issuing "a disingenuous and populist call for tighter immigration laws, when his perceived problem is from an area the UK government is powerless to affect - EU immigration."

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