British Gas under attack for 10% rise in servicing charge

MARY FAGAN

and GLENDA COOPER

British Gas plunged into fresh controversy yesterday with the revelation that central heating servicing prices for millions of customers will go up by an average 10 per cent. The company said that the changes, which will benefit annual revenues to the tune of pounds 25m, are needed in order to cover its costs.

The increase sparked furious reactions from the Labour Party and the Gas Consumers' Council, which called for an independent analysis of the company's costs. The increases will effect 3 million customers who have contracts with British Gas and millions more who call the company out occasionally.

David Wells, managing director of the Service division, said: "We aim to be the best, not the cheapest. Charges currently do not cover the cost of providing these services and clearly it is unfair to be cross-subsidised."

The company also admitted that it could not rule out further increases for some customers in future to even out regional variations. A spokesman said: "That is an expectation for the future. We will be more cost reflective as we go forward."

Gordon Brown, the shadow Chancellor, said he could not see how a 10 per cent rise could be justified. "Huge questions have to be asked about British Gas's management."

British Gas was also criticised by consumer groups. Philip Cullum, policy manager at the Consumers' Association, said: "Customers will be surprised and disappointed about a rise which is about three times the rate of inflation." He said there was a choice of service providers in this area adding: "We would encourage customers who aren't happy with this increase to look elsewhere."

But Ian Powe, head of the Gas Consumers' Council, expressed fears that families on low incomes, who could bear the brunt of the increases, could put themselves at risk in an attempt to cut costs. "An increase on this scale could tempt some to discontinue their annual service, which is so essential to their safety," he said.

Mr Powe warned people against "cowboy operators" and urged them to check that contractors were recognised by Corgi - the Council for Registered Gas Installers.

Mr Brown said that the increase raises the question of whether Ofgas, the industry watchdog, should intervene. But Ofgas, said that in a market such as servicing of domestic heating, it has no remit.

An Ofgas spokesman said: "In a competitive market, you cannot have people like us telling companies what they should charge. British Gas must be allowed to charge what prices they need. People can always go elsewhere and have service contracts with others."

British Gas has raised prices from pounds 78.20 to pounds 89.88 in Scotland and pounds 84.95 to pounds 93 in most of England and Wales. The increases, which take effect from 7 October, will have the greatest impact in Scotland, where prices will go up by almost 15 per cent. British Gas said that Scotland is cheaper than other regions for historic reasons.

Charges compared

British Gas:

Full annual service,breakdown and repair service, same day call if before 7.30pm: present three star costs: pounds 78.20 to pounds 84.95 From 7 October pounds 89.88 to pounds 104.40,[depending on area of country.]

Cheapest service [annual check and priority callout] rising from pounds 26 to pounds 30 [lowest band].

Servowarm (national):

Full annual service safety check, breakdown cover including parts and labour, priority call out, scale damage, pounds 25 voucher towards new boiler:pounds 89.96 [some regional variations].

Typical local independent contractor (Central Heating Services [covering Hampshire and Surrey]):

Service: Full annual check-up, breakdown cover including parts and labour, priority call out:: pounds 81.87