'Disgraceful' 81% increase in British Gas direct debits for gas bills - even worse than announced price increases

11.54.00am BST (GMT +0100) Fri 12th Sep 2008

Martin Tod, Liberal Democrat Parliamentary Candidate for Winchester, has uncovered an apparent British Gas policy of increasing direct debits far above announced price increases.

British Gas announced a gas price increase of 35% in July. In August 2008, Mr Tod was contacted by local pensioners alarmed by having been asked for much higher increases to their direct debits than this. In one case, British Gas tried to increase a direct debit from £44 to £87 - a 97% increase. In another, they tried to increase a direct debit from £46 to £71 - a 54% increase. In response, Mr Tod emailed several thousand residents in the Winchester area to find out how widespread the problem was and was shocked by the response he received. The average increase for British Gas customers standing orders was 81% - more than twice the 35% price increase announced in July.

Mr Tod commented:

"British Gas appear to be ripping off direct debit customers to pay more to their bosses and shareholders. They're driving up direct debits faster than prices so they can put customers' money in the bank and make money on the interest. It's underhand and it's a disgrace. They're relying on people not checking their bills in detail. It's not their money and they should be fined - heavily - for this kind of abuse. It's hitting those on fixed incomes - particularly pensioners - very hard.

"Even people with a long history of credit balances with British Gas are being asked for direct debit increases far above the 35% announced in July. The average increase I was told about was 82%. One pensioner couple was asked to double their payments despite being £109 in credit.

"Since 2006, the interest income declared in their accounts by British Gas parent, Centrica plc, has gone through the roof - doubling from £40 million in 2006 to £83 million in 2007. Interest in their interim accounts for first six months of 2008 (£43 million) is 54% higher than the £28 million interest income reported for the first six months of 2007."

Mr Tod added:

"The dramatic increase in interest income from Centrica suggests this is a deliberate strategy. They're ramping up people's direct debits and chasing our cash really hard - even when their already astronomical prices don't justify it. It's bad enough that prices have gone up by a third. It's even worse that they're putting up people's direct debits by much more than that."

Many of the people who were contacted by Mr Tod were able to get their direct debit increases cut back after calling British Gas:

"It's definitely worth calling British Gas and asking them to cut the increase in your direct debit - particularly if you have a credit balance. Many people have been successful with this with quite a few getting the increase eliminated altogether. Sometimes British Gas have been claiming that their proposed increase is a 'mistake', but their financial results suggest it is deliberate."