Government 'failing to get a grip' on rising energy costs as British Gas announces 12.5% increase

Known as one of the Big Six suppliers, British Gas has defended its decision to increase electricity prices by by 12.5% by blaming "significant cost pressure" on the transmission of power which means it is selling "at a loss".

During the election, the Conservatives announced plans to introduce a cap on so-called default energy tariffs, after attacking the industry for offering "poor value" and failing to treat customers in a "fair and reasonable" way.

But it has since U-turned on the pledge, and following the British Gas announcement, Labour have accused ministers of failing to "get a grip" on soaring energy costs.

“Today’s announcement shows that the Conservative Government has still not got a grip on the broken energy market, with companies raising prices yet again," said Labour’s Shadow Minister for Energy, Alan Whitehead.

“This is why we need a Labour Government to radically transform the energy market, bring down energy bills and transition to a low carbon future.

“At the very least the Conservatives should institute the energy price cap which Theresa May promised during the campaign.”

British Gas is the last of the Big Six to increase prices after it promised in December last year to freeze tariffs until August, with its rivals moving to raise bills at the start of the year.

The Centrica-owned group said it will give more than 200,000 vulnerable customers receiving the Government's warm home discount a £76 credit to offset the tariff increase.

The Department for Business, Energy and Industrial Strategy (BEIS) has condemned the move, expressing "concern" that the price rise "will hit many people already on poor-value tariffs".

It has also stressed that the energy regulator Ofgem is working on proposals to improve safeguards for those on the poorest value tariffs.

However, consumer rights groups have been quick to point out this falls well short of the cap that customers were expecting in the wake of the election.

Alex Neill, of consumer group Which?, said: "Hard-pressed consumers waiting to see how the Government will tackle costly standard variable tariffs will be disappointed to see prices rising."

Meanwhile, the former Labour leader Ed Miliband, who proposed an energy price freeze in the 2015 election, took to Twitter to criticise ministers for their inaction.

He asked BEIS Secretary Greg Clarke: "Where is your energy price cap promised at election? Behind back of sofa/dumped/slipped your mind?"