British Gas has pledged to donate 10 per cent of its profits “for the duration of the energy crisis” to fund support for households struggling with rocketing bills.
Thousands of customers deemed most in need of help will receive an average of £750 per household in grants via the British Gas Energy Support Fund, the supplier said, in an announcement made the day before regulator Ofgem is expected to confirm plans to raise its price cap by 80 per cent to £3,553 in October.
The supplier’s pre-tax profits were £98m in the first half of 2022, meaning its initial contribution would be £9.8m, but it pledged to immediately boost this to £12m over the winter when energy usage peaks.
British Gas said it was offering the largest voluntary aid package of any UK energy supplier, with a total fund of £18m over the last eight months, including the new funding which will be backdated to the start of 2022.
“The current cost of living crisis requires all of us to think differently,” said Chris O’Shea, chief executive of Centrica, the parent company of British Gas Energy.
“Committing 10 per cent of our profits for the duration of the energy crisis will mean we can target help at those who need it the most. This increased investment in supporting our customers adds to the financial support and advice we already offer and ensures more grants will be available as we go into this winter.”
It follows a call for action to “protect businesses, livelihoods and jobs” in a letter to Boris Johnson, chancellor Nadhim Zahawi and both Tory leadership candidates.
The business group urged the politicians to consider Covid-style grants for small and medium-sized firms, a temporary cut in VAT to 5 per cent, and for Ofgem to be given more power to strengthen regulation, warning: “We simply cannot afford to see another month of the same old news.”
Rishi Sunak has vowed to spend around £5bn on targeted support for the most vulnerable through the benefits system if he enters Downing Street, but frontrunner Liz Truss has yet to commit to any further direct payments – instead favouring cutting taxes, halting green levies, supply-side reforms and targeted investment zones.
But on Thursday, the Resolution Foundation think tank warned that the Conservatives must “think the unthinkable” and consider raising income tax to fund further support for struggling households, calculating that a 1 per cent rise – largely funded by the wealthiest fifth of UK households – would raise £9.5bn a year.
Continuing the ongoing wave of pleas for direct government intervention, the consumer watchdog Which? urged ministers to raise the existing bills discount by at least 150 per cent or risk pushing millions of households into financial distress.
The government’s support package for all households must increase from the current £400 to £1,000 – or from £67 to £167 per month from October to March, it said.
Mr Zahawi insisted the previous day that “nothing is off the table” when it comes to action on soaring energy bills, but added that a freeze in the price cap would not deliver “targeted help” for those who need it most.
Labour has called on Tory leadership hopefuls Rishi Sunak and Liz Truss to expand the windfall tax on oil and gas companies – which both have rejected, despite polling by Opinium finding that 56 per cent of those who voted Tory in 2019 are in favour of the policy.
The Treasury is said to be looking at a range of options to present to Mr Johnson’s successor, including a proposal by energy firms for a fund allowing them to freeze bills for two years and pay it back over 15 to 20 years.
Scottish Power’s chief executive Keith Anderson has said the plan for a state-backed loan scheme – in which energy firms could draw from commercial banks – could cost around £100bn and was being “seriously considered” by the government.
But both leadership candidates have rejected that idea also, with Mr Sunak saying he was “nervous and sceptical” about the plan.
Additional reporting by PA
