Huge hidden price hike looming for 100,000s of British Gas customers
British Gas has broken a much-publicised promise to keep hundreds of thousands of customers off expensive standard tariffs and give them lower bills, MoneySavingExpert.com can reveal.
Last year, British Gas vowed to "give customers a fairer, simpler deal and lower bills" by ending the practice of people automatically rolling onto pricey standard variable tariffs, and instead moving them onto a slightly cheaper fixed 'temporary tariff' – with 600,000 customers currently on one.
But since 1 January, it has quietly U-turned on this pledge and has revised the terms and conditions of the current 'temporary tariff', meaning it now tracks the new energy price cap – and will have identical rates to its standard variable tariff.
It will also mean big increases for customers rolling off the previous temporary tariffs. Those who were moved to it last April and haven't switched away will see a huge 18% rise. Taking the example of someone with typical usage, that means the bill rocketing from £1,064/year to £1,254/yr on 1 May.
The energy giant told us it is still committed to reducing the number of households on its expensive standard variable tariff, yet this latest move means customers are being placed on a tariff with the SAME high costs, just under a different name – and this will ultimately result in more people seeing higher energy bills.
On British Gas' temporary or standard variable tariff? Use our Cheap Energy Club to ditch, switch and typically save £300/yr.
Martin: 'You're being penalised for loyalty'
Martin Lewis, founder of MoneySavingExpert.com, said: "British Gas boasted it was changing, that it wanted to give 'fairer, simpler deals' so that those coming off fixed tariffs wouldn't be penalised for loyalty.
"Well that's turned out to be balderdash, baloney and any other b words you can think of. That policy didn't even last a year. They're now back on its most expensive standard tariff, just by a different name. And would you believe it – what a coincidence – this has happened just before the price cap and, therefore, British Gas' standard price is being hiked by 10%.
"If you're a British Gas customer, especially one not on a fixed-rate tariff, you're paying far, far more than you need to. For someone on typical use, other firms – including those with better customer service ratings – will charge you £250+ a year less, and it's the same gas, the same electricity and the same safety. So the most effective way to complain is not to write, it's to do a comparison, ditch and switch."
What is a standard variable tariff?
The costs of a standard variable tariff (SVT) – as the name suggests – are variable, so the rate you pay can change, but there are no exit fees or fixed end date. SVTs are usually energy suppliers' default tariffs and are often the most expensive. If you've never switched or your fixed deal is over, it's likely you're on one of these.
A fixed-price tariff essentially means the unit price you pay for your energy is set for a certain period, such as one or two years, but you may be charged a fee if you decide to switch before it ends.
I thought British Gas had scrapped its standard variable tariff?
Back in November 2017, British Gas announced it would stop putting new customers on its expensive standard variable deal from March 2018, though anyone already on the SVT would not be moved.
Instead, any customers reaching the end of a fixed deal without switching are rolled onto a fixed default tariff – named 'temporary'. These were originally 12-month fixed-priced deals and were typically cheaper than the SVT, though since 1 January these have been replaced by new default variable tariffs, which offer the same variable rates as the SVT and will mean customers are exposed to the same price hikes on 1 April.
Despite customers paying the same on both tariffs, British Gas insists the temporary tariff is different as it offers a 'fixed term' and continues to report customer numbers on these separately to those on the SVT.
I'm on a temporary tariff, what can I do?
If you're one of the 2.9 million on British Gas' standard variable tariff or the 600,000 on one of its default 'temporary' tariffs, you're free to switch providers or to a cheaper British Gas deal. Even the cheapest temporary tariff is £1,064/yr on average, so you can typically see savings of £134/yr by switching to the cheapest deals on the market.
Here's how your bill may change from 1 April, depending on which default tariff you were moved to:
- Temporary tariffs between April and August 2018 – your bill won't change until your fix is up. You'll then be moved to its new, more expensive temporary tariff with variable rates, increasing to an average £1,254/yr on 1 April.
- Temporary tariffs between September and December 2018 – your bill will return to the price you were paying prior to 1 January 2019 and will remain at this level until your fix is up.
- Temporary tariffs since 1 January 2019 – your price will increase at the same rate as the SVT, with the average price set to increase to £1,254/yr.
What does British Gas say?
British Gas told us its temporary tariffs are fixed term, which create automatic prompt points to encourage customers to switch. It also said it needs to align costs owing to Ofgem's price cap which changes every six months, so needed to change to variable pricing.
It confirmed its strategy to reduce customer numbers on its SVT remains the same, as it is no longer for sale and no new customers have joined it since March 2018.