British Gas cancels abusive Prepayment Top Up hike
People power triumphs over corporate power as public pressure forces British Gas into a U-turn over its decision to raise the minimum top up by 500%. Selectra brings you the details below.
What did British Gas want to do with the minimum top up?
On New Year's Day, the company increased the minimum top up amount it would accept for energy from £1 to £5. The move was met with fear and panic by customers across the country.
The Big Six supplier, which counts around 9 million homes and 400,000 businesses as customers, said it had introduced the change “in response to increasing transaction costs.”
British Gas justified the move by pointing the finger at several other suppliers which also set a £5-minimum top up level and claiming that the number of its prepayment customers regularly topping up with less was “only a small number”.
For some on low incomes or those affected by fuel poverty, the rise meant choosing between spending their limited budget on energy or on food. It meant not being able to turn on the lights or the heating if they needed to buy something to eat after their emergency credit ran out.
Coming in the dead of winter and just after Christmas, the most financially difficult time of year for many people, the supplier’s decision forced a stark choice on its most vulnerable customers.
Who uses prepayment meters?
More than five million homes use prepayment meters in the UK.
About 20.5% of these customers are in fuel poverty, whereby a higher portion of their income is devoted to energy costs, according to government figures.
They are often on unpredictable incomes and may already be in debt. Being able to count topping up with small change can give people the flexibility to ration their energy use until the next payday.
Poverty is expensive as it often limits the choices available to those living on low incomes, cheaper options may be unavailable due to long-term commitments, costly outlays or prohibitive travel costs.
In the case of energy, people who use prepayment for their gas and electricity are already penalized with higher costs compared to those who can afford to pay via direct debit or with other methods.
Citizens Advice reported in 2018 that 400,000 people in 140,000 homes, were regularly unable to top up their meters. Thirty-three percent of those homes had children and 50% had someone living with a mental health condition.
One British Gas customer told the campaign that he uses a pre-pay meter because he can’t afford direct debit.
“Five pounds may not sound a lot, but when you’re scraping together coppers just to make up the money, it can be the difference between a hot meal and going hungry,” he said.
Why did British Gas reverse its top up decision?
Preet Kaur Gill, MP for Birmingham Edgbaston, launched a petition calling for the change to be scrapped on the 38 Degrees website and sent a letter to the company criticizing its decision as “the height of social irresponsibility.”
Although its full-year profits for 2019 were the worst ever for British Gas, the petition argued that a company “which last reported profits of £466 million should not be increasing the burden on its most hard-up customers.”
“We ask that British Gas does the responsible thing and reverses this decision,” it said.
The petition was signed by about 91,000 people and it was presented directly to the CEO of British Gas by staff from 38 Degrees who also explained the experiences of those suffering from fuel poverty to him.
How did British Gas react?
British Gas said it would work with Payzone and the Post Office to reduce the minimum top up to £1 for customers using these facilities to feed their prepayment meters.
Announcing its reversal of the decision, the company said that in 2019 it had spent £158m on nearly 600,000 vulnerable households and offers more help to these customers than any other supplier.
British Gas is owned by Centrica and Sarwjit Sambhi, chief executive of Centrica Consumer, said the group had “listened closely to feedback after making this change.”
“The aim of this move was to keep our costs down in order to offer our customers the best value, but I am happy to change this decision whilst we continue to look at ways that we can help our most vulnerable customers,” he said.
Preet Kaur Gill MP said it was a “vital win” and that she was “very happy” the minimum top up rise had been revoked.
“This has revealed the extent of the fuel poverty crisis in Britain today, with far too many struggling to find even £5 to heat their homes,” she said.
“I hope that other energy providers will now follow British Gas's lead.”
“There is much more that needs to be done to tackle the fuel poverty crisis and I will continue to campaign for those who are struggling and at risk of falling into hardship."
If you’re on a low income see the table below for links to our guides on the schemes available to help you with your energy needs.
|Warm Home Discount||A one-off rebate of £140 applied to energy bills in Autumn and Winter for those who qualify.|
|Winter Fuel Payment||An annual grant of between £100 and £300 for retired and elderly people.|
|Cold Weather Payment||A one-off payment of £25 when temperatures are 0ºC or below for seven days or more.|
|Energy Company Obligation (ECO)||An initiative to lower heating bills for households that qualify for the scheme.|
|Pension Credit||A tax-free, means-tested benefit designed to supplement monthly household income for retirees.|
|Energy Company Schemes||Some energy suppliers run their own schemes - and often you don’t need to be their customer to qualify.|
British Gas may have been guilt-tripped into doing the right thing this time but it has a reputation for poor customer service and, if you’re on a low income, it’s not the place to go for the cheapest deal on your energy.
Luckily, here at Selectra we can offer you simple and reliable advice about finding the most affordable energy supplier for your needs. Click here to find out how it works or give us a call today and we’ll call you right back.