As part of a major cost cutting scheme, British Gas owner Centrica announced it would cut more than 6,000 jobs. It made the announcement in its half year results on 30 July. The company said that, taking growth in account, the net reduction of total roles would be around 4,000.
Centrica told investors it is trying to stick to its strategic plan to cut around £750m in spending each year until 2020. Other cost cuts include the shrinking of annual upstream oil and gas investments by almost 50%.
Adjusted profit in the energy supplier's British Gas division jumped by 44%, lifted by the profit from residential energy supply, which doubled in the half year to 30 June due to a colder spring. Centrica reported its group revenue edged down by 2%, while pre-tax profit was up by 3% to £1bn.
Director of consumer policy at uSwitch.com, Ann Robinson said: "The news that British Gas is predicting a surge in profits will be a hard pill to swallow for its customers, especially as so many went cold last winter to cope with sky-high bills."
Gas price cuts
Since January 2015, British Gas has announced two rounds of 5% gas price cuts, but although the company was the only Big Six energy provider to do so, Robinson pointed out that the combined cuts "will lower its average dual fuel bill by just 6%". She said: "Suppliers must do the right thing by passing on savings to help consumers, who are struggling with bills which are £700 a year higher than they were ten years ago."
Wholesale prices paid by gas and energy providers have plummeted over the last two years, customers generally not seen their bills decrease. Robinson argued that the energy firms should cut their bills by double-digit percentages. She added: "British Gas should again lead by example by making a 5% cut to both standard gas and electricity tariffs, particularly when it is forecasting increased profits."
Big Six overcharging
The Competition and Markets Authority found that the Big Six energy providers overcharged millions of British customers after an investigation and coined the possibility of a national price cap based on its findings. The CMA also said that the market does not offer enough clarity to customers about switching providers.
Robinson stated that switching providers could help customers in some cases. She said: "Interestingly, British Gas customers could be a staggering £252 a year better off by switching to a new fixed price deal offered by Sainsbury's Energy, which it runs on behalf of the supermarket."