British Gas puts up bill by 35%

British Gas this afternoon announced a 35 per cent increase in gas bills with immediate effect.

It also said electricity bills would go up by nine per cent, adding an extra £262.80 a year to the average dual fuel customer's bill.

The news puts huge pressure on Gordon Brown as energy prices are a main driver of the current inflation crisis while consumers will be left with less money in their pocket.

Households have already been hit by food and petrol price rises this year caused by rocketing oil costs.

It is the second increase in British Gas prices this year following a rise of 15 per cent in January and comes after increases of 22 per cent for gas and 17 per cent for electricity from rival EDF last Friday.

All the other main suppliers such as Southern Electric, Eon and npower are expected to follow suit shortly. Consumer groups said it could push average fuel prices to more than 1,500 a year by Christmas.

British Gas managing director Phil Bentley said: "We very much regret that we have had to make this decision at a time when many household budgets are already under pressure. The simple fact is we have entered an era of unprecedented high world energy prices."

Mr Bentley added: "The only answer to cope with higher energy prices, I'm afraid, is for all of us to be more energy efficient."

Earlier this month, Jake Ulrich, managing director of British Gas parent company Centrica, urged customers to wear sweaters to help keep warm.

Tim Wolfenden, head of home services at eSwitch, said today's increases had taken him by surprise, adding: "It is drastic news for a huge number of consumers. These are the highest rises we have seen in gas prices in years, if not ever. We could see prices going up for the next five years."

Steve Bloomfield, national officer at Unison, said: "Customers can ill afford another round of price increases. This latest increase will still hit vulnerable groups despite temporary measures to soften the blow."

British Gas, which has 11 million customers, says it only makes £3 profit on every £100 of gas it supplies. But its sister company Centrica Energy, which produces gas from the fields of the North Sea and Irish Sea, will tomorrow report strong profits running into hundreds of millions of pounds.