Energy bills to soar again

British Gas today warned of soaring prices as families were told to prepare for a £400 rise in annual bills.

Energy bills could go up by as much as 40 per cent because of massive increases in the cost of oil, gas and coal on global markets. Centrica, the parent company of British Gas, today released a trading statement in which it said it would "reset residential prices".

The company, which made £1.95 billion profit last year, claims its earnings are being hit by the wholesale price of gas and oil.

It said it had no option to push up household prices for gas and electricity if it were to keep its profits up.

Warning that operating profit will be down this year, Centrica said in today's statement: "Wholesale gas and power prices in the UK remain stubbornly high."

The news of higher bills is another blow to families already struggling with the higher cost of mortgages, rising grocery bills and soaring petrol prices.

It creates more uncertainty in the economy as inflation rises and the Government struggles to keep a cap on wage rises following the 14pc pay deal struck by Shell tanker drivers.

Energy minister Malcolm Wicks admitted that significant increases in gas and electricity prices are "very, very likely".

Asked if he agreed with the predicted rise of 40 per cent, or £400-a-year, he said: "I'm worried about the scale of it. I can't give you a figure because actually no-one knows." He also rejected claims that the UK was facing particular difficulties, saying: "Our prices for electricity are still lower than in many parts of Europe."