22.12. Letter to British Gas

Hi everybody, I received a letter from the Managing Director of British Gas Tuesday this week, not a personal letter exactly, it was more like a general information letter that British Gas regularly sends out, but this one had a somewhat different tone than usual. In the letter British Gas commits to have an ‘Honest Conversation’ with their customers and they also encourage their customers to email them feedback to their new approach – their honest conversation! I must admit I have been thinking about writing to British Gas for a long time, and this feels like a good opportunity, but the things I am experiencing I am sure I am not alone with, so I thought I should make my feedback an open letter to British Gas, here on my blog, with a copy via email to them. My apologies to all my overseas readers who might feel that this particular topic doesn’t apply to them, please read on for a while; this isn’t as much about British Gas in particular as it is about financial hardship and what gas and electricity companies can do to ease the burden on their customers in times like these. Maybe this applies to where you live too?

Here is a copy of the letter I received (opens in a new window).



Dear Mr Bentley.

Thank you for your letter dated December 2011, which I received Tuesday 20th December.

As you write in your letter, the energy industry and British Gas has faced a lot of criticism recently, and I agree you do need to make things better for customers. I think it is encouraging that you want British Gas to lead that change and I hope you will succeed with making real changes that actually matters to us customers.

We hear a lot about financial hardship on the news, and it has been an ongoing topic for a long time. Perhaps the message isn’t really reaching the people that can make real changes, or perhaps this has become old, tired news that goes in one ear and out the other? I want to use this opportunity to put a face to this issue, to put facts and figures down in front of you so you can see what financial hardship really is, and what the last few years of increased gas and electricity prices have meant for people like me. I will present you with a lot of facts, figures and numbers, so hold on to your hat, the numbers are vital to understand what has happened to my economy the last few years – and many people in the same situation like me.

First a few personal details about me: I am a 47 year old woman, divorced and living on my own. My 25 year old son moved out to live on his own 6 years ago, he is working full time and is renting a flat not far from me. I am disabled and long term ill with no prospect of ever going back to work. My income is ‘Income Support with disability premium’ and I also get ‘Housing Benefit’ which is paid directly to the housing association which I am renting from and ‘Council Tax Benefit’ which goes directly to the Council. In addition to this I am in receipt of ‘Disability Living Allowance’, the ‘Mobility Component’, which goes directly to the charity ‘Motability’ to pay for the car I am renting from them, without the car I am unable to get out of my house when I am well enough to drive short trips round the neighbourhood, at other times, my car is unfortunately just parked outside my house. Finally, I get ‘Disability Living Allowance’ the ‘Care Component’, which is an allowance that is meant to pay for the extra expenses by being ill. My allowance goes mainly to pay for the extra expenses I have on food on my rather special diet, and to pay for petrol, which is not included in my car rent contract. This means the money I have coming in to my bank account are Income Support and Care Component of ‘Disability Living Allowance’ (DLA), the rest of the money is going directly to the different places I have just listed.

I have the same bills as everyone else has; but by living alone I can’t share the cost of running a house with anyone else, the cost of heating my house, having a phone, Internet connection, insurance, TV licence, electricity etc; it is cheaper to share these costs with someone else who also have an income, but it just happens that I haven’t found anyone to share my life with after I got divorced, so I have to use a rather big part of my benefit to cater for these costs compared with a two-person household. From April this year I get £96.35 per week in Income Support and £19.55 per week in DLA. This is meant to cover all expenses people usually have on a salary except rent and council tax, which is paid for directly. That’s £463 every 4 weeks.

My list of bills looks like this:

• Gas
• Electricity
• Water
• Phone and Internet
• Mobile Phone
• Content Insurance
• TV licence
• Petrol
• Food and other consumables
• Clothes/shoes
• Taxi/minicab expenses when I can’t drive myself (I have a London Taxi Card)
• Medication I don’t get on free prescription
• Long term replacement of things like my glasses, electric goods and other necessary things for myself and the house that eventually needs replacing

(I haven’t taken the car in here, as the benefit I get covers all expenses except petrol and is paid directly.)

As you can see, there are a few things on my list you probably would have put there yourself, if you had made this list for your wife, or for a family member. Things like haircuts and other beauty treatments, holidays, presents for Christmas and birthdays, books, newspapers, eating out and other treats, …oh, I could make a very long list of things most people take for granted, but just isn’t possible to afford when living on Income Support.

So what’s all this got to do with British Gas you might wonder? I am getting there, let me just present you with how much my benefit has increased the last few years, it is increased in April every year:

2006: £81.95/w
2007: £84.40/w
2008: £86.35/w
2009: £91.80/w
2010: £93.45/w
2011: £96.35/w

In 2006 a 4 weekly payment of Income Support was £327.80, compared to £385.4 in 2011, an increase of 17.5% over those 5 years or an average of 3.5% per year. In the same period my Direct Debit for gas went up from £26 per month to £64 per month. That is an increase of 146% !! Here is the whole list of my gas and electricity consumption for these 5 years, (click to open in a new window) and what I was billed this period. As you can see, my gas bill was actually lower than my electricity bill for most of 2006 and 2007, and my electricity bill has stayed fairly the same the whole period despite your prices going up, although electricity not as much as gas prices.

 Mr Bentley, how can you justify gas prices like this? I know you have special tariffs for people on low income and benefits, it is called Essential Tariff, and I heard about it just by sheer coincidence on the news. I got on the phone to your company the next day and switched, it was very easy and they didn’t even want any proof of income, which I found rather strange as I am used to having to document everything whenever applying for anything related to income. I got the Essential Tariff in July 2008 and expected that to have an impact on my utility bills; sadly your prices rocketed at the same time and have continued to do so – as you can see from my bills.

The government has talked a lot about bringing pensioners out of fuel poverty, but I have not heard much about younger people like me, disabled and long-term ill, living on benefits, in terms of fuel poverty. Did you know that an elderly person living on state pension, without any savings, in total including pension credit gets £137 per week? And usually at least £200 in Winter Fuel Allowance per year? And still it is being said that state pension is too low to live on, that you are below the poverty line on a state pension. My Income Support is £96.35 per week just to compare. When you live on Income Support you can get so-called Cold Winter Payments, but the rules for that is quite strict as it has to be zero or below for 7 consecutive days, so if it is really cold for 6 days and then a day with for example 4 degrees, they start counting the days from day 1 again. I did receive a couple of payments last winter, but over the 10 years I have had Income Support, my very first payments was the winter 2009/2010.
OK, back to fuel poverty: if I take my total income after paying rent and council tax per year, I get £6026. If I take your current prices, what I currently pay by Direct Debit set by your company, the yearly expense for gas is £768 and electricity £348. That gives me a total of £1116 for my heating and electricity. The government has stated that fuel poverty is defined as those who have to spend 10% or more of their income to achieve adequate warmth and light. I spend 18.5%. If I take away the DLA benefit, which is strictly meant to top up my income because I am ill and in reality is being used to pay for special diet food and petrol, the sums are even worse, my yearly Income Support is £5010 and the percentage I then end up with for fuel is 22.2%.
These are the hard facts, Mr Bentley, and there is absolutely nothing I can do to change that. I can’t go out and take an extra job to pay for the increase in my heating bill as I am not able to work even part time, that’s why I have been on disability benefits for the last 17 years and will be for the rest of my life until I get a state pension. I don’t have any influence over how much my benefit increases every year; I can’t go on strike like the staff on London Underground do when they are not happy with their pay deals….can you imagine people on disability benefits on strike to get higher benefits so we can manage our bills….who would even care?
The term Fuel Poverty is a real thing, a tool, a way of measuring what people have left to live on when your basics like rent and fuel are paid. Somewhere, something has gone wrong here, there is no good having this tool if no-one is using it.

Back to your letter, where you list 5 steps people can take to save money on their bills with you. I appreciate that some people are a bit slow to react to letters from you and information in the media, but nothing here is new to me, sadly, so I won’t be able to save any money as far as I can see.

Number 1: “Right tariff for you”: I am on the Essential Tariff; I really hope it is the cheapest tariff you got, it was presented as that when I switched from my online tariff. The problem I have with it is that when I go on comparison websites to see if I can get a better deal, something I do regularly, this tariff never comes up, on any of the websites. Why is that? Is the Essential Tariff a secret? I know what I pay, it says so on my bill every month, but it is difficult to compare with other tariffs and with other companies, so my first plead to you is to get the Essential Tariff included on comparison websites.

Number 2: “Insulate your home”: I had my loft insulated on the Warm Front Scheme, free of charge, in 2003. I realise I was quite early on compared to many people, but I responded to media information and got it sorted. Unfortunately I live in a Victorian property and have no cavities in my walls so cavity insulation is not available to me.

Number 3: “Take control over your Payments, moving to Direct Debits can save you up to £67 and you can set the payments to suit you.”: I have paid by Direct Debit since I became a customer with you 10 years ago. The bit about setting the payments to suit me baffled me a bit. Do you mean payment holidays? You see, my Direct Debit is set by your company, and it is your computer system that determines what I need to pay and it is assessed every 4 months. Because we had such an extremely cold winter last year, your computer system thinks I am going to use the same amount of gas this winter and has adjusted my payment accordingly so I am now £136 in credit. I can’t see why I should be that much in credit in December, I tried your credit refund calculator asking to get £100 refunded, and the calculator then told me that my next Direct Debit as a consequence would be increased from £64 to £78! This is of course because your computer system has calculated that my gas usage for this winter will be the same as last winter, the coldest winter in 130 years. I can see from my usage so far that I already have used considerably less gas than last year, but how do I tell your computer system that? Wouldn’t it be fair if my account was in debit during the winter and in credit during the summer? Am I really meant to have an account in credit all the time, effectively lending you money, rent free?? Here is a list of my account for the last 2 years, (click to open in a new window) showing that my gas account was £969.30 in credit over 16 months and £195.47 in debit over 6 months during 2010-2011. I have phoned a couple of times to get my Direct Debit adjusted, but your computer system keeps adjusting it in your favour every so often and with Direct Debit I have NO CONTROL, your computer system just help itself to the money it feel I need to pay every month from my account. This is very frustrating, and the only solution I can see is to go over to pay for what I use every month. That means huge bills in the winter and hardly anything in the summer, not ideal with my income, I like spreading the cost, but is it fair, Mr Bentley, that I should lend you all this money? So this is my next question to you; can you do something with the Direct Debit system so it allows me to have a greater control and so I don’t need to be in credit all the time?

Number 4: “Energy Smart”: I got my free electricity monitor a couple of years ago, but I think by then I had already shaved all I could by being smart with my usage. As for monthly bills, I really appreciate them. I started with monthly bills in January 2010, I submit my readings every month and despite the teething problems you have had with this system, especially last year, I am really happy with this. I also print off my graphs and save them so I can compare with previous years, although last year’s graphic was much better than what you have changed to now. Here is your new version for my gas usage. (click to open in a new window)

Number 5: “A simple thank you – Nectar Points”: I signed up to Nectar points with you as soon as that became available so I already receive them, thanks for that, they are welcome, every pound counts.

So you see, Mr Bentley, your list of ‘simple ways to save money this winter’ doesn’t really apply to me, my bill will stay the same unless you do something to the price of gas.

When it comes to how much gas I use, I realise I use more than most one-person household. Due to my illnesses, one of which is arthritis, I need to have a reasonable warm house. I am home all day, every day, except for my quite frequent day trips to different hospitals around London. People who go to work 5 days a week can turn down their heating when they leave in the morning and turn it up again when they come home; I don’t have that possibility – I don’t have an employer to keep me warm during the day most of the week. I do however use the timer on my boiler, the heating goes off an hour before I go to bed and come on half an hour before I get up. I also make sure to adjust the water temperature according to the temperature outside as I have a combi boiler. My boiler is 10 years old, and is probably wasting some gas compared to new boilers, but my housing association expects boilers to last for 15 years so I can’t see mine being replaced for another good few years. I keep the thermostat as low as I can manage, and as I am writing this to you, I am wearing…let me count….4 layers; vest, polo neck jumper, thin cardigan and a fleece jacket. I have a throw over me here on my sofa, and my cat is lying next to me keeping me warm too. And still I use 22.2% of my Income Support on fuel.

Mr Bentley, you asked for feedback and you said your Honest Conversation starts now. I have been as honest as I can and perhaps more personal than you expected, but as I said in the beginning of my letter; I wanted to put a face on the issue and give you real facts - fuel poverty is about real people in real situations and it is not an issue that goes away with small talk at dinner parties. What can your company do to help me and other people in my situation survive economically and still be able to pay our bills? Heat or eat is not a punch line, it is a reality.

I look forward to hearing from you.

Kind regards,
Helene U. Taylor