Grangemouth Refinery Workers 'Reject Deal'

Two-thirds of workers at the Grangemouth oil refinery have refused to accept new terms and conditions, their union says.

Ineos had set a deadline of 6pm on Monday for the workforce to agree to its "survival plan", which amounts to a cut in pension entitlement, overtime pay and redundancy terms.

Without agreement and without fresh investment, management has said it could close the plant by 2017.

Ineos said the Scotland's biggest oil refinery, which has been shut down since last week because of the dispute, is losing £10m a month. 

Ineos Grangemouth site manager Gordon Grant talks with Unite's Pat Rafferty

Ineos group director Tom Crotty told Sky News that the risk of the refinery having to shut permanently was very real and that the workers needed to show commitment to persuade shareholders to increase investment.

He said: "The shareholders will consider the over all view of the workforce and we have to consider have we got enough people supporting the company to make it a viable proposition to restart the plant because we have serious safety concerns over this type of operation.

"It's a big site, three time the City of London, and to restart it we cannot take the risk of having to restart it and then stop it again. It's very risky.

"Until we know we have got the support of the people on the site we cannot do that."

Ineos sent out a letter on Thursday to all 1,350 worker at the plant asking them to either reject or accept the plan, and said that hundreds had agreed to the new deal.

However, according to Unite, 65% of workers had rejected the plan.

Ineos says if workers do not agree, the refinery will close

Unite's Scottish Secretary Pat Rafferty said: "The people who have so far rejected Ineos' ultimatum are the backbone of the plant, the people who keep the site running and the oil flowing.

"The people of Grangemouth and Scotland will be expecting Jim Ratcliffe and the Ineos shareholders to now take heed. Do the right thing tomorrow, drop the threats to the workforce, fire up the plant and get around the table at Acas.

"This is an overwhelming rejection of the company's blackmail and threats. This workforce has said that they want to secure a future for Grangemouth, free from fear, based on negotiation not confrontation."

A shareholders meeting is expected to take place on Tuesday to discuss the dispute.

The plant processes around 200,000 barrels of oil a day and supplies most of Scotland's fuel, however, Ed Davey, the energy secretary has said that the shutdown would not hit petrol and diesel supplies.

Ineos and Unite have been embroiled in a bitter dispute for weeks, initially over the treatment of Unite convenor Stephen Deans, who was involved in the row over a selection of a Labour candidate in Falkirk, where he is chairman of the constituency party.

He was suspended, then reinstated, and is facing an internal investigation, which is due to report on Friday.

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Rescue Plan Leaves Co-op With 30% Bank Stake

The Co-operative Group is to lose overall control of its banking arm amid a funding struggle, Sky sources have confirmed.

The Co-op will be left with only a 30% stake in the bank, according to Sky News City Editor Mark Kleinman.

An announcement is expected to confirm the deal next Monday, with City investors and bondholders filling the funding shortfall.

The growing likelihood of the self-styled ethical lender being controlled by predatory US hedge funds and blue-chip investors such as pension funds and insurers has triggered warnings over the bank's future ethos.

Meanwhile, the bank has confirmed a suspension of listing and trading on the London Stock Exchange of its subordinated debt securities.

"The group has stated that constructive engagement with bondholders is continuing and that Group remains confident that a proposal to recapitalise the bank can be agreed and put to bondholders," it said in a statement.

"The bank expects to request the suspension of the relevant securities to be lifted at the time that full details of a recapitalisation plan are announced."

The Co-op banking division operates as a mutual concept and currently has 4.7m customers. It includes an insurance arm for home, motor and pet cover.

On June 17 the bank, which was founded in 1872, announced it needed to raise £1.5bn to plug the capital black hole.

The bank now admits it needs an additional £105m to deal with increased provision for payment protection insurance (PPI) and other product mis-selling claims, and "expects that many elements of any recapitalisation plan will be materially different".

The recapitalisation from outside the mutual comes after the Co-op previously set aside £269m to compensate customers mis-sold PPI.

The recalculated funding shortfall is due to more customers coming forward as well as the Financial Conduct Authority providing fresh guidance on appropriate levels of compensation for customers.

The sum also includes a compensation for mortgage customers affected by a newly-discovered flaw in which they were charged only interest on their first mortgage instalment - meaning further payments were higher than they should have been.

Customers who took out Platform and Optimum mortgage products would have been affected although the bank has not yet notified any of them and further details of the scale of the issue remain unclear.

The bank said the overall new provision of up to £105m also took into account "the identification of a technical breach of the Consumer Credit Act".

This was thought to relate to failing to inform some loan customers that they could reduce their outstanding balance.

The overall provision from the bank also includes money put aside because of overdue payments and unpaid cheques.

Co-op disclosed the figures as it prepares for its recapitalisation plan - which will mean it has to publish financial details to the stock market.

The attempt to plug the £1.5bn black hole in its balance sheet through a painful fundraising will force losses on to owners of its bonds and leave it with a stock market listing - ending its prized mutual status.

Hedge funds represented by investment banks had earlier demanded the bank tear up its rescue plan, instead proposing an alternative plan of converting all its bonds into shares, giving it a bigger stake in the lender.

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London House Prices Leap 10% In Just A Month

London house prices are said to have soared to a new high this month, beating their previous record by nearly £30,000 and fuelling fears that the capital is overheating.

Property website Rightmove said asking prices in the capital saw an "unsustainable" 10% month-on-month increase in October, pushing typical asking prices in the capital to £544,232, leapfrogging a previous high set in July by more than £28,000.

It put much of the increase down to a "frenzy" of activity in parts of prime inner London as overseas investors look for a safe haven to place their cash amid the troubles of the eurozone, which is "leaving the shelves bare".

Westminster was named as London's strongest-performing house price area in October. Prices there have soared by 11.9% month-on-month to reach £1.6m typically.

Kensington and Chelsea and Hammersmith and Fulham also recorded increases of 11.8% in sellers' asking prices over the month.

In comparison, Rightmove said across England and Wales, asking prices rose by 2.8% month-on-month, following two months of falls, to reach £252,418 on average.

Prices across the country are 3.8% higher than they were a year ago, although in London they have shot up by 13.8% over this period, Rightmove said.

There are concerns that London's property market is overheating

Despite the overall upward march in prices, Rightmove said that "a bubble seems a long way off in the majority of regions".

The patchy state of the housing market was still shown, as four areas recorded year-on-year falls in house values - Wales, the North, the North West and the West Midlands.

The North recorded the biggest year-on-year drop, with asking prices falling by 2.2% to reach £145,094 on average.

Sellers in Wales have dropped their asking prices by the second biggest amount over the last year, with prices falling by 1.4% annually to typically reach £165,708.

The findings come after the Council of Mortgage Lenders reported last week that lending activity is at its strongest in five years and the Office for National Statistics said that UK house prices reached an all-time high of £247,000 in August, surpassing a previous 2008 peak.

Housing market activity among people with low deposits who have previously struggled to get on the property ladder is expected to increase further in the coming months, as a new phase of the Government's flagship Help to Buy scheme is fully fired into action.

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Nuclear Power Plant 'Strike Price' Agreed

A deal to build Britain's first nuclear power plant in a generation is expected to be announced today.

The Government has been negotiating with French-owned EDF Energy for more than a year over two new plants which will be built at Hinkley Point in Somerset.

But ministers are now understood to have agreed on the crucial 'strike price' which will give EDF a guaranteed rate for producing low-carbon electricity, raising concerns that this will hike up energy bills.

If wholesale prices drop below the strike price, investors who financed the project will be compensated. If prices rise above that level, EDF will pay the difference back to consumers.

The 'strike price' gives EDF a guaranteed rate for producing electricity

The two reactors proposed for Hinkley are a key part of the coalition's drive to shift the UK away from fossil fuels towards low-carbon power.

Energy policy has shot up the agenda since the party conference season, when Labour leader Ed Miliband pledged to freeze retail prices for 20 months.

Chancellor George Osborne removed another obstacle last week when he announced that Chinese firms will be allowed to invest in civil nuclear projects in the UK - even potentially taking a majority stake.

The funding agreement will almost certainly mean that the new reactor at Hinkley will be a mirror image of the Taishan plant in China.

Ed Miliband and George Osborne weighed into the energy debate last week

During a visit to the Taishan plant last week, Mr Osborne said: "It is an important potential part of the Government's plan for developing the next generation of nuclear power in Britain.

"It means the potential of more investment and jobs in Britain, and lower long-term energy costs for consumers".

But anti-nuclear activists living near the site say they have been misled by the decision process to site the plant at Hinkley.

Anti-nuclear campaigner, Theo Simon

Campaigner Theo Simon told Sky News: "We were told it would mean lower energy bills but actually the announcement of the strike price is really the last nail in the coffin of this project.

"We were told that it would provide cheap energy; we were told it would help us to bridge the energy gap in the early 2000s, and now it seems it wont be built 2025 and we will all be paying for the profits of EDF and Chinese nuclear corporations for the next 40 years."

The issue of prices has become even more controversial with the Big Six power firms unveiling hikes of more than 9% in electricity and gas prices.

Deputy Prime Minister Nick Clegg has raised concerns about the increases, telling Sky News' Murnaghan programme that the energy firms needed to justify prices increases.

"Clearly the companies need to justify the bill increases that they are now announcing," he said.

"It cannot be right that people who are really struggling - many, many people still struggling to pay their weekly, their monthly bills, where electricity and gas bills for this winter are a looming worry.

"It can't be right that those bills are increased for those households in our country and yet it is all rather opaque about what drives these increases."

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HS2 Rail Link: 'Cities Could Lose Up To £220m'

Some cities in the UK could lose as much as £220m if a new high-speed rail link is built, previously unseen figures have shown.

If HS2 goes ahead, it will leave more than 50 areas worse off - details that were omitted from a Government-commissioned report in September, it is claimed.

The full findings of the KPMG study into the north-to-south rail route were released under a Freedom of Information request by the BBC's Newsnight programme.

Last month, the Department for Transport hailed the study, which found the UK economy would be boosted by £15bn a year, with Greater London benefitting by £2.8bn and the West Midlands by £1.5bn.

The project has caused outrage in some areas

But the study shows many areas not on the line - which would connect London to Birmingham and to Manchester and Leeds - will suffer a fall in economic output.

The worst-hit areas will be Aberdeenshire (-£220m), Norfolk East (-£164m), Dundee and Angus (-£96m), Cardiff (-£68m) and Norfolk West (-£56m).

Professor Henry Overman, who was an expert adviser to HS2 Ltd, told the BBC it was obvious that as some areas reap the benefits of being better connected, other places away from the line will pay a price.

The link will cut journey times between the north and south

"When a firm is thinking of where to locate, it thinks about the relative productivity of different places, and the relative wages etc," he said.

"HS2 shifts that around. So if you are on the line, that makes you a better place that hasn't had that productivity improvement."

Alison Munro, chief executive of HS2 Ltd, told Newsnight the figures were unsurprising.

"What this is showing is that the places that are on the high-speed network ... those are the places that will benefit most from high-speed two," she said.

The first phase of HS2 from London to Birmingham

"But high-speed two isn't the only investment that the Government is making. Over the next five years it is planning to spend £73bn on transport infrastructure."

Earlier this month, the Treasury Select Committee said HS2 had "serious shortcomings" and should be put on hold.

It said a "more convincing" economic case was needed for the scheme, which is now estimated to cost £42.6bn - 17% higher than first thought.

A Department for Transport spokeswoman said: "These figures show that the new north south railway is vital to rebalance our economy and it boosts the north overall more than the south. Of course the line does not serve every city and region and these figures reflect that.

"But it is wrong to take them in isolation. HS2 is part of a much bigger boost to our transport system - £73bn in the next parliament, of which HS2 is just £17bn. This will massively benefit places HS2 will not serve long before the line opens."

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Energy Bills: Welby Slams 'Severe' Price Rises

The Archbishop of Canterbury has launched a stinging attack on Britain's energy firms, warning the latest round of price hikes seem to be "inexplicable".

Justin Welby insisted the so-called Big Six energy companies had an obligation to behave morally rather than to simply maximise profit.

His intervention, published in an interview with the Mail on Sunday, came after British Gas followed in the footsteps of SSE by announcing a 9.2% increase in prices.

The head of the Church of England, himself a former oil executive, said he understood the anger the rises had generated.

"The impact on people, particularly on low incomes, is going to be really severe in this, and the companies have to justify fully what they are doing," Mr Welby said.

Last week British Gas announced a 9.2% increase in prices

"I do understand when people feel that this is inexplicable, and I can understand people being angry about it, because having spent years on a low income as a clergyman I know what it is like when your household budget is blown apart by a significant extra fuel bill and your anxiety levels become very high. That is the reality of it."

The Archbishop urged firms to be "conscious of their social obligations", saying they had to "behave with generosity and not merely to maximise opportunity".

"They have control because they sell something everyone has to buy. We have no choice about buying it. With that amount of power comes huge responsibility to serve society," he said.

"It is not like some other sectors of business where people can walk away from you if they don't want to buy your product and you are entitled to seek to maximise your profit.

"The social licence to operate of the energy companies is something they have to take very, very seriously indeed."

Electricity prices are rising faster than those for gas

But the Church Of England owns a significant number of shares in energy companies.

Sky's Chief Political Correspondent Jon Craig said: "Justin Welby has now joined in this increasingly politically charged debate about energy prices - the only embarrassment really for the Church of England really is that it owns more than £7m of shares in Centrica and about £6bn of shares in SSE.

Craig added: "The remarks have been welcomed already by the Labour Party - but they will infuriate government ministers, the Prime Minister and the Energy Secretary."

An ongoing bitter political spat over energy has seen Labour leader Ed Miliband attempt to seize the initiative by pledging a 20-month-long price freeze.

But Prime Minister David Cameron has dismissed the idea as a "con", and encouraged consumers to switch suppliers to keep bills down.

But polls have suggested that Labour's promise is popular with voters, putting pressure on the coalition to respond.

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Cable Hits Back At Royal Mail Sale Critics

By Mark Kleinman, City Editor

Vince Cable, the Business Secretary, has rebutted claims that he cost taxpayers hundreds of millions of pounds by undervaluing shares in Royal Mail, arguing that the price of the privatisation should be assessed only after the Government has sold its entire stake in the company.

Sky News has obtained a letter sent by Mr Cable on Friday to the Business, Innovation and Skills (BIS) Select Committee, in which he dismisses concerns that the sale of the postal operator was spectacularly mispriced.

Mr Cable and the Government's investment banking advisers have been accused of undervaluing the company after seeing its share price rise by 38% on its first day of trading.

"Value for money has been central to our strategy as we have taken forward the sale of shares through an initial public offering," he wrote.

"Delivering value for money is about more than just the level of proceeds received on day one.

"Our long-term strategy to safeguard the universal service and deliver value for money for the taxpayer involves not only getting good value for the initial stake sold but also getting good value for the residual stake held by Government (30% of the Company assuming exercising in full the Over-allotment Option), and leaving Royal Mail in a strong, sustainable position capable of accessing the capital markets in the future."

Mr Cable said that the initial price range for the flotation, which attributed a value of between £2.6bn and £3.3bn to Royal Mail, was recommended by Goldman Sachs and UBS, the lead banking advisers, and endorsed by Lazard, which provided independent advice to ministers.

"In August 2013, as the date of the IPO approached, this list of potential investors was narrowed down to a focused group of approximately 20 investors, selected on the basis of feedback gathered during the investor engagement process and, in particular, their understanding of the risks inherent in the Company's industrial relations," he wrote.

The timing of the disclosure that unions would ballot Royal Mail workers for strike action, which was voted through this week, meant that some potential investors in the company indicated that they would opt not to buy shares, the Business Secretary added.

Royal Mail's share price has been mildly buffeted by the vote in favour of industrial action next month, but the stock continues to trade well in excess of the 330p-a-share offer price.

Mr Cable told MPs that the top end of the price range was set because it was "compatible with securing a stable, long term shareholder base as a foundation for achieving value in future sell-downs of the Government's retained stake whilst also taking into account the material risks associated at the time with the ongoing IR situation and the market risks arising from possible US default and the fact that the recent IPO of BPost (a recently-listed Belgian peer) was trading below issue price".

In his letter to committee members, Mr Cable argued that the flotation price placed Royal Mail in a similar dividend yield bracket to comparable companies, but said the "considerable media interest that was predicting a substantial first day premium" was a factor in the initial surge in its share price.

The Business Secretary also sought to counter claims by his Labour opposite number, Chuka Umunna, that Royal Mail's property portfolio could be worth more than £1bn.

"Taking into account the overall position of the surplus portfolio and the relative immaturity of these sites in terms of actual development, a combined value of £330m (as suggested in one of the equity research analyst reports) appears at the top end of any likely range," he wrote.

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Energy Bills: Small Firms Challenge 'Big Six'

No10 In 'Wear A Jumper' Row

Updated: 1:36am UK, Saturday 19 October 2013

Downing Street has been forced to backtrack after suggesting people struggling to pay their heating bills should put on a jumper.

Officials had to issue a clarification after initially saying wrapping up warm to avoid paying more was something people could "consider".

Labour, which has accused the Government of failing to act to address soaring energy prices, leapt on the comment as proof the Tories are "out of touch".

Leader Ed Miliband declared: "Their crime policy used to be 'hug a hoodie'. Now their energy policy appears to be 'wear a hoodie'."

The comment also quickly gained traction on social networking site Twitter, with various comical suggestions under the tag #cameronsheatingtips doing the rounds.

One user wrote: "Have your maid stitch a fine coat of swan feathers after your manservant plucks a swan for Sunday brunch."

Another advised: "Simply add a large measure of Courvoisier VSOP to your Vanilla Latte."

The row will have been exactly what Downing Street was seeking to avoid when it was quizzed about the Prime Minister's views on energy price hikes.

It came after Energy Secretary Ed Davey said on Thursday night that he wears jumpers at home to keep his bills down.

On Friday morning, Mr Cameron's official spokesman was duly asked whether people should "wrap up warm" and wear jumpers in the same way.

He said: "That's not a question that I have asked him. Clearly, he is not going to prescribe necessarily the actions individuals should take about that but if people are giving that advice, that is something that people may wish to consider."

The spokesman added: "His advice to people is to shop around for fuel prices."

Mr Miliband moved to capitalise on what was interpreted as a gaffe, even though No10 had tried to make clear Mr Cameron would not tell people what to wear.

He wrote on the Labour website: "These responses to the energy price rises show how little Mr Cameron and his Government stand up for the interests of hard-working people.

"He has no grip on the cost of living crisis and he seems to think the solution to this crisis is nothing to do with him.

"Energy bills are already up by an average £300 since he took office. The price hikes we are seeing point to a market that isn't working for consumers. Yet his solution to this market failure was to tell people to shop around and dress warmly.

"Of course people will rightly seek the best deal they can find but that will not fix a broken market, and will not bring the kind of relief that consumers and businesses need."

He added: "Never let the Government tell you that there's nothing they can do, or that it's your responsibility to sort out the problems in our energy market. They could act - they just choose not to."

Downing Street later had to issue a clarification, as insiders admitted the spokesman had used "loose language".

It said: "To be clear, it is entirely false to suggest the Prime Minister would advise people they should wear jumpers to stay warm.

"Any suggestion to the contrary is mischief-making. The Prime Minister would point people to a range of things being done to help people with their fuel bills, such as legislating to put everyone on the best tariff for them.

"He believes Labour's "price freeze" policy is a con - and certainly would not advise people on what they should wear."

Energy policy has been thrust to the heart of the political cost of living row after companies started announcing major hikes in prices ahead of the winter.

On Thursday, British Gas became the second of the "Big Six" to announce price increases after SSE led the charge with an 8.2% rise earlier this month.

Mr Cameron described the hike as "disappointing" and he and Mr Davey encouraged customers to switch to a cheaper deal with another firm.

Labour has said it will impose a 20-month freeze on prices if it wins power in 2015 but this has been dismissed by critics, including the Tories, as unworkable.

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Osborne Signs Nuclear Power Deal With China

By Mark Stone, China Correspondent, Taishan, Southern China

Britain's next generation of nuclear power is almost certain to be funded in part by the Chinese following an agreement between governments and operators in the UK and China.

The announcement was made by the Chancellor George Osborne on a visit to China's Taishan Nuclear Power plant in Guangdong, southern China.

Mr Osborne said: "Today is another demonstration of the next big step in the relationship between Britain and China - the world's oldest civil nuclear power and the world's fastest-growing civil nuclear power."

The agreement will almost certainly mean that a new reactor, already planned for Hinkley Point in Somerset, will be a mirror image of the Taishan plant in China.

The terms of the contracts with China and detailed figures for the proposed Hinkley Point project, including the so-called strike price between the companies and governments, are expected to be announced in the UK next week.

Taishan nuclear power plant in China

However, the broad agreement outlined by Mr Osborne will allow a consortium of French and Chinese firms to build the plant using a proportion of Chinese cash.

China's state-owned China General Nuclear Power Company (CGN), French energy company EDF and the nuclear firm Areva already work together at the Taishan plant, which is due for completion later this year.

Mr Osborne was given a tour of the Taishan plant, where he climbed up one of the unfinished nuclear reactors with CGN general manager Zhang Shanming and the CEO of EDF, Vincent de Rivaz.

"It is an important potential part of the Government's plan for developing the next generation of nuclear power in Britain," he said.

"It means the potential of more investment and jobs in Britain, and lower long-term energy costs for consumers."

Mr Osborne said the deal would mean more jobs and investment

China has the largest new nuclear power construction market in the world. It currently has 17 operating nuclear reactors, with a further 28 under construction.

UK treasury officials, travelling with the Chancellor, have been keen to stress the safety record of the Chinese civil nuclear industry and also the strict regulations under which the Chinese must operate.

"Any investment from any country has to comply with rigorous regulatory standards for safety and security," an official said.

Reports that China has asked for a future licence to operate nuclear power plants in the UK in return for their investment have not been confirmed by British officials.

Today's agreement followed a Memorandum of Understanding (MoU) signed in Beijing on Tuesday between Mr Osborne and his Chinese counterpart Ma Kai on civil nuclear co-operation.

The potential importance of a nuclear future was underlined by a report warning that Britain faced a higher risk of power shortages over the next five years as old generating plants began to close.

The Royal Academy of Engineering predicted that capacity would be stretched "close to its limits" from next winter by unexpected events like prolonged cold weather and unplanned plant outages.

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Energy Bills: British Gas Ups Prices By 9.2%

British Gas has become the second major supplier of household energy to announce a rise in its prices - by an average 9.2%.

The company said its electricity and gas prices will rise by 10.4% and 8.4% respectively from November 23 - affecting 7.8 million households.

Regional variations mean some Scottish customers will see prices rise on average by as much as 11.2% while those in London will suffer a 10.6% increase and households in Yorkshire will have a 10.5% lift.

The move comes despite a pledge by British Gas earlier this year to use an annual earnings windfall from the cold weather last winter to keep a lid on tariffs.

Angry customers took to Twitter to complain ahead of an already planned Q&A session with customer services director Bert Pijls.

Twitter users flocked to complain ahead of a British Gas Q&A session

One user asked: "Hey @BritishGas how many vulnerable people do you think you will push into fuel poverty whilst continuing to make billions in profit?"

The average increase is higher in percentage terms than that confirmed by rival SSE last week which is raising its bills by 8.2% from November 15, although research from price comparison website uSwitch suggested it brought their average dual fuel tariffs together in terms of cost.

The Prime Minister David Cameron described the latest increase as "disappointing" and urged households to try to save money by switching suppliers.

E.ON, Scottish Power, EDF Energy and npower are the other so-called 'big six' providers yet to make announcements on their winter pricing.

Electricity prices are rising faster than those for gas

British Gas said it was a hard decision for the company, which is owned by Centrica.

Its statement said: "We recognise that energy bills are a real worry for hard-pressed households, particularly at a time when the cost of living is rising faster than incomes.

"Today's announcement, which will add about £2 a week to the average dual fuel bill, reflects the increasing cost of: buying energy in global markets, delivering gas and electricity to the home, and the Government's social and environmental programmes, which are paid for through customers' bills."

It pledged that more than 500,000 of its elderly and most in-need customers would be protected by an automatic discount to offset the price increase throughout the winter - worth £60 per dual fuel household.

This was, British Gas said, in addition to the £135 that will be paid to many of these customers who qualify for the Government's Warm Home Discount scheme.

Ed Miliband used Labour's conference to announce his 'bill freeze' plan

Ian Peters, managing director of British Gas Residential Energy, added: "I know these are difficult times for many customers and totally understand the frustration that so many household costs keep on rising when incomes aren't keeping pace.

"We haven't taken this decision lightly, but what's pushing up energy prices at the moment are costs that are not all directly under our control, such as the global price of energy, charges that we have to pay for using the national grid that delivers energy to the home, and the cost of the Government's social and environmental programmes.

"Energy efficiency is the best way to keep bills down, and I encourage anyone who has not benefitted from them to go online and check if they are eligible."

The cost of energy bills sparked a political frenzy last month when the Labour leader Ed Miliband pledged to freeze prices for 20 months if his party won power at the 2015 general election.

Shares in both SSE and British Gas-owner Centrica fell sharply in the wake of the announcement, wiping a combined £2.7bn off the value of the firms.

Caroline Flint, Labour's Shadow Energy and Climate Change Secretary, said: "These latest price rises show clearer than ever why Labour's price freeze is needed.

"People are sick and tired of being left out of pocket because of David Cameron's failure to stand up to the energy companies.

"Britain's energy market isn't working for ordinary families and businesses. Labour's energy freeze will save money for 27 million households and 2.4 million businesses and our plans to reset the market will deliver fairer prices in the future."

In an interview with Sky News, Energy Secretary Ed Davey said: "I think British Gas is going to lose a lot of customers over this.

"British Gas in their press release is trying to blame the Government for social and environmental costs but we've looked at their figures and it looks like they're being very inefficient in managing these Government programmes."

Ministers have been encouraging households to switch suppliers as the best way of keeping their bills as low as possible.

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