Ed Davey suggested British Gas had charged one of the highest prices to domestic customers in the last three years. Photograph: Getty Images.
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Six questions answered on Centrica's share price fall after suggestions British Gas could be broken-up

Why is Ed Davey investigating British Gas’s profit margins?

British Gas owner, Centrica, suffered a fall in share price today after the UK energy secretary investigated its profit margins and suggested the company may have to be broken up. We answer five questions on the potential break-up of British Gas.

By how much has Centrica’s share price fallen?

The share price fell by 3 per cent today after energy minister Ed Davey questioned the company’s dominance in the market. British Gas currently has 41 per cent of the domestic gas supply market in the UK, the largest share of any of the so-called "big six".

Why is Ed Davey investigating British Gas’s profit margins?

Davey said in a letter that profit margins made by the "big six" energy suppliers when supplying gas were actually higher than previously thought. In particular, he highlighted the high profit margin of British Gas and its large market share. He added that British Gas had charged one of the highest prices to domestic customers in the last three years.

He estimated that if gas margins were similar to electricity households would save on average up to £40 a year. Davey also provided information that showed Centrica saw profit margins of 11.2 per cent for its gas business in 2012. He suggested a market investigation.

Why has Davey said British Gas may have to be broken-up?

If an investigation found evidence of a monopoly this could result in the company being broken-up. As well as asking the competition authorities to investigate the profit margins as part of an ongoing review, he has written to energy regulator Ofgem and the Competition and Markets Authority asking them to consider all possible avenues "including a break-up of any companies found to have monopoly power to the detriment of the consumer".

What else has Davey said?

Mr Davey told the BBC: "This is a significant issue for consumers out there who are struggling with their energy bills."

In his letter he says: "Analysis of the profit margins of the energy companies shows that the average profit margin for gas is around three times that of electricity.

"There is also evidence that British Gas, the company with the largest share of the gas domestic supply market, has tended to charge one of the highest prices over the past three years, and has been on average the most profitable."

What has British Gas said about Davey’s comments?

In its statement, British Gas said: "We welcome this and have complied with all the requests for data which we have received.

"The data referred to in the Secretary of State's letter has already been fully disclosed and in the public domain for a number of weeks."

What have the independent experts said?

Some have queried why this publicly available information hasn’t been investigated by Ofgem already.

However, Richard Lloyd, the executive director of the consumer rights group Which?, told the BBC the intervention was hugely significant and suggested Davey agreed with Which? that the structure of the biggest energy companies is partly to blame for the price hikes.

"It will now put huge pressure on the regulators, in a matter of weeks, to announce that they're taking the first steps towards potentially breaking up the very biggest of the big energy companies," he added.

Heidi Vella is a features writer for

Photo: Getty Images
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No, IDS, welfare isn't a path to wealth. Quite the opposite, in fact

Far from being a lifestyle choice, welfare is all too often a struggle for survival.

Iain Duncan Smith really is the gift that keeps on giving. You get one bile-filled giftbag of small-minded, hypocritical nastiness and, just when you think it has no more pain to inflict, off comes another ghastly layer of wrapping paper and out oozes some more. He is a game of Pass the Parcel for people who hate humanity.
For reasons beyond current understanding, the Conservative party not only let him have his own department but set him loose on a stage at their conference, despite the fact that there was both a microphone and an audience and that people might hear and report on what he was going to say. It’s almost like they don’t care that the man in charge of the benefits system displays a fundamental - and, dare I say, deliberate - misunderstanding of what that system is for.
IDS took to the stage to tell the disabled people of Britain - or as he likes to think of us, the not “normal” people of Britain -  “We won’t lift you out of poverty by simply transferring taxpayers’ money to you. With our help, you’ll work your way out of poverty.” It really is fascinating that he was allowed to make such an important speech on Opposite Day.
Iain Duncan Smith is a man possessed by the concept of work. That’s why he put in so many hours and Universal Credit was such a roaring success. Work, when available and suitable and accessible, is a wonderful thing, but for those unable to access it, the welfare system is a crucial safety net that keeps them from becoming totally impoverished.
Benefits absolutely should be the route out of poverty. They are the essential buffer between people and penury. Iain Duncan Smith speaks as though there is a weekly rollover on them, building and building until claimants can skip into the kind of mansion he lives in. They are not that. They are a small stipend to keep body and soul together.
Benefits shouldn’t be a route to wealth and DWP cuts have ensured that, but the notion that we should leave people in poverty astounds me. The people who rely on benefits don’t see it as a quick buck, an easy income. We cannot be the kind of society who is content to leave people destitute because they are unable to work, through long-term illness or short-term job-seeking. Without benefits, people are literally starving. People don’t go to food banks because Waitrose are out of asparagus. They go because the government has snipped away at their benefits until they have become too poor to feed themselves.
The utter hypocrisy of telling disabled people to work themselves out of poverty while cutting Access to Work is so audacious as to be almost impressive. IDS suggests that suitable jobs for disabled workers are constantly popping out of the ground like daisies, despite the fact that his own government closed 36 Remploy factories. If he wants people to work their way out of poverty, he has make it very easy to find that work.
His speech was riddled with odious little snippets digging at those who rely on his department. No one is “simply transferring taxpayers’ money” to claimants, as though every Friday he sits down with his card reader to do some online banking, sneaking into people’s accounts and spiriting their cash away to the scrounging masses. Anyone who has come within ten feet of claiming benefits knows it is far from a simple process.
He is incredulous that if a doctor says you are too sick to work, you get signed off work, as though doctors are untrained apes that somehow gained access to a pen. This is only the latest absurd episode in DWP’s ongoing deep mistrust of the medical profession, whose knowledge of their own patients is often ignored in favour of a brief assessment by an outside agency. IDS implies it is yes-no question that GPs ask; you’re either well enough to work or signed off indefinitely to leech from the state. This is simply not true. GPs can recommend their patients for differing approaches for remaining in work, be it a phased return or adapted circumstances and they do tend to have the advantage over the DWP’s agency of having actually met their patient before.
I have read enough stories of the callous ineptitude of sanctions and cuts starving the people we are meant to be protecting. A robust welfare system is the sign of a society that cares for those in need. We need to provide accessible, suitable jobs for those who can work and accessible, suitable benefits for those who can’t. That truly would be a gift that keeps giving.