PM admits: there is a gas crisis

Tony Blair was forced to admit that there is something of a gas crisis over rising prices, to industrial users initially at least, when cornered on the subject in the House of Commons today

During PM Questions, Mr Blair admitted that Britain faced "difficulties" over soaring gas prices, although he insisted there was no shortage of supply.

Mr Blair said: "Of course there are going to be difficulties with gas prices because of the cold winter we are likely to have."

Michael Howard, the Conservative leader, claimed that failing to guarantee gas supplies was another example of the "incompetence" of a Government now unable to cope with the challenges facing the country.

He told MPs: "Four weeks ago the leader of the House (Geoff Hoon) when asked if the Government could guarantee energy supplies to business and domestic customers this winter said: ‘Yes, they can’. Does that guarantee still stand?"

Mr Blair replied: "There is not, as far as we are aware, a problem for domestic users. There is a problem for high level industry users. But the only way of dealing with that is to make sure the industry itself can get as much demand as possible from abroad."

The UK gas market has already come in for some criticism from the European Union, which found that gas prices in Britain - until recently a net exporter of gas - were higher than elsewhere in the EU.

The spot price of wholesale gas has risen 500 per cent in three weeks, to £1.70 a therm, already causing some of the UK's biggest power stations to reduce output. Businesses that use gas for fuel or as a raw material have warned that they could be forced to cut production or close, if bottlenecks in supply are not resolved.

The Met Office says that the UK could be on the brink of the coldest winter in a decade. Experts warn that consumers will feel a knock-on effect, with utility bills soaring by an average of £85 a year by January.

For advice and price comparisons on domestic gas supplies, visit the uSwitch website.