Energy Secretary Ed Davey faced accusations yesterday of sparking a “witch hunt” after he suggested that British Gas could be broken up to encourage competition and lower prices.

Mr Davey has urged competition authorities to “think radically” as they consider whether to launch a full-scale investigation into the energy supply market that could result in British Gas being broken up.

In a letter, Mr Davey pointed out that British Gas has 41 per cent of the market share in gas, and generated a profit margin of 11.2 per cent in 2012 on domestic supply.

He told the BBC’s Today programme: “I want them to think radically. They could decide to take no action or they could decide to go for a full-scale market investigation.

“There could be a number of remedies if they go down that route, including the breaking up of some of these companies if they have been shown to abuse their market power.”

GMB national secretary for energy Gary Smith said that while the union “has been clear that privatising and breaking up natural monopolies like water, gas and electricity supply has been a disaster” gunning for the destruction of the

British-owned company was not helpful.

He said: “This company employs and is committed to employing tens of thousands of workers in the UK.

“To suggest there is going to be significantly more competition which will drive down prices is rubbish. We have energy companies who are losing money selling energy to customers.

“What we need is proper regulation in these natural monopolies.”

The Campaign for Public Ownership said regulation was not the answer.

Director Neil Clark said: “It’s simple — renationalise.”