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.