British Gas has been forced to stop pushing through changes in payments to 500 contractors its uses for boiler installations.

The decision to pause the new payment terms comes after several suppliers who work for the energy giant said the changes would leave them out of pocket.

British Gas has a workforce of 1,000 who install boilers – 500 are directly employed by the company, with the rest contract workers.

One supplier, who wished to remain anonymous, said: “The changes will see my pay drop by 40%. It’s just not worth it to be treated this way.”

Others said they would no longer work for British Gas because the cuts were financially ruinous.

According to sources close to British Gas, the issue comes when contractors have to buy extra parts for installations, compared with employee-installers who have access to a range of parts through their British Gas vans.

This ran the risk of increasing costs for British Gas which the company is desperate to reduce. It is also aimed at creating flat fees across the country.

A British Gas spokesman said:  “All of our engineers and partners are vital in delivering a great service to our customers.

“We recently proposed a simpler way for our contractors to charge us for boiler installation services.

“This would introduce standard and fair charges across the country to ensure good value for our customers.

“We always listen to feedback and will speak to any individuals who are concerned.”

British Gas, which is part of Centrica, has been losing hundreds of thousands of customers over the last few years, as competitors have eaten into its market share.

In July, bosses said 178,000 customers quit British Gas in the first six months of the year – following a further 742,000 who left last year.

Centrica also disclosed a loss of £446 million in the first six months of the year, compared with profits of £704 million a year earlier.

Following the poor results, chief executive Iain Conn quit the business, in a year that saw shares fall 70% and the dividend cut.

Simon Neville is PA City Editor.