High time for less gas and more application

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I have a confession. I haven't paid a heating bill for nine months. I've tried to, but British Gas stubbornly refuses to send me a bill. I didn't notice at first. The realisation gradually dawned on me about Christmas time. All this lovely central heating and hot water, and no one asking any money for it. Still, it didn't exactly worry me. It wasn't until Easter that I thought I should do something about it.

I rang customer services and after the normal century listening to machines telling me my call was held in a queue and would be answered shortly, I got through to a real person. She was very nice at first. She politely listened to my problem, said it was nothing to do with her, and suggested I call another number.

When I said I didn't want to call another number, and couldn't she just pass on my details to the right department, and didn't she realise how public-spirited I was when I could keep quiet and probably enjoy free gas in perpetuity, and for god's sake did they want my money or not? ... she hung up on me.

Since then, I've made some progress. Defeated, I rang the new number and gave more details. I then received a letter acknowledging my existence, but no bill. That was a month ago and I still haven't received a bill. Meanwhile, the boiler continues to roar away very nicely.

There is a point to this story. Occasionally, you can get taken in by the British Gas public relations machine. You start to believe that maybe the company has changed. Maybe it has become the efficient global energy company it claims to be. Maybe it really is Britain's second most admired company after Marks and Spencer (a claim it was making only two years ago).

But then time and again with British Gas, it comes up with a blunder that makes a mockery of the carefully polished image and makes you suspect it is still a monumentally badly run organisation. Sometimes the blunders are big - like locking itself into contracts to buy gas that it does not want at double the market price; or giving monster pay rises to directors in a year when complaints are rocketing and profits plunging. Sometimes they are small - like its wilful determination not to disturb me with bothersome requests to be paid.

The company's imperfections should be kept firmly in mind as it screams with fury over the tough new regulatory regime pencilled in for it last week by the regulator, Clare Spottiswoode, director-general of Gas Supply. Ms Spottiswoode has clobbered British Gas with a much harsher than expected price review for its pipeline business, TransCo, which will have to cut its prices by 20 to 28 per cent. That is tremendous news for domestic customers, who can expect an annual saving of pounds 30. It is bad news for investors: the shares plunged 22 per cent last week.

The response of British Gas has been predictable. It calls the review "a smash and grab raid" on the shareholders and warns it could lead to 10,000 job losses and even jeopardise safety. But for all the company's bluster, it is tellingly silent on Ms Spottiswoode's methodology. She is confident that her new regime is intellectually robust - see page 3.

It all looks rather grim for British Gas. The company has few allies. It is on a hiding to nothing if it tries to make this a political issue. It has 1.7 million disappointed shareholders, yes, but it has many times that number of customers, who will welcome the review. Even after a disastrous year for the shares, the total return to Sids since privatisation in 1986 has been dramatically better than putting the money in a savings account.

British Gas should knuckle under and accept the review. Instead of endlessly fighting external battles - with the Government, with the regulator, with suppliers - it would surely benefit from a bit more introspection. The culture at head office seems always to be about finding someone else to blame for its troubles.

British Gas still has tremendous advantages over ordinary companies - huge market share, a natural monopoly, a great reservoir of skills and, although competition is being introduced, customer inertia works strongly in its favour.

Instead of whingeing about external problems, the top management should get on with exploiting the edge the company undoubtedly still has. And they could start by billing their customers.

Smith's twin migraine

It is crunch time for Bill Cockburn, the former Post Office boss who now calls the shots at WH Smith. He promised to complete his review of the troubled group by the end of May. I'm told we can expect an announcement by mid-June.

Parts of the business are doing all right. Newspaper wholesaling is a good cash cow. The US is showing encouraging growth opportunities. The music shops are doing well. But that still leaves two vicious headaches - the Do It All home improvement stores, which are owned jointly with Boots, and the core WH Smith chain.

Neither is a candidate for miracle solutions. Mr Cockburn has probably already taken the decision to extricate himself from Do It All, but he cannot just walk away from it. That is a recipe for plunging staff morale and is likely increase the already huge write-offs. Any exit is still going to be prolonged unless Boots comes to the rescue and buys out WH Smith's share.

The core Smith chain's problems are equally intractable. Mr Cockburn needs to reduce the worrying 38 per cent of people who enter and leave his stores without buying anything at all and increase the modest pounds 5 average spend of those who do fish out their wallets. The chain is losing customers to both the supermarkets and specialist retailers. Again, it is going to be a long haul.

Neither problem has a quick, headline-grabbing solution. Mr Cockburn may well choose to take a more dramatic step.

One candidate is the group head office in Sloane Square. With almost 400 employees, it cannot cost much less than pounds 25m a year to run. If Mr Cockburn wants to make a splash, he might consider closing it and running the entire business from Swindon, where the Smith chain already has its headquarters.

PS. This is my last column. After two years as City Editor, I'm off to work in Australia for a couple of years. Thank you for your calls, letters, ideas and criticisms, and thank you for reading. G'day and so long!

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