Spottiswoode attacks British Gas `machine'

Clare Spottiswoode, the gas industry regulator, yesterday launched an astonishing attack on British Gas, accusing the company of attempting to undermine her as part of an orchestrated campaign to fightprice controls on its pipeline business, TransCo.

Ms Spottiswoode, the director general of gas supply, said she had heard that the British Gas board, led by chairman Richard Giordano, had commissioned a psychological profile of her as part of the campaign. Ms Spottiswoode also referred by name to one of British Gas's public relations advisers, Angus Maitland.

The outburst against British Gas and its "huge machine" came as the company rejected the TransCo price controls as "unjustified and unworkable" and announced it was taking its case to the Monopolies and Mergers Commission.

Ms Spottiswoode has been at loggerheads with the company for the past three months since it described her proposals as "the biggest smash-and- grab raid" in corporate history. They would cut pounds 28 off the average bill but reduce TransCo's revenues by pounds 650m a year and, according to the company, put 10,000 jobs and the integrity of the gas system at risk.

Yesterday Ms Spottiswoode said: "They have a huge machine, they have their lobbyists, their advisers, their Angus Maitlands of this world. We do not have the resources to get into this."

British Gas seemed to think, she said, that its "huge publicity campaign will affect what we think, of what the MMC panel think". But, she said, its tactics would prove counter-productive.

She said British Gas had had a "pretty vitriolic" relationship with her predecessor at Ofgas, James MacKinnon, and that its behaviour was "just in character" now. "To lose one regulatory relationship is bad news," she said. "To lose two is extremely bad news."

Last night the company rejected the criticisms. Philip Rogerson, British Gas's deputy chairman, said: "I was both saddened and surprised to hear her comments. We have studiously ensured that we have focused on the issues. We have deliberately not focused on personalities because that would be wholly inappropriate."

Mr Rogerson added that he was "astonished" to hear it had ordered a psychological profile of Ms Spottiswoode. "I have absolutely no knowledge of any such profile being carried out."

Mr Maitland, who runs the Maitland Consultancy and also gives British Telecom and the National Grid PR advice on relationships with their regulators, said Ms Spottiswoode's comments were a mystery.

"This campaign has been fought on the issues. I have never spoken to any journalists about Clare Spottiswoode herself. I have concentrated on the issues. If anyone has been manipulating the campaign, it is not us."

During his price review of BT, the industry regulator, Don Cruickshank, is understood to have been concerned that a campaign was being mounted directly against him.

Ms Spottiswoode and her advisers have been the subject of some personalised critiques. Last weekend, one Sunday newspaper wrote how Ms Spottiswoode had been elevated into her job from "a small and not particularly successful software consultancy" and was part of a network of academics and regulators who belonged to Hayek's so-called "Austrian" school of economics linked with Birmingham University.

The MMC inquiry into TransCo is expected to last at least six months. However, Mr Rogerson said this would have no effect on the plan to demerge British Gas's trading arm from TransCo by spring next year.

Decisions on future dividend policy, he said, could only be made once the outcome of the MMC inquiry was known. Analysts calculate that the payout would have to be trimmed by at least 10 per cent if the Ofgas proposals are implemented.

British Gas said that, on asset valuation and depreciation, Ms Spottiswoode had ignored earlier MMC rulings.

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