`Whitehall farce' blocks gas funding

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Thousands of complaints about British Gas are going unanswered because the Government has blocked extra funding offered by the company to enable the Gas Consumers Council to employ more staff.

The council's director, Ian Powe, warned of a crisis after it closed its London headquarters temporarily last week to cope with an accumulated mountain of complaints. He said that 400 unanswered calls were logged in three hours.

In May, Richard Giordano, the chairman of British Gas, offered to pay the Gas Consumers Council (GCC) pounds 300,000 as a "goodwill gesture" to fund another call centre and seven extra advisers after complaints about the company soared. But the Department of Trade and Industry blocked the cash injection on the grounds that the GCC's funding rules prevented direct payments from British Gas.

Under the present regime, the council, a statutory body set up to represent consumers after British Gas privatisation, gets its funding from the DTI. The money, most of which comes from British Gas, is raised by a levy on all licensed gas supply firms from the industry watchdog, Ofgas.

A DTI spokeswoman admitted technicalities in the legislation, which ministers had never envisaged, meant the extra funds could not be passed on. "If this payment was made it would appear as if it was a regular contribution rather than just a one-off. We are looking at the situation," she said.

Mr Powe met with the Consumer Affairs Minister, John Taylor, last week, but no solution has been found. One suggestion is that the GCC could ask Ofgas to change its licence terms and conditions to allow for one- off payments, but the process would require long and complicated consultation with the industry.

"It is Whitehall farce on an epic scale," said Mr Powe. "All those clever folk at the DTI and the Treasury cannot cut the red tape that separates thousands of people who need help from those who want to give it."

Many of the complaints stem from British Gas's computer billing system, introduced earlier this year, which replaces 60 separate networks in 12 regions at a cost of pounds 150m. The company has admitted it has problems with the system, which the GCC said had resulted in some customers having hundreds of pounds wrongly debited from their bank accounts.

The GCC said the number of complaints it received increased by 170 per cent in July and by 99 per cent in August.