MPs blow cold as British Gas chief earns his money

Cedric Brown found explaining his 75% pay rise too easy, writes Barrie Clement
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The Independent Online
Cedric Brown, the £500,000-a-year chief executive of British Gas, got an unexpectedly easy ride at the hands of our elected representatives yesterday.

Pilloried in the press for his 75 per cent basic pay rise, subject to the fury of unions for suggesting showroom staff might suffer a pay cut, Mr Brown told the House of Commons Employment Committee he simply got "the rate for the job".

He insisted that the Labour Party's suggestion that there should be some form of regulation of pay was "inappropriate".

The committee, made up of sympathetic Tories and largely ineffectual Labour MPs, did however discover his pay rise meant an extra £750,000 in pension benefits.

Angela Eagle, Labour MP for Wallasey, pointed out that Mr Brown earned around £1,000 a day compared with the £10,000-£13,000 a year received by showroom staff. He replied that his increase was "only" 28 per cent, not the 75 per cent that had been publicised. He arrived at the lower figure by taking into account "complex trade-offs", meaning lower benefits.

If Ms Eagle thought he was highly paid, his company submitted a list of the earnings of the highest paid directors of FT-SE 100 companies. Even after his increase he languished in about 50th place. The highest remuneration was a not inconsiderable £17,402,000 at the Royal Bank of Scotland group, followed by the top man at SmithKline Beecham on £1,898,000, and in third place the relatively impoverished senior director at Hanson who received a miserable £1,362,000.

Earlier in the day Tim Melville-Ross, director general of the Institute of Directors, had warned that the clamour over Mr Brown's pay could undermine the very basis of capitalism.

Thus Conservative MPs billed and cooed with Mr Brown, eliciting comments about increasing competition and the need to engage in the cut and thrust of the global market.

British Gas was the seventh largest company in Britain, the 15th largest in Europe and his "differential" with basic staff grades were amongst the lowest in the country.

Mr Brown pointed out that a smaller US competitor paid its chief executive 10 times more. He preferred, however, not to compare his pay with that of the footballer Andy Cole, transferred from Newcastle United to Manchester United for £7m.

Greville Janner, chairman of the committee, smirked malevolently throughout the proceedings and delivered his usual Perry Mason impersonation at the end. After all, he said, the announcement of the increase came at a time when the company was in the process of cutting 25,000 jobs, warning showroom staff that their pay might be cut and axeing safety budgets.

Overall, however, the time and effort spent by PR gurus in preparing Mr Brown for the fray constituted money which could have been better spent.

How utility chiefs worked their way to the top salaries JAMES SMITH, 67, has been chairman of Eastern Electricity since 1990, writes Ian MacKinnon. Last year he made £466,287 on top of his £237,000 salary by cashing in his share options in April. His salary before privatisation was £68,000. A father of one son and one daughter, he was educated at Heriot-Watt College and Strathclyde University before moving on to become an engineering officer at Mercantile Marine and then to appointments at several electricity generating boards, becoming chairman of the Eastern Electricity Board in 1982.

SIR DESMOND PITCHER, 59, became chairman of Northwest Water Group in 1993 - his £315,000 salary represented nearly a six-fold rise on that paid to his predecessor in1989-90. It is a role he has combined with being chairman of the Mersey Barrage Company and the Mersey Development Corporation. From his three marriages, Sir Desmond, knighted in 1992, has two sons and two daughters. He was educated at Liverpool College of Technology before a career in industry, primarily in telecommunications and motor manufacturing. He is also deputy chairman of Everton Football Club.

CEDRIC BROWN, 59, has been chief executive of British Gas since 1992, after a year as senior managing director. He earns £475,000 a year, a rise of 75 per cent on the previous year, which provoked a storm of protest. The father of three daughters and a son, he worked his way up during a career in the gas industry. He was educated at Sheffield, Rotherham and Derby colleges of Technology, before becoming a gas distribution engineer for East Midlands Gas Board. With spells in private industry, he pr ogressed to regional chairman of British Gas's West Midlands operation.