LEADING ARTICLE:Gas customers still left waiting

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The Independent Online
Cedric Brown was at the trough again yesterday. As the rest of us anxiously watch fuel bills rise during the cold snap, the British Gas chief executive is gorging himself again on the personal finance equivalent of a feeding frenzy. A pension worth almost pounds 250,000 a year is the reward Mr Brown gets for overseeing a doubling in customer complaints in the last year, a sagging share price and scant benefits for gas consumers. Privatisation was meant to usher in a world of competition where executives would be judged on the merits of their performance. Even in his departure that ethic does not yet seem to have caught up with Mr Brown.

Mr Brown's retirement and the break-up of British Gas may offer consumers some hope. Beginning in the South-west this spring, domestic consumers will have a choice of gas suppliers. That should mean lower prices and better service. By 1998, a string of oil and electricity companies will be competing with British Gas to supply households. Prices adjusted for inflation are already at the level they were at in the early 1980s. With competition, further cuts of up to 20 per cent are predicted. Mr Brown and the old-style British Gas culture he embodied are not designed for that world, although yesterday's decision to split the company in two is in part designed to hive off the liability of uneconomic long-term gas supply contracts.

The blame for creating the morass of misjudgement that has characterisedBritish Gas in the last few years, should not be confined to Mr Brown. Ministers have only slowly woken up to the mistakes they made when they privatised the company. When we were invited to buy shares in British Gas it was agreed it would be a monopoly for 25 years. It should have been a licence to print money. It is a measure of how badly managed the company has been that shareholders have seen so little in return for their investment.

Ministers have only gradually introduced more competition. British Gas persuaded ministers not to press ahead with earlier plans drawn up by the Monopolies and Mergers Commission for the company to be split up. It failed to get the Government to bail it out of those costly long-term contracts that commit it to buying gas from other North Sea producers at prices that are now uneconomic. That the company could even attempt this is a sign of how far from being a fully fledged private company it is.

Mr Brown had to go. But he did not act alone. The man who finally engineered his departure, the original fat cat of British industry, Richard Giordano, British Gas's non-executive chairman, also has some questions to answer: namely why did it take so long for him to act when many outside the company realised more than a year ago that change was needed?

The de-merger of British Gas into two companies is a step forward as far as the consumer is concerned. It will leave one component, British Gas Energy, to concentrate on providing the most competitive deal for 19 million customers. The other part, TransCo International, can focus on its main interests - the operation of gas pipelines. This sharper focus should improve capacity to respond to competition.

The Government must press ahead with introducing more competition. It must tell British Gas now that it will not be persuaded that 1998 is too soon to let other companies compete nationally to provide gas to British homes. Ministers must stick to that target. British Gas has had long enough to prepare for the rigours of competition.

For Cedric Brown the privatised monopoly of British Gas has been a licence to print money. Now it is time for consumers to get some real benefits, for which they have been waiting forlornly for so long.