ALEX BRUMMER: British Gas boss O’Shea needs to step up

Bonanza £3.3billion profits at British Gas owner Centrica were always going to be a problem.

As the biggest gas supplier in the nation, with some 10m customers, there are questions as to why more largesse is not shared with households when energy bills are causing so much pain.

What will be even more infuriating for many consumers will be the prospect of chief executive, Chris O’Shea, potentially collecting £4.2million in total pay while they struggle with the price of eggs.

Pay package: Chris O’Shea, chief exec of British Gas owner Centrica, will potentially collect £4.2m in total pay

Optics are not helped by the bad taste left after clumsy debt collectors (one removed from British Gas) busted into homes of the vulnerable to install prepayment meters.

Plain-spoken Scotsman O’Shea, however, did what many in the public eye find hard. He took to the TV screens and fronted up with an apology.

Centrica dished out £75million to hardship cases in 2022 and is not opposed to the creation of a ‘means tested’ social tariff.

It also thinks that in spite of bad publicity, pay-as-you-go prepayment meters should not be ditched.

Centrica earns most of its profits in the UK, unlike Shell, BP and Glencore. It is a minority investor in the ageing nuclear fleet and is still involved in North Sea oil and gas production. 

Its tax bill, at £1billion, will make it one of the UK’s largest payers and between now and 2028 it estimates it will be incur a £2.5billion windfall levy on electricity operations.

The energy market is in turmoil, with 29 suppliers closing their doors in the last year. Among the biggest failures, Bulb was rescued by Octopus at a cost to the taxpayer that has never been properly disclosed. In this opaque universe, Centrica does at least offer customers stability.

Keeping faith with shareholders is of importance to Centrica as it still has an army of half-a-million small investors, a legacy of the ‘Tell Sid’ privatisation campaign in 1986. 

The dividend uplift and £300million of share buybacks is not just a giveaway to City sharks. O’Shea is an advocate of more energy investment in Britain as it seeks to lower carbon emissions and provide security of supply. 

With the right support in Whitehall, he believes Britain could become a hydrogen champion and cites the JCB roll out of facilities and buses in Northern Ireland as a model.

The Centrica chief has plans for new carbon capture storage at Morecambe Bay, wants government support for a £1billion full refurbishment of the recently rebooted Rough storage facility in Yorkshire and could back new nuclear.

This year’s bumper earnings should have been an opportunity for Centrica to double down on investment when the economy most needs it, especially as it has at least £400million of plans in the pipeline. It could also do more to help less well-off customers.

A fresh way forward would be smaller shareholder and bonus pay-outs and a far more aggressive approach to environmental projects and social responsibility.

Global choices

World Bank president David Malpass’s temerity in expressing doubts about the science behind climate change was always going to cause difficulty in a Washington dominated by Democrats.

His apology, and the World Bank’s funding of climate change projects, was never going to satisfy critics. 

US Treasury Secretary Janet Yellen led the chorus calling on Malpass ‘to expand the bank’s vision’ and to harness ‘stronger’ private finance.

By leaving early, Malpass gives the White House the opportunity to slip one of its own into the job. 

One possibility under discussion is former Nigerian finance minister Ngozi Okonjo-Iweala, director-general at the World Trade Organisation. Whether she passes the ‘American’ citizenship test is more challenging.

My own choice is former Bank of England governor and climate change guru Mark Carney, who is technically Canadian.

It is to be hoped they don’t dust off an old Democrat fossil, such as Larry Summers (released from Harvard), as a matter of tribal politics.

Emerging treasure

Of all Britain’s major banks, Standard Chartered commands least attention. Under the stewardship of Bill Winters its reputation, revenues and returns have been restored. 

As significantly, it is a big player in Singapore and East Asia, Africa and the Middle East, all markets critical to UK finance as it creates a post-Brexit, more global future.

Allowing it to be sold and disappear down a Gulf sink-hole should never be an option.