Boss of British Gas owner Centrica waives bonus after bills furore

Sam Laidlaw – who was paid nearly £1.5m in cash bonuses last year – said he understands the anger of customers 

theguardian.com, Phillip Inman, economics correspondent, Monday 4 November 2013

Centrica chief Sam Laidlaw speaks at the CBI conference in London on
Monday. Photograph: Andy Rain/EPA

The boss of Centrica, the owner of British Gas, has waived his bonus this year after admitting that the energy industry urgently needs to rebuild trust with consumers.

Sam Laidlaw, who was paid a total of nearly £5m last year including almost £1.5m in cash bonuses, said he understood the anger and frustration felt by many after bills rocketed by more than three times the rate of inflation in 2013.

Speaking at the CBI's annual conference in London, he said trust in the energy sector is at an "all-time low" and acknowledged an urgent need to rebuild it.

He said the reputation of the company and the industry had been damaged by the furore over rising bills and industry leaders needed to tackle the issue head on. But Centrica, which has almost 9 million UK customers of its British Gas subsidiary, was innocent of profiteering, he said, and was unable to subside retail prices from profits in other parts of the business.

He said Centrica's gas exploration business, which has been mentioned as a possible cash cow for the retail arm, lost £130m last year. Other parts of the organisation were also less profitable than critics imagined, while profit margins on worldwide sales were a modest 5.9%, he said. Laidlaw pledged to cut bills if the chancellor goes ahead in his autumn statement with plans to absorb the green levy into general taxation. He said British gas would cut bills by the amount of the levy if the rumoured change goes ahead.

Currently the green levy, which is used to subsidise the extra costs of generating electricity from renewable sources, is imposed on the larger energy providers, which pass on the bill to customers.

The commitment appeared to give a boost to proposals circulating inside the Treasury for an immediate cut in household bills by transferring the green levy to the government budget. Officials had feared that energy companies would absorb the cut and boost profits rather than pass on the benefit to customers.

Laidlaw said there was a need for leadership in the current environment, though a decision to deny bonuses needed to be balanced with being able to attract employees.

"Just to continue in this world where households are under pressure, and assume it is business as normal, is not the way thoughtful remuneration committees think about it."

Laidlaw said the energy industry was "in the eye of the storm", conceding that firms should be more transparent, explain how bills are made up and improve the process of switching suppliers.

Laidlaw said he was focused on helping customers struggling to pay bills this winter. More than half a million British Gas customers will receive a special discount of £60, on top of a £135 warm home discount, he said.

Laidlaw said his company had reduced its costs by £300m over the past few years, and would immediately pass on any reductions in the social and environmental part of energy bills. "We are listening – we get it, absolutely. We know there is a problem."

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