British Gas pays consumer group over complaints

British Gas has offered a "six-figure sum" to the Gas Consumers Council to help it cope with a flood of customer complaints that continue to erode the company's battered image.

The Council says it has been swamped with calls from customers who have been unable to get through to British Gas phone lines.

The GCC says it received 9,000 such calls at its offices in May and June alone, which should have been dealt with directly by British Gas.

Ian Powe, director of the council, raised the problem during talks yesterday with the managing director of British Gas Trading, Mike Alexander. Under the company's radical demerger plans, BGT is the subsidiary that sells gas to 18.5 million homes and businesses.

The extra funds, understood to be up to pounds 500,000, will significantly boost the GCC's pounds 3m budget, the bulk of which already comes from British Gas, via the Treasury. The money will pay for a new call centre and additional telephone staff in the Council's 11 overstretched regional offices.

British Gas refused to elaborate on the size of its offer, which is believed to have been made to the Energy Minister Tim Eggar, but described it as a "goodwill gesture".

It said that "clearly with the advent of competition the workload of the GCC will increase ... and it is in everyone's interest that the GCC can extend its monitoring capacity".

BGT blamed the increasing complaints on its 18-month programme to replace computer billing operations. More than 60 separate systems in 12 regions are being merged into a single, huge database at a cost of pounds 150m.

A spokesman said: "With work on that scale you're bound to get teething troubles."

British Gas has almost finished cutting 25,000 jobs from its UK workforce. However, the spokesman denied the GCC's charge that customer service posts had been culled in the reorganisation. He said: "There are as many people working in customer service roles as there were in 1994."

Mr Powe welcomed the extra cash but warned it was only a temporary measure. "The solution lies with British Gas in solving its own difficulties and putting more resources into correcting them."

The news comes on the eve of figures from the GCC which will show an increase of more than 50 per cent in complaints against British Gas in the first half of the year, to record levels.

The complaints are a further embarrassment for British Gas as it prepares for the start of nation-wide domestic competition, due in April 1998. It has already lost more than 10 per cent of residential customers in the trial run of competition in the South-west, which began in May.

Yesterday Swalec became the latest regional electricity company to pile in to the domestic gas supply market, announcing its intention to compete with British Gas when full competition is established.

Swalec said it aimed to cut average bills in South Wales by up to 20 per cent. The company has been selling gas to business customers for four years and chief executive John Roberts said it was set to become a gas supplier for many of its 870,000 domestic customers.

The company also announced the start-up of "Swalec Gas Care" - a breakdown and annual service scheme designed to compete against British Gas's Three Star product.