Centrica director quits in political feud

A political farce has struck at British Gas's former supply business, Centrica, just four days after it split itself off as a separate company.

The farce culminated yesterday in the surprise resignation from Centrica's board of Heather Rabbatts, the former barrister and currently the high profile chief executive of Lambeth Council, following a typically bitter internal feud among rival political factions in the London borough.

Ms Rabbatts told councillors last November of her intention to join the Centrica board as a non-executive director. She was drafted in to grapple with Lambeth's catalogue of problems two years ago on a pounds 115,000 salary, reputed to be the highest in local government.

Most Labour members at Lambeth, a "hung" authority in which no party exercises overall control, had supported the job at Centrica. Ms Rabbatts had pledged to pay her pounds 20,000 salary from Centrica, which covered her attendance at eight board meetings a year, to local charities. It was believed to be the first time a salaried council official had been appointed to a non-executive directorship.

Jim Dickson, leader of the Labour group, said yesterday: "Failure to support her appointment is a missed opportunity for Lambeth. It would have provided a productive trade in ideas between the public and private sectors for the benefit of both."

A source at the council said: "We have had our own well-known problems here just like British Gas, including terrible service and a dreadful press reputation. Heather is sorting that out and I would have thought her experience would have come in useful at Centrica."

However, in what appeared to be a bizarre twist of allegiances Conservative councillors, supported by some local union officials, opposed the appointment. In the local press, Unison, the public service union which also has many Centrica members, claimed the directorship was another example of the "fat cat" mentality which had plagued the company and was now creeping into local government.

Councillor Bernard Gentry, deputy leader of the Conservative group, said: "Lambeth is still in a dreadful mess. Her time is needed here." He also said the Conservatives would be investigating why Ms Rabbatts had apparently taken up the appointment despite needing to seek approval from councillors beforehand.

The Conservative group said this was a serious development. Mr Gentry denied that his local party's opposition to Ms Rabbatts' Centrica job was a break with normal Conservative policy, which encourages the injection of business principles into the public services.

Meanwhile, the Liberal Democrats, who hold marginally the largest number of seats in the borough, also objected, though they claimed they were not opposed to such moves in principle. Mike Tuffrey, leader of the group, explained: "Most of our members were opposed to this. Her talents need to be addressed to the borough."

Ms Rabbatts was to be one of six non-executive directors at Centrica, alongside Sir Michael Perry, chairman, and Bill Cockburn, who is also chief executive of WH Smith.

Roy Gardner, chief executive, said he was very sorry about the resignation, but argued the board still had a strong team of non-executives. A Centrica spokeswoman said there would be no immediate move to replace her. "We are not going to rush into anything."

Ms Rabbatts declined to comment on the resignation, apart from saying it was a "matter of personal regret". However, a source close to the Lambeth chief executive said: "In terms of conflicts of interest, there just wasn't one. As for whether she could spare the time to take this job on, she has said it would come out of her annual leave."

Centrica shares ended their first week on the stock market with a drop of 1.75p yesterday to 68.5p.