'Corporate greed' is costed at 1p a month

Attempt to cap British Gas boardroom perks falls at vote

The Government last night voted down an attempt to deal with "corporate greed" in the gas industry, defeating by 271 votes to 234 a Labour move to give the Director of Ofgas a duty to take into account boardroom pay and perks when fixing gas prices.

The Energy minister, Tim Eggar, said the proposals amounted to "political interference" with the regulator and the imposition of an incomes policy by the back door.

The Report Stage of the Gas Bill, opening the industry to more competition, enabled Labour to attack "lavish handouts" right across the privatised utilities.

Nigel Griffiths, an Opposition trade and industry spokesman, said a message should go out to utility boardrooms that directors could not continue to enrich themselves at a rate which had already made 12 of them millionaires.

Six directors of British Gas had received nearly £7m in share options, he said. "We need regulatory pressure over British Gas to ensure that performance to customers is improved as well as performance to shareholders."

Mr Griffiths said British Gas had seen a decline in its profits, a reduction in earnings per share, and a loss of industrial customers. Meanwhile, service to the public had suffered as showrooms and staff had been axed.

But Mr Eggar, a Minister of State, said the idea that the high pay of executive board members was at the expense of customers "simply doesn't bear examination". If British Gas's costs rose above those of its competitors, the impact would be felt by shareholders, not by customers.

He said the total remuneration package from the British Gas board came to £2.3m - representing about 1p a month on each consumer's bill.

Labour's new clause sought to reassert political control over the management of the industry, Mr Eggar said. "They haven't really put their heart into a new Clause IV, it is just part of an elaborate con job."

However, in a confused exchange with Mr Griffiths, he suggested the Director of Ofgas, Clare Spottiswoode, actually could look at boardroom pay when setting the price formula.

Mr Griffiths said the regulator had told Labour she "didn't even look at the costs of the salaries in the boardroom. She told us she had nothing to do with salaries".

But the minister replied: "It is one of the factors which, when she sets the formula, she may wish to take account of. She may choose to do so. It depends on the particular way in which she approaches this issue."

In deciding the price formula, the regulator had to take into account whether the industry's costs were "reasonable", Mr Eggar explained.

Labour's new clause would have made it a specific direction to the regulator to take into account whether the pay, benefits in kind and share options of directors reflected the performance of the company.

Intervening on the minister's jibe about a back-door incomes policy, Kevin Hughes, Labour MP for Doncaster North, said it seemed the "fat cats" already had one. "It is 'grab as much you can for yourself'. Does Mr Eggar think in excess of £400,000 is fair for three days a week?" The minister didn't say.

With a consultative Green Paper due out tomorrow proposing radical changes to the legal aid system, MPs took the opportunity of Questions to the Lord Chancellor's Department to make early submissions.

Paul Boateng, Labour's legal affairs spokesman, asked if there were any plans "belatedly" to deal with restrictive practices within the legal profession. There had been a 600 per cent increase in the cost of legal aid to the taxpayer - some £1.4bn a year - while restrictive practices on the part of the Law Society, representing solicitors, and the Bar Council, representing barristers, went unaddressed, said Mr Boateng, a barrister himself. "Isn't it time to redress the balance of legal aid in favour of the taxpayer and the consumer?"

In reply, Parliamentary Secretary John Taylor, the Lord Chancellor's agent in the Commons, said that must be "an ever-present intention". Some 3.5 million people had been helped by legal aid in 1994-95 and the number would increase 25 per cent by 1997-98.

Monopolies of various kinds were being steadily eroded under the Courts and Legal Services Act, he said. "Mr Boateng will find, I dare say, that amongst the legal aid proposals will be that legal aid funding will be available for law centres, supported by him, and citizens' advice bureaux, supported by me ... Green Paper out Wednesday. More then."