ALEX BRUMMER: Centrica is held hostage by the GMB union

Should your gas boiler break down or there be an interruption to energy supplies in the midst of the bleak winter pandemic, don’t expect an immediate response from your British Gas engineer.

At a moment in time when unemployment queues are lengthening, insolvencies surging and the NHS is working to capacity, the GMB union is taking thousands of members at British Gas out on strike.

Chris O’Shea, installed as chief executive of British Gas-owner Centrica in March 2019, regards the group’s 20,000 engineers as being in the front line in keeping people warm in winter, ensuring the lights are on, dealing with emergencies and getting behind the Government’s 2050 net-zero carbon target.

At a moment in time when unemployment queues are lengthening, insolvencies surging and the NHS is working to capacity, the GMB union is taking British Gas members out on strike

To this end, he is seeking to modernise pay structures at the energy giant, changing some contracts which date back to pre-privatisation in 1986.

Some 20,000 engineers have been offered a basic contract paying £40,000 a year, preserving membership of a defined benefit pension scheme and with productivity incentives. 

The majority of workers have signed up but the GMB is resisting, describing the changes as a ‘fire and rehire’ scheme and taking its members out on a series of one-day strikes. 

Militant GMB members have been photographed burning the new contracts. There is a strong suggestion that ordinary GMB members, many of whom have signalled acceptance of the deal, are being embroiled in a politically motivated dispute.

The industrial disruption comes at a moment when Centrica finally appears to be stabilising its customer base of 9m energy and service customers after a period of intense price competition which saw it lose 2m UK customers in short order. 

The cost savings from the new contracts are thought to be immaterial but their passage would pave the way for the recruitment of 1,000 apprentices. 

After a string of profit warnings, trading at Centrica, notwithstanding the industrial dispute, looks to have been resilient in 2021 with earnings heading higher. 

Proceeds from the £2.7billion sale of US operations will be used to pay down debt and plug the pensions deficit. 

O’Shea is also reinstating plans to sell North Sea exploration and production operations. However, it is not exactly a seller’s market at present.

Centrica has abandoned its grandiosity and is seeking to better compete with online upstarts. The GMB is in danger of sabotaging prospects for all stakeholders.

Rose tinted

Stuart Rose is a better retailer than political campaigner.

He was the last Marks & Spencer boss to report £1billion of profits but his Britain Stronger in Europe movement failed miserably. In the interim, his faith in Ocado technology has paid off handsomely as value headed into the stratosphere.

Rose even managed to do his former employers at M&S a huge favour when he and fellow retail veteran Archie Norman carved out a joint £700million UK food venture.

The City will be closely watching Rose’s arrival as non-executive chairman of ambitious convenience and food retailer EG.

Until last year, when founders Zuber and Mohsin Issa launched their bid for Asda, the brothers were barely on the radar. Now they are regarded as a hot property, having built up a chain of 6,000 sites across ten countries with private equity backers TDR.

Recent history tells us that the arrival of a powerful non-executive chairman is no accident. Usually it is a prelude to swapping private equity for public with a stock market float. Where Asda (if regulatory clearance is won) fits in to all this is not yet clear.

But the opportunity to cash out, at a time when the London discount is starting to fade, must look enticing.

Tasty morsel

IG chief executive June Felix is not waiting for Rishi Sunak’s Big Bang 2.0 to go global. In anticipation, she has done that rare thing and splashed out on a significant American acquisition rather than waiting to be bought. 

The deal comes after an extraordinary boom in spread betting and exotic trading which saw profits at IG soar by 129 per cent in the first half of the year as wannabee sharp shooters were glued to their screens during lockdown.

The US target for IG is Tastytrade, founded a decade ago, which has 105,000 active traders and a huge presence on social media. 

The price is a hefty £730billion with more than half being satisfied in shares. That, after all, is what equity is for.

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