British Gas boss concerned for Scotland’s energy industry jobs

Chris O’Shea hasn’t lived in Scotland for decades, but the boss of Centrica, which owns British Gas, is concerned about the future of the energy sector in his homeland.

He worries that the “end” of gas and oil drilling in the North Sea and the transition to green energy will not create new roles quickly enough to offset job losses.

His wide-ranging interview with us follows a series of difficult moments for the sector, at a time when rising energy prices are driving up household bills and delivering high dividends to shareholders and hefty pay packages to bosses, including himself. British Gas also faced a scandal over prepayment meters being forced into the homes of vulnerable people who had not paid their bills; This is something the company no longer does, he says.

Today O’Shea’s biggest concern is Decline in jobs in the North Sea oil and gas industry. Harbor Energy, the UK’s largest oil and gas producer, announced job cuts earlier this year. And this month, the Port of Aberdeen said: It will cut roles in the face of what it describes as a “shattering” decline in North Sea oil and gas activity.

“The energy transition is the right thing for us to do. It’s very important,” says O’Shea, noting that British Gas is no longer exploring for oil and gas in the North Sea and is making more use of energy imported from overseas.

That doesn’t mean he doesn’t think more drilling is needed in the North Sea.

“Whether you look at it from a cost perspective, a carbon perspective, or an environmental perspective, most of the time the gas you produce domestically will be cheaper than the gas you import, and certainly cleaner than the gas you import,” he says.

But back to the topic of the transition to green energy, he tells the BBC’s Big Boss Interview, drawing on personal experience, that the problem is happening faster than it needs to happen.

“I grew up in a Fife town surrounded by coal mines and saw the devastation when coal mines were closed during the miners’ strike and people in incredibly well-paying jobs going nowhere.

“There are second, third generation people who are not working right now. And I desperately want to avoid that during this transition.”

He says it was quite difficult to find a job after college and that he “received a lot of rejection letters.”

“I know what it’s like to be a little worried about finding a job,” he says.

“I also know what it’s like to land a job you enjoy, and when you find out you’re good at it, it can change your life; it certainly did for me.”

But the CEO is no stranger to cutting roles, laying off the best of 5,000 jobs shortly after taking over at the height of the Covid outbreak in April 2020.

“I wasn’t sure the company could really survive,” he says. “The only way I could justify it to myself was to try to protect 20,000 jobs, but I couldn’t protect them all.”

Since then, Centrica has taken on 1,700 apprentices and has committed to taking on one more every day for at least this decade.

Similar to energy prices in recent years, this was a volatile period for O’Shea.

While wholesale energy prices rose partly due to supply problems following the outbreak of war in Ukraine, many smaller suppliers went bankrupt because they could not meet fixed-price agreements with their customers.

“It all comes down to inadequate regulation,” says O’Shea, arguing that energy regulator Ofgem needs to be tougher on ensuring suppliers have enough money to manage risks.

“You can’t have a system where profits are privatized and losses are socialized,” he says.

Ofgem told the BBC that the regulation means the sector “now holds assets of around £7.5bn, a significant turnaround from the £1.7bn value during the crisis, meaning they are now better protected against failures and the impact on customer bills.”

As energy bills soar, questions have arisen about high dividends to shareholders and O’Shea’s own salary and bonuses. It reaches £8.2 million in 2023.

“Investors are investing and they want returns,” he says. “People don’t put money in the bank and say ‘it’s okay, don’t give me interest’ and investors don’t buy shares and say ‘it’s okay, don’t give me interest’.”

O’Shea argues that these dividends were not derived from British Gas customers and were a result of other parts of Centrica’s diversified business.

“There is very little profit to be made in the energy retail business. The profit you can make is limited to 2.4% of your revenue,” he says.

The 52-year-old young man faced a great public reaction after this situation emerged. Debt agents working for British Gas were breaking into people’s homes to install prepayment meters.

“We’re not doing that right now,” he says when asked if that’s ongoing.

But he argues regulator Ofgem should tell firms how to act when people don’t pay and how to find out who can’t pay and who will refuse to pay.

“My heart goes out to people who can’t pay, but those who choose not to pay are freeloaders and we have to find a way to differentiate and go after the people who choose not to pay and eliminate the distress of people who can’t pay,” he adds.

He appears to support potential plans for the Chancellor to announce help for ratepayers in the Budget. Reducing the current 5% VAT rate applied to energy.

“Anything that would reduce the cost of energy would be welcomed.

“But the truth is we have to pay for it somehow,” he warns.