British Gas plans to cash in on surplus property

British Gas has set up a property division to manage and exploit its portfolio of land and buildings, one of the largest in Britain, in a bid to boost earnings from these assets.

The company values its property at more than pounds 1.1bn. The recently announced plans to reorganise its gas business and cut 25,000 jobs over five years means that increasing numbers of sites will become redundant or only partly used.

The new unit, to be based in Croydon, south-east London, will have a staff of 260 and be headed by Ralph Ellis, former chairman of British Gas South-eastern region.

Mr Ellis, who took up his new post last week, said his business would be different from a traditional property company. 'I am keen on the total quality approach - investing in people, teamwork and sharing ideas,' he said.

Previously, each of the 12 British Gas regional businesses had its own property department. Although the company made about pounds 120m a year on rentals this was not regarded as a business and was treated much as a peripheral activity, Mr Ellis said.

'Now it is there to make money and will stand or fall on its own merits. This is a new drive and a new focus, like nothing British Gas has done before.'

The property division will have a range of tasks including the decontamination and redevelopment of old gaswork sites. Some will house new office blocks but the larger ones may become full-blown business parks and industrial estates.

Some offices no longer needed will be offered to other companies as serviced business units, with British Gas providing functions including reception and typing.

The company hopes its drive into the property sector will increase revenues outside the regulated gas market and provide employment in areas where it is laying people off.