SCOTLAND'S most vulnerable pensioners have become the innocent victims of a row over payments between Centrica, the owner of Scottish and British Gas, and the sub-contractors employed by it to install central heating in OAP homes under the Scottish Government's innovative "warm deal" scheme. One small company working on the £7m project will today lay off part of its workforce because it has not been paid for six weeks and can no longer afford to underwrite the contract through wages and materials. Other firms facing a similar cash-flow dilemma are likely to follow suit in the coming weeks unless the problem is resolved and overdue bills met in full. Bizarrely, the root of the problem appears to lie with Centrica's convoluted accounts administration. This has been outsourced to India to save money for a company which announced an annual profits' rise of 500% from its residential business in February. Contractors claim that their invoices have not been processed at the Indian end of the operation and Centrica has yet to intervene to clear the financial logjam, despite repeated and increasingly desperate pleas.

The delay now threatens not only the installation schedule for up to 10,000 homes still to be fitted, but also the viability of a number of small, specialist companies and the jobs of their employees. The association representing installers is calling publicly for swift Scottish governmental intervention to protect those skilled jobs and to ensure that radiators are in place for pensioners before next winter. Given that Holyrood commendably committed £7m of taxpayers' money to safeguard the elderly on a scheme which should have been a role-model template for the rest of Britain, it should now be seen to act decisively to cut through Centrica's corporate red tape and inexcusable tardiness in paying its debts.

The general economic credit crunch makes all small companies highly vulnerable to liquidity problems. Centrica and its subsidiaries are huge enough to escape the worst effects of that squeeze. Moreover, Centrica is gripping the purse-strings on money which it holds in financial trust, in moral terms at least, as an executive agent of government policy. Failure to live up to its responsibilities could have wider implications for its shareholders. Westminster has already floated the idea of a windfall tax on power suppliers of both gas and electricity, principally as a shot across their bows in view of price hikes for disgruntled voters already feeling the pinch from cost-of-living increases elsewhere. It might be an opportune time to resurrect that threat.