Cost reductions at npower likely to affect around 900 jobs

Energy giant npower is aiming to cut up to 900 jobs under a programme to reduce its operating costs in response to the “extremely tough” UK retail energy market.

The German-owned firm, which employs 6,300 workers in the UK, said actual redundancies will be “considerably lower” because of the number of employees who leave every year.

Chief executive Paul Coffey said the retail energy market was “incredibly tough”.

He added: “Ofgem itself forecasts that five of the ‘Big Six’ energy companies will make a loss or less than normal profits this year due to the implementation of the price cap, and with several recent failures of new energy suppliers, it is clear that many have been pricing at levels that are not sustainable.

“Even with these reductions, we still forecast significant losses this year, but we’re doing everything we can to minimise them whilst continuing to focus on service and value for our customers.”

Unions will be fully consulted over the proposals, starting in early February, said npower.

Earlier this month Ofgem, the energy watchdog, introduced a cap on the prices of energy bills for customers on standard variable tariffs, which customers are automatically moved to after deals finish.

The company highlighted the price cap, and “intense competition” on fixed-price tariffs.

Unite national officer Peter McIntosh said it was “shocking news”, adding: “We will be seeking an urgent meeting with management to examine the business rationalise behind this announcement.

“We don’t believe that these job losses are solely down to Ofgem’s price cap.”

Unison national officer Matt Lay said: “This is grim news and means an anxious few months for staff across the company.

“But it’s just the tip of the iceberg – npower isn’t the only firm struggling. The UK’s entire retail energy market is broken and in need of an urgent fix.

“Households across the country are now better off because of the price cap, but as more energy suppliers shed staff, or go under completely, it’s businesses and consumers who’ll end up picking up the tab.”

Laura Gatiss of the GMB said: “The GMB is on record as saying that Ofgem should be abolished and its regulatory functions taken over by the Government, making its regulatory role subject to scrutiny and accountable to Parliament with the powers to cap prices. However what we have with this announcement by npower is a kick in the teeth for the workforce, many of whom are GMB members.

“It is only a few short years ago that npower offshored customer relations work and in the process closed sites in the North East and rationalised work around Rainton Bridge in Houghton-le-Spring.

“The company then brought that work back into the UK when that strategic decision clearly had not worked.”

Sue Ferns of the Prospect Union said: “Npower workers were already worried after the failure of the merger with SSE – today’s announcement will be even more worrying for them, and for workers across the retail energy sector.

“This is symptomatic of conditions in the sector and the Government and energy companies need to start taking action now to mitigate any further impact on jobs, and to minimise compulsory redundancies.”

Npower is part of the innogy SE group, and serves 4.6 million residential and business customers with electricity and gas.