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Coronavirus: British Gas owner Centrica axes 5,000 staff in manager cull

File photo dated 08/02/2007 of a gas hob with a bill from British Gas, whose owners, Centrica, are to cut thousands of jobs after a strategic review which will see its workforce cut by 10\%.
British Gas owners Centrica are to cut thousands of jobs in a move it says will create a 'less bureaucratic organisation'. (PA)

The owner of British Gas has announced thousands of staff are set to lose their jobs, in a move its leader said would cut costs and halt the company’s “decline.”

Centrica (CNA.L) confirmed plans on Thursday to slash around 5,000 jobs, warning its earnings had halved in recent years. Around half the job losses are expected to hit managers, including around 20 of the 40 current members of its senior leadership team.

The company said in an update to investors the restructure would create a “less bureaucratic organisation,” but a union organiser warned it would fight for every job. The majority of the cuts are likely to hit in the second half of the year after consultation with staff, though senior figures are expected to leave by August.

Britain’s biggest household energy supplier also announced plans to standardise and “modernise” employment contracts, which could prove controversial among its remaining staff. Centrica said it would begin consulting on proposals to “simplify terms and conditions,” saying workers were currently on varieties of 80 different contracts.

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New Centrica boss Chris O'Shea said: “Since becoming chief executive almost three months ago, I've focused on navigating the company through the COVID-19 crisis and identifying what needs to change in Centrica. We've learnt through the crisis that we can be agile and responsive in the most difficult conditions and put our customers at the heart of our decision making.

“However, I believe that our complex business model hinders the delivery of our strategy and inhibits the relentless focus I want to give to our customers.”

The company’s shares dropped around 4% on the announcement in early trading in London.

Centrica had already announced plans to slash £400m ($507m) from its spending this year in early April, as it warned on the impact of the pandemic. Bonus payouts for managers were paused, and a final 2019 dividend cancelled.

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Domestic energy usage has increased among customers working at home, but Centrica has also seen “a more significant reduction” in business demand as firms closed sites during the lockdown.

It has warned of an expected increase in bad debt too, with falling business and household incomes hitting customers’ ability to pay. Meanwhile prioritising essential work to minimise virus risks has hit revenues from non-essential services.

Justin Bowden, national secretary of the GMB union, acknowledged the company’s problems, blaming former prime minister Theresa May’s energy price cap and “too little too late” responses from management.

He said it had left the company “crippled and weak,” but warned: “Slashing thousands more jobs is not the answer. You cannot just cut your way out of a crisis. GMB will fight for every single job.”