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Unions fear for 'thousands of UK jobs' as energy firm Npower announces cuts

·Finance and policy reporter
A picture shows the logo on the front of an office of British energy supplier npower in Hull, northeast England, on March 8, 2016.  British energy supplier npower, a unit of Germany's RWE, said it will axe 2,400 jobs after posting an annual loss on fierce competition, sliding sales and operational problems. / AFP / PAUL ELLIS        (Photo credit should read PAUL ELLIS/AFP via Getty Images)
Npower is making cutbacks. Photo: PAUL ELLIS/AFP via Getty Images

The energy firm Npower has announced plans for a major cost-cutting programme, sparking union fears for thousands of jobs in the UK.

A spokesman for the GMB union called it a “body blow to Npower workers across the UK,” and condemned the government’s energy bill price cap for putting jobs at risk.

E.ON (EOAN.DE), which owns Npower, said in a statement published on Friday a £500m restructuring plan would be stepped up, but did not confirm any plans for job losses.

E.ON added in its statement that its cost-cutting plans involved “leaner, increasingly digital processes,” with job cuts feared in its UK call centres.

Its chief executive Johannes Teyssen said: “The UK market is currently particularly challenging. We’ve emphasized repeatedly that we’ll take all necessary action to return our business there to consistent profitability.

“For this purpose, we’ve put together proposals and already begun discussing them with British unions.”

READ MORE: Tata Steel to axe 1,000 jobs in the UK

The GMB spokesman said: “Clearly this announcement will be a body blow to Npower workers across the UK.

“The Government has to urgently wake up to the impact that the price cap is having on good and reasonably well-paid jobs in UK energy companies.”

Unison general secretary Dave Prentis added: “This is a cruel blow for Npower employees. They’ve been worried about their jobs for months. Now their worst fears have been realised, less than a month before Christmas.

“The UK energy market is in real danger of collapse. If nothing is done, there could soon be other casualties.

“Npower’s demise means there’s no time to waste. It makes the powerful case for bringing the retail arms of the Big Six energy firms into public ownership.”

READ MORE: Inflation at three-year low after energy bills capped

The Labour party repeated its pledge to nationalise part of the UK energy market after the announcement.

Rebecca Long-Bailey, shadow business secretary, said: “We need energy workers more than ever to improve the efficiency of our homes and roll out renewables, and customer service is an essential part of that.

“Job cuts on this scale, done to make a quick buck, are utterly senseless and illustrate how the energy market is failing to deliver for workers, customers or the climate.”

The announcement was made in E.ON’s third-quarter results. It said adjusted earnings before interest and taxes were “significantly lower” year-on-year, blaming the UK government price cap but admitting Npower had already been facing difficulties.

British Labour Party MP Rebecca Long-Bailey speaks at the Labour party annual conference in Brighton, Britain September 24, 2019.  REUTERS/Peter Nicholls
Labour MP Rebecca Long-Bailey. Photo: REUTERS/Peter Nicholls

“The truth is the UK remains a difficult market, not just for us. The UK market has been challenging for several years.

“Churn rates are high, margins slim and the price caps introduced this year have exacerbated the situation. No company operating here has been spared these difficulties,” said Teyssen on a conference call with journalists.

The energy price cap was introduced by former UK prime minister Theresa May’s administration , after firms were accused of failing to pass on lower costs to customers.

A spokeswoman for energy regulator Ofgem, which manages the price cap, said it stops “inefficient suppliers unfairly passing on costs to SVT customers.”

She added: “We have set the cap at a level which will put pressure on inefficient suppliers to reduce costs and become more efficient. Inefficient suppliers will need to reduce their operating costs through delivering efficiency savings if they want to make a reasonable return.

“How suppliers decide to respond to the price cap in practice is a commercial decision for the suppliers and we are not able to predict how suppliers will chose to react.”

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