Npower cut 1400 jobs
The North East jobs market is on a roller-coaster. The feel-good factor created by car manufacturer Nissan’s promise of 300 jobs locally has been undermined by energy company Npower, which has announced swingeing job-cuts, most of which fall in the region.
Altogether, Npower cut 1400 jobs across the North and Midlands, after a decision to outsource much of its customer service and back office functions.
Npower, which is one of the ‘Big Six’ energy companies, claims pressure from new Government regulations to reduce bills for consumers is partly to blame: “We’ve been doing this to improve our customer service and keep our costs down at a time of external pressures on customer bills,” it said in a statement.
Certainly, it seems the job-losses are a side-effect of the many complex issues at large in the energy industry at the moment, including rising energy prices and the burden of renewable energy subsidies.
Impact of the job-losses on the North and Midlands
Although some jobs are being relocated, the cuts are chilling news for the North-East and Midlands. Office closures in Stoke-on-Trent will see 550 employees lose their jobs, with 400 lost in Oldbury, 430 in Rainton Bridge, Sunderland, and 80 in Leeds.
While, 540 workers will transfer to UK-based Capita under TUPE, hundreds of roles will be outsourced to Tata Consultancy Services in India. Other offices in Peterlee, Co Durham, and Thornaby, Teesside will close, but the workers will be offered jobs on other sites.
The latest job cuts come on the back of the planned closure of its Kingswinford site in the West Midlands announced earlier this year, which houses 300 call centre and IT support staff. About 120 of these jobs were outsourced to Indian firm Wipro and the UK’s Computacenter.
Although Npower is now the retail subsidiary of German company RWE, its roots are in Northern Electric, which explains why it has traditionally been a strong employer in the region. It employs 9,600 people in the UK and claims there will still be 3,500 people employed in the North.
Snapshot of the energy industry in the UK
• UK Energy in Brief 2012 states that 171,000 people were directly employed in the UK energy industry in 2011 (7% of industrial employment), considerably higher than the 2005 level.
• According to the ONS, the energy industry accounted for 3.5% of GDP in 2012, down from its peak in 1982 of 10.4%
• The Big Six include British Gas, EDF, E.on, Npower, Scottish Power and SSE.
Is the Government to blame?
With headlines predicting power-cuts next winter and the Big Six bosses announcing price-hikes to keep abreast of rising energy costs, the industry is crying out for an overhaul – most agree it needs to see more competitors in the sector.
Labour’s suggestion of a freeze on energy bills, however, has been dismissed by the Government as it would lead to bigger price increases before and after any freeze. Meanwhile, in a bid to make the free market work, the Government has rattled the Big Six by introducing legislation to put consumers on the lowest tariff by default.
These are tough times and energy businesses are being urged to operate efficiently to maintain their long-term profitability and keep bills down for overstretched consumers.
It seems they will put up a fight. Angela Knight, chief executive of industry body Energy UK has told the BBC that only 18-20% of the bill is in the control of energy companies and she defended their profit margin of 5%, saying that businesses have to remain profitable to stay in business.
For sure, finding the balance between consumer and industry is tricky. Npower’s owner has announced a 3% fall in operating profits to £176m in the first half of 2013. It plans to cut 6,750 jobs across Europe between 2014 and 2016 and reduce costs by £840m.
Needless to say, it has blamed its poor profits on the government’s regulations for simplified energy tariffs as well as the energy-saving measures in domestic homes.