Up to 4,500 jobs are going to be cut as part of a major restructuring at supplier npower, as new parent company E.On completes its takeover of the struggling energy provider.
In a statement the company said: "Regrettably it is inevitable that a transformation of this scale will have an impact on the workforce and it is likely these proposals will result in a significant number of job losses at npower over the next two years."
Unions have criticised the move, calling it a “cruel blow” to the company’s employees.
“They’ve been worried about their jobs for months. Now their worst fears have been realised, less than a month before Christmas,” said Unison general secretary Dave Prentis.
The restructuring will see npower’s residential and small and medium-size enterprise customers served by a shared IT platform. By combining these groups so they are served by a single platform, less staff will be needed resulting in the job losses.
Npower’s remaining operations will be restructured over the next two years, with a total cost of £500 million.
A spokesperson for the GMB union said: “Clearly this announcement will be a body blow to Npower workers across the UK. 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.
“Npower is a poorly managed company with significant losses in the UK but it’s always the workers that face the brunt of poor management coupled with regulation that sends work overseas whilst sacking energy workers in the UK.”
Increasingly the UK energy market is coming under scrutiny, with regulations criticised for making the market difficult to operate within. Npower has particularly struggled, causing parent company Innogy’s income if the first six months to fall by a quarter versus 2018.
E.on's chief executive Michael Lewis said:“The background to these decisions is of course the unprecedented upheaval in the energy market: in the last 18 months we have seen almost one third of suppliers going bust or continuing to operate at a loss. What we’re announcing today is our response to this difficult situation in order to remain sustainable."
The challenging market conditions were emphasised further by CEO Johannes Teyssen, whilst presenting the companies Q3 results: “The UK market has been very challenging for several years. We’ve reported on this repeatedly. Churn rates are high, margins slim, and the price caps introduced this year have exacerbated the situation. No company operating there has been spared these difficulties.”
E.on received approval from European regulators to purchase npower in September, with the company now owning a 90% operating stake. The move will make E.on the second biggest supplier in the UK.
Unison’s Prentis called for nationalisation to help protect jobs in the energy sector, saying that if nothing is done “The UK energy market is in real danger of collapse.”
“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.
“This would preserve jobs, ensure customers get a better deal and allow the UK to meet its carbon neutral targets.”