The energy giant npower is to cut up to 4,500 jobs as part of a major cost-cutting drive that could result in it closing most of its sites in the UK.
The company said the two-year restructuring plan would cost £500m and by 2022 would produce £100m in profits for npower’s German owner, E.ON.
Unions described the shake-up as a “cruel blow” to staff, coming in the run-up to Christmas.
“This is a cruel blow for npower employees,” said Dave Prentis, the general secretary of Unison. “They’ve been worried about their jobs for months. Now their worst fears have been realised, less than a month before Christmas.”
The company said it would cut costs across its IT infrastructure and customer service operations, which will mean the closure or cutting back of call centres and staff.
“The UK market is currently particularly challenging,” said Johannes Teyssen, the chief executive of npower’s parent E.ON. “We’ve emphasised 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.”
E.ON claimed that in stepping up its “ambitious cost-cutting efforts” it was not “losing sight” of customers. “This is based on leaner, increasingly digital processes that also improve the customer experience,” the company said.
Npower, which supplies gas and electricity to about 2.5 million households, employs about 5,700 staff in the UK. The company, the smallest of Britain’s big six energy suppliers, has been loss-making for the last four years, despite restructuring efforts and heavy job cuts.
Unison’s Prentis said npower’s woes provided a “powerful case” for the big six energy firms to be renationalised, a plan put forward by Jeremy Corbyn in the Labour party’s election manifesto.
“The UK energy market is in real danger of collapse,” Prentis said. “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. This would preserve jobs, ensure customers get a better deal and allow the UK to meet its carbon neutral targets.”
The energy supplier has made substantial losses in recent years. In 2016, it reported a loss of £99m and announced that it was cutting 2,400 jobs. In January this year, it cut 900 jobs, blaming “intense competition”, and the government’s price cap on default tariffs, which took effect at the start of the year.
“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,” a spokesman for the GMB union said. “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 while sacking energy workers in the UK.”
In December a proposed merger of npower and SSE, the UK’s second biggest energy supplier, collapsed.
The company would not confirm the exact number of jobs that will go in the cost-savings drive.
“It is only right and fair that colleagues are informed first of any possible changes and we will be making no further comment at this time,” an E.ON spokesman said.