The new owner of npower plans to cut up to 4,500 jobs from the struggling business as part of the biggest dismantling of a UK energy supplier since privatisation.
Britain’s sixth-largest energy supplier will lose the majority of its 5,700 staff and eight UK offices across the country after a takeover by the German energy giant E.ON.
The owner of E.ON UK will take two years to break apart npower’s energy business and let go of its staff in a £500m overhaul described as a “cruel blow” to employees in the run-up to Christmas.
The restructuring will hand millions of npower customers to E.ON UK to create Britain’s second-largest energy supplier, while cutting the market’s big six incumbent energy players to five.
E.ON said it is working with trade unions and staff representatives from npower’s offices and call centres in Rainton, Hull, Leeds, Birmingham, Solihull, Oldbury in Warwickshire, Worcester and Swindon to reduce the impact on staff.
However, trade unions have warned that the “horrific” scale of the proposed staff cull, due to begin in the new year, would be “as bad as it gets” for the energy company’s employees.
“This is a cruel blow for npower employees,” said Dave Prentis, the general secretary of the Unison union. “They’ve been worried about their jobs for months. Now their worst fears have been realised, less than a month before Christmas.”
From next spring millions of npower’s home and small business customers will be handed to E.ON UK, while npower’s profitable supply arm servicing business and industrial customers will continue to operate as normal.
The end of the energy market’s big six era comes after E.ON inherited npower as part of the mega-deal with rival energy giant RWE earlier this year, and was unlikely to find a buyer for the struggling business.
Npower has lost millions of customers in the last four years, leading to consecutive financial losses for the troubled company.
In the first nine months of the year losses deepened to €167m (£142m), from a loss of €71m in the same months last year, as customer losses accelerated to 220,000 in the last three months alone. The supplier had 3.6 million gas and electricity customer accounts at the end of September, down from four million at the start of the year and 5.4 million at the end of 2015.
Michael Lewis, the chief executive of E.ON UK, said restructuring npower would help build “a sustainable business with a lower cost base that allows us to compete in this extremely challenging market”.
He said: “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.”
Npower had hoped to weather the “unprecedented market challenges” by merging with SSE’s energy supply business but the deal fell apart late last year amid concerns over the credit worthiness of the planned new company.
Since then, SSE has agreed to sell its supply arm to the independent energy supplier Ovo Energy in a £500m deal to create the UK’s second largest energy supplier and safeguard the jobs of almost 8,000 staff. Npower has been unable to find a new buyer despite efforts to cut costs and reduce staff.
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.”
