E.On is planning on cutting as much as 500 jobs at both its head office in Coventry and its Nottingham centre. In order to adhere to the changing business, the company claimed it needed a reduction in numbers after its distribution arm, Central Networks was sold last March.
E.On recently became the fourth company in the “Big Six” of the energy industry to increase the prices of energy bills. Gas tariffs have increased by 18% and electricity by 11% as of September 13. The firm had blamed the increases on the increase in wholesale energy prices this past year, with an increase of 30%. No doubt this, along with concern from customers, has led to some of the job reduction.
Consumer Focus had asked for the energy companies who increased prices to be investigated, asking for energy regulator, Ofgem to step in and take some control. Chief executive of the consumer group, Mike O’Conner, claimed that wholesale costs are a third lower than when they peaked in 2008, with a higher result bill costs. No doubt inflation has also had an impact, with a rise of 4.5%, 2.5% above the Bank of England’s target. Whatever the case, E.On has resorted to cuts in employment as a part of reducing its own defecits and remaining in business.
E.On had hoped to use voluntary redundancies in order to cut the jobs. Around 12,000 people are employed by the gas and electric company, which not only supplies power and gas to households and businesses, but also generates electricity.
Dr. Paul Golby, the chief executive of the company in the UK said, “We had to undertake a deep and rigorous review of how much money we spend in order to ensure we keep costs as low as possible for customers. While I’m very aware that this will be a difficult time for our colleagues, it is our aim to keep uncertainty to a minimum and to achieve these redundancies by voluntary means.”
The company was unable to disclose how many people would be made redundant at each location, claiming that because they had hoped for voluntary redundancies, they would not be able to determine the effects at this time.