Powering Down: Npower to cut jobs

December 11, 2019

2 min read

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What's going on here?

The Big Six energy firm Npower has announced a cut of 4,500 jobs in an attempt to make the company more profitable.

What does this mean?

Npower is a subsidiary of the power giant E.On which is planning on merging their computer systems in order to save money. This restructuring is expected to cost Npower £500m and will mean that consumers as well as smaller businesses will be served by E.On’s computer systems and customer service teams. This plan is due to a changing energy sector where big suppliers are being pressured by the energy price cap and the growth of challenger brands which currently hold a 30% share of the market and by 2024 are predicted to have a 50/50 split with the Big Six firms.

What's the big picture effect?

The announcement comes as a blow just before the Christmas period for those employed at Npower. However, a Legacy IT system has considerable costs and through merging the system with E.On it will enable savings in the long term. The firm has blamed an “incredibly tough” retail market and the new price cap by the government which began in January 2019.  E.On announced a 27% loss in profit in the first 9 months of the year and Npower has made significant losses in the UK. Yet, although a benefit to businesses, the removal of the price cap will directly impact the consumer.

The General Secretary of Unison Union claims that the UK energy market is in danger of collapse and has urged the government to take ownership of the retail businesses of the six largest providers. With the general election looming there is a real possibility of energy nationalisation under a Labour government. However, such a move is bound to encounter legal challenges from the Big Six as well as from challenger energy companies which will suddenly find themselves unable to compete with a government run company. 

Report written by Michael Johnson

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