Gladstone Brookes | British Gas owner Centrica cuts 6,000 jobs as profits double

British Gas owner Centrica cuts 6,000 jobs as profits double

 British Gas owner Centrica cuts 6,000 jobs as profits double

Centrica, the firm which owns British Gas, has announced they will be cutting 6,000 jobs on the same day they announce British Gas profits have doubled in the last six months.

The profits from British Gas’s residential arm rose from £265 million last year to £528 million for the same period this year. Centrica group profits fell by 3% to £1 billion.

Rise

The rise in British Gas profits was due to higher gas consumption, triggered by the cold weather earlier this year compared to the relatively milder winter of 2014, claim Centrica.

But at the same time profits in the group’s oil and gas production division slumped by 78% to £116 million as a result of lower oil prices.

Job losses

It is understood the majority of the 6,000 job losses will be in the UK and 3,000 will go by the end of 2017.

Centrica say half will go through redundancies and the rest through natural wastage.  However, 2,000 new jobs will eventually be created in growth areas.

Review

Iain Conn, appointed chief executive by Centrica at the start of the year, said he has been conducting a strategic review of the business over the last five months and reached the conclusion that the group should concentrate on the British Gas retail side of the group and reduce its activities in energy production.

He denied that British Gas was making excessive profits and said profit per customer was planned to remain the same as in other years – between £40 and £65.

Cut

The company cut gas prices by 5% earlier this year and is due to reduce them by a further 5% next month.  The double cut means the average annual gas bill should be reduced by £72.

They came after the Competition and Markets Authority (CMA) announced an investigation had discovered the energy industry as a whole have been overcharging their customers by £1 billion a year.

Criticised

The size of the profits increase has been criticised by Ann Robinson, director of consumer policy at uSwitch. She claimed ‘sky-high bills’ were a factor.

She said: “Wholesale prices, which make up around half of energy bills, have plunged to their lowest level for five years.  Although British Gas are the only Big Six supplier to reduce gas prices twice this year, the fact remains that the combined cuts will lower its averaged dual fuel prices by just 6%.

Still waiting

“Meanwhile why are consumers still waiting for EDF, E.On, SSE, npower and Scottish Power customers to make further reductions.

“Suppliers must do the right thing by passing on savings to help consumers who are struggling with bills which are £700 a year higher than they were 10 years ago.”

Response

Iain Conn’s response to such criticism is that the profit rise had happened ‘despite us doing our very best to hand back to our customers the falls we saw in the commodity price.’

Asked why the firm had not simply cut prices further he said: “It’s easy in the rear-view mirror to say that.  We are not in the business to take money away from our customers. Nobody predicted the cold weather in May and June and it was not easy to react to that at that precise moment.”

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