Ovo Energy tells staff it will cut a quarter of its workforce

By Dearbail Jordan
Business reporter, BBC News

Image caption,
Ovo Energy's chief executive Stephen Fitzpatrick

Ovo Energy, the UK gas and electricity provider, has told staff it plans to cut a quarter of its workforce.

The firm confirmed in a letter to its employees that it will axe 1,700 roles from a total 6,200 workers.

The reorganisation is linked to its acquisition of SSE three years ago and the integration of the firm into Ovo.

It is understood the cuts will be made through voluntary redundancy. Ovo has also told staff it will raise minimum pay across the firm to £12 an hour.

In the letter, Adrian Letts, the boss of Ovo's retail business, told staff: "Whilst it is regrettable to be reducing roles across the business and we understand this will be an uncertain time for many, we will fully support all our employees as this process develops over the coming months.

"We are engaging with our recognised trade unions to ensure all receive the right information and support."

Unite, the union, said it had warned back in 2020 about the possible impact Ovo's takeover of SSE's retail business and the possible impact on jobs.

On Thursday, Unite's general secretary Sharon Graham said: "We will do everything in our power to defend our members' jobs.

"We will not sit by and watch our members being made to pay the price of the pandemic."

Ovo said that it will reduce the number of its offices from 10 to three in Bristol, Glasgow and London. It also said that "more employees will also be supported to work flexibly from home should they wish".

The company added that it intends to "reverse the policy of off-shoring from the previous owner and create more high-skilled jobs here in the UK".

Ovo took over SSE's household energy business in 2019. A spokesperson for Ovo declined to say how many roles the shift away from off-shoring would affect.

Mr Letts said the changes "will enable us to better serve our customers".

But Gary Carter, national officer at the GMB union, said: "At a time when more than 20 energy companies have gone to the wall and customers are looking to other providers for their energy needs, this looks like the wrong time to cut jobs."

The energy sector has been struggling with higher wholesale gas prices since last September and the UK's price cap for households means firms have been unable to pass on the rising costs to retail customers.

It has led to large numbers of smaller energy businesses going bust. Larger energy companies have taken on the customers from firms that have collapsed.

It is the second time Ovo has announced major job cuts since the pandemic began. In May 2020, it reduced its headcount by 2,600 workers and closed offices, stating that Covid had led to more people paying their bills online.

Most of the cuts came from the SSE business which Ovo bought for £500m, which added 3.5 million customers to its existing base of 1.5 million households.

Mr Letts said that Ovo is shifting around 120,000 SSE customers a week onto its own operating platform which it said will "significantly drive down costs and improve the customer experience".

Rising bills

Regardless of the price cap, households are set to see a significant rise in energy costs this year when the regulator Ofgem reviews the ceiling on gas and electricity bills.

When a company cuts costs it is usually bad news for staff, but possibly of benefit to its customers.

Reducing costs can lead to lower prices. Not this time. Household energy bills will rise, sharply, in April.

Anyone on a variable or default tariff - or whose fixed deal is coming to an end - is highly likely to see their annual bill go up by hundreds of pounds owing to sky-high wholesale gas prices.

The company has just apologised for suggesting customers do star jumps to keep warm. There certainly won't be any leaping for joy among staff and customers today.

Ovo boss Stephen Fitzpatrick has been lobbying the government to help reduce a rise in bills which would come into force in April. He has said that the rise in wholesale gas prices and its impact on people will be "an enormous crisis for 2022".

On Wednesday, he told the BBC: "Unless the government comprehends how significant this is in the coming weeks, we're going to face a tragic situation where UK households cannot afford to heat their homes."

However, his company Ovo offered slightly more controversial guidance this week on how to cut bills to SSE Energy customers - suggesting they do "a few star jumps" or hug a pet "to stay cosy".

Image source, Getty Images
Image caption,
Cats can double as a heating device, according to Ovo's - now deleted - advice for SSE customers

Ovo was forced to apologise and Mr Fitzpatrick blamed a "bad day" for "ridiculous" advice to customers on how to stay warm amid soaring energy bills.

He said he was "really embarrassed" by the "ridiculous" advice emailed to customers on "simple and cost-effective ways to keep warm this winter".

"We're a large company and somebody had a bad day," he said.

The guidance has since been removed from the website.

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