Centrica to cut 5,000 jobs and slash management

Centrica plans to cut about 5,000 jobs with more than half the cuts affecting management as the energy supplier's new boss seeks to reduce costs and revive earnings.

The owner of British Gas said most of the job cuts would be made in the second half of 2020 and that about half its 40-strong leadership team would leave by the end of August. The cuts will affect about a fifth of Centrica's workforce of about 26,000 people and take the number of job losses since 2015 to more than 17,000.

Chief Executive Chris O'Shea is removing three layers of management and will have fewer customer facing business units that all report directly to him. He stepped up from chief financial officer in April, replacing Iain Conn who presided over a falling share price and declining earnings.

As part of the overhaul Sarwjit Sambhi, CEO of Centrica's consumer business, and Richard Hookway, who runs the business division, will leave the board on Thursday and quit the company by the end of July. Johnathan Ford, the finance chief of Homeserve, will replace O'Shea as Centrica's CFO.

Centrica said it would also consult with workers about new terms and conditions to consolidate more than 80 different employee contracts with many dating back over 35 years.

O'Shea said: "I truly regret that these difficult decisions will have to be made and understand the impact on the colleagues who will leave us. However, the changes we are proposing to make are designed to arrest our decline, allow us to focus on our customers and create a sustainable company.

"The harsh reality is that we have lost over half of our earnings in recent years. Now we must bring focus by modernising and simplifying the way we do business."

The company's shares fell 3.4% to 40.41p at 13:45 BST. The shares are worth a fifth of their value three years ago.

Centrica has suffering increased competition for UK energy customers and tougher regulation even before the Covid-19 crisis put extra pressure on its business. Bad debts are rising and demand has dropped sharply from business customers forced to stop trading.

In April Centrica blamed an energy price cap and lower gas market prices for a loss of more than £1bn. The company scrapped its dividend and shelved the sale of its Spirit Energy business in April as problems mounted.

Unions criticised the company for long-term poor management and lack of clarity on its plans. The GMB union said: “Slashing thousands more jobs is not the answer. You cannot just cut your way out of a crisis. GMB will fight for every single job.”

The Unite union said a call with Centrica's management left its officials in the dark about the effect of the cuts on frontline engineers.

The union's regional officer Mark Pettifer said: "It was all a bit vague and unsatisfactory. We are demanding much greater clarity and reassurance for our members who are providing much needed services to the nation’s households.”