British Gas owner cuts jobs as it braces for pay row at AGM

Axe In Wood

Centrica will cut 3,000 jobs this year as the group, which owns British Gas, reduces costs to shore up its financial position.

The job losses mean Centrica will achieve half the 6,000 reductions it had planned by 2020 during 2016, with 800 having already been axed in the first three months of the year. About 5,000 of the cuts will be in the UK with the rest in North America.

Centrica announced the rapid pace of job cuts as it prepared for questions about boardroom pay and its environmental record at its annual general meeting on Monday.

The highest profile company to hold its AGM since the rebellions over pay at BP and Smith & Nephew on Thursday, Centrica has already faced criticism over a £3m pay deal for chief executive Iain Conn.

When Conn’s pay was revealed last month, fuel poverty campaigners noted that the company was among those criticised by the Competition and Markets Authority for overcharging customers.

Conn’s pay was for a year when operating profits fell 12% to £1.5bn. At last year’s AGM, just 67% of investors voted in favour of the remuneration report after concerns were raised about the pay deal for Conn, who was hired from BP.

In its trading update ahead of the shareholder meeting, Centrica said the number of British Gas residential energy contracts fell by 224,000 in the first quarter of this year to 14m but that it planned new deals to keep customers. This 1.5% fall was faster than the 1% decline for the whole of last year.

At this year’s AGM environmental campaigners are preparing to ask Centrica - which through its British Gas subsidiary holds 40% of UK gas accounts - to take further steps to encourage customers to cut carbon emissions.

Bruce Duguid, a director at fund manager at Hermes Equity Ownership Services, is preparing to ask Centrica’s board about action it will take to raise the company’s grade from the carbon disclosure project back to A from the B it was awarded last year.

Dugiud plans to ask two questions. “Given that 90% of carbon emissions associated with Centrica occur at its customers and not within the company itself, will Centrica consider setting ambitious carbon reduction targets for its customers in addition to those for its power generated?”.

“And secondly, will Centrica seek to regain the coveted ‘A’ grade from the carbon disclosure project?”.

Hermes, a member of the coalition of investors known as Aiming for A, acknowledged the methodology used by the carbon disclosure project did not full account of the reduction achieved by Centrica’s customers.

Centrica said it was on track to make £750m of cost savings by 2020 and that its UK business returned to profit in the first quarter of 2016.

Conn said: “We continue to make good progress in implementing our strategy, and with improving levels of customer service, good operational performance, lower costs, and the launch of new products to help customers manage their energy usage, we remain on track to deliver against our 2016 targets.”

Powered by article was written by Jill Treanor and Sean Farrell, for on Monday 18th April 2016 08.22 Europe/ © Guardian News and Media Limited 2010


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