BT upsets unions with move to save pounds 500m

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The Independent Online
BT HAS launched a 'mini- restructuring' in an effort to boost revenues by at least pounds 500m a year.

The project, codenamed 'Breakout', is intended to help offset the effects of increasingly tight regulatory restraints on the company, but its existence is likely to fuel fears that BT is aiming to reduce staff by more than 60,000 to 100,000 by 1998.

BT says that the new regulatory formula, under which price increases are limited to inflation minus 7.5 percentage points, means that it must find an extra pounds 500m 'just to stand still'.

A spokesman for the company declined to say what form the restructuring would take, other than that it would mean BT becoming more focused on customers.

In the latest journal of the National Communications Union, which discloses the existence of Breakout, the NCU calls for the company to withdraw its alleged 100,000 target for staff numbers. BT currently employs more than 160,000 people.

BT has never confirmed the 100,000 figure, but Tony Young, the general secretary of the NCU, said that unions had been told that it was 'directionally correct'.

BT has already said it will cut 15,000 jobs this financial year, of which 11,300 have gone so far. A further 15,000 jobs are also to be axed next year.

Mr Young said he had told Michael Hepher, BT's group managing director, that staff co-operation in BT's fight against the effects of competition and regulation could no longer be taken for granted.

Employees were not being honestly consulted about change, he said, and added: 'The current state of industrial relations in BT is as low as the morale of its staff.'

The NCU is particularly incensed about BT's use of agency and contract staff at a time when it is laying off so many employees.

Earlier this month, BT announced a 50 per cent increase in pre-tax profits to pounds 1.5bn. However the company said underlying growth was only 2.5 per cent and warned of a harsher environment as competition and regulation grow.