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Business News

BT doubles job cuts to 30,000

One of the biggest job cuts of the current recession was announced today when telecoms giant BT revealed plans to axe up to 15,000 posts in the coming year - 10 per cent of its workforce.

The firm said it had already slashed 15,000 jobs in the last 12 months, 5,000 more than expected, as it unveiled pre-tax losses of £134 million for the year to March 31.

BT said it was aiming to cut the jobs through natural wastage, non replacement and voluntary redundancy and had no plans for compulsory lay-offs, but the scale of the losses was grim news for the economy, coming just days after unemployment jumped by almost a quarter of a million to 2.2 million.

Chief executive Ian Livingston said BT would do all it could to protect the jobs of its permanent staff despite the scale of the cuts, pledging that some workers would be redeployed and retrained and could even take up a BT apprenticeship.

There will be a "substantial" reduction in recruitment this year and fewer apprentices will be taken on, said Mr Livingstone, revealing that 2,000 jobs came back from India in the last year in a reverse of the outsourcing drive followed by many British companies.

Mr Livingston said there will also be more flexible work patterns introduced, including call centre staff based at home rather than in an office.

The pre-tax losses follow a mammoth £1.9 billion hit from BT's global services arm, which provides IT networks to multinational businesses.

BT announced £340 million of provisions in February but added another £1.2 billion today because of a more cautious view on the progress of cost savings and the performance of the division's two biggest contracts, thought to include its work on the £12.7 billion overhaul of the NHS's computer system.

The division also booked £280 million of restructuring charges and warned of a further £420 million of costs over the next two financial years.

While its other businesses have been performing well, BT signalled the problems at the global services division last October, sending its shares below their flotation price more than 20 years ago.

BT dealt a further blow to shareholders today by announcing a 59% cut in the company's full-year dividend to 6.5p a share, while saying it will be increasing its pensions payments from £280 million to £525 million a year, although there was no new figure for the size of its deficit.

Mr Livingston said: "Three out of four of BT's lines of business have performed well in spite of fierce competition and the global economic downturn.

"However this achievement has been overshadowed by the unacceptable performance of BT Global Services and the resulting charges we have taken."

He said there were signs that a new leadership team at BT Global Services was starting to turn the division around.

BT's revenues rose 3% to £21.39 billion in the year to March 31, but the company said economic conditions and the restructuring of global services meant it was braced for a fall of between 4% and 5% in the current financial year.

At BT Retail, revenues were down 3% in the final three months of the year, driven by a 7% decline in consumer revenues as weaker calls activity was only partly offset by growth in broadband and TV-on-demand service BT Vision.

BT said its workforce fell from 162,000 to 147,000 in the year to March, 5,000 more than predicted, with the extra cuts largely among agency staff.

The company said it had worked very closely with its unions to ensure that alternative work is found for any members of staff who didn't volunteer for redundancy but whose position has gone, adding that more than 2,000 staff have been found alternative work within BT.

Andy Kerr, deputy general secretary of the Communication Workers Union, said: "Fifteen thousand is a very challenging level of job losses, especially on the back of last year's reductions.

"We expect the majority of job losses to be third party - contractors and agency staff - as they were last year with many jobs being lost outside of the UK. However this is a serious day for staff at BT.

"We're working closely with the company to ensure any losses are voluntary and we're looking at new ways of finding new work and retaining permanent employees, including secondment agreements."