Energy giant Scottish and Southern Energy to shed 900 jobs

Up to 900 jobs will be axed at Scottish and Southern Energy (SSE) after the company announced today it was immediately suspending all its doorsteps sales.

The decision to abandon old-fashioned door-to-door selling follows a breakdown in confidence in the practice among consumers, the energy giant said.

It also comes two months after the company was found guilty of using doorstep salesmen to mislead potential customers in a case brought against it by Surrey County Council.

Commission-based doorstep selling has ceased to be an effective way to gain customers for the long term, the firm said, adding that it expected to permanently close its doorstep sales operations.

It said in a statement: "Confidence in the way companies sell energy on the doorstep, and the way in which salespeople are remunerated, is low."

It also acknowledged that energy was a "significant purchase" and the sales process required "increasingly significant" customer safeguards.

The energy supply market was evolving from the simple selling of electricity and gas to providing a bigger range of energy products and services as well, it said, adding that "engagement with customers needs to reflect this".

The statement said: "Subject to consultation with potentially affected employees, SSE believes this could result in the loss of up to 900 jobs in Great Britain, although it will be consulting with those people who may be affected about ways of avoiding compulsory redundancies.

"Its objective is to minimise the number of jobs lost, through the retraining and redeployment elsewhere in SSE of as many employees as possible."

Since household gas and electricity supply markets opened up to competition in the 1990s, doorstep, telephone, online, venue and partnership sales have been used by leading energy companies to encourage customers to change their supplier of electricity and gas.

In 2010-11, about 45% of SSE's total customer gains in Britain came from doorstep sales, the company said. The rest came from telephone, venue, online, direct mail and partnership sales, which will all continue.

Alistair Phillips-Davies, SSE generation and supply director, said: "By encouraging customers to switch suppliers, commission-based doorstep sales have played an important and useful part in the development of Britain's competitive energy supply market. Customers have been able to benefit from better value for money and improved standards of service.

"The reality is, however, that the world has moved on. We understand that fewer people are willing to engage with traditional doorstep sellers.

"Changes in products, services and processes mean the energy market has matured to a stage where we believe that commission-based, doorstep sales is no longer a sustainable way of securing energy customers for the long term.

"Energy companies need to earn and retain trust. That will be earned by teams of people in the community and in customer service centres who make customers' lives easier, not least by helping them to minimise their energy bills."

The potential consequences of the company's change in strategy were "obviously serious", he said.

He added: "We will work with them to achieve the best possible outcome in the circumstances.

"We have been saying for some time that while the last decade was about rapid growth in customer numbers, the next decade will be about the transformation in energy supply, as patterns of electricity and gas consumption change and as companies offer customers a broader and deeper range of energy services.

"So, although the steps we are taking may have some short-term impact on the number of customers we gain in the Great Britain market, we believe that this will be outweighed by the long-term benefit from deploying the right products and services in the right way."

SSE was convicted at Guildford Crown Court in May of two counts of taking part in misleading selling practices and is currently appealing against the verdicts.

It said it was also "continuing to co-operate" with Ofgem's ongoing investigation to establish whether four suppliers, including SSE, were complying with new licence conditions introduced in 2009 to govern energy sales processes.

Consumer group Consumer Focus called for an end to all doorstep energy selling in the wake of SSE's announcement.

Director of energy Audrey Gallacher said: "Cold-call doorstep sales have been a continuous problem since the competitive energy market was introduced.

"Suppliers have an appalling track record on mis-selling and have failed to offer their best deals face-to-face, leaving a huge number of customers switching to a worse deal.

"The energy industry has had a decade to get doorstep sales right and has failed. Four suppliers are currently under investigation by Ofgem and SSE itself was in fact found guilty of misleading tactics in a very recent court case.

"We welcome the announcement by SSE and hope that it will encourage other energy suppliers to end cold-calling sales on the doorstep which can pressurise consumers into making poor decisions."

Price comparisons service uSwitch also welcomed the news of SSE's suspension of doorstep sales.

Energy expert Tom Lyon said: "SSE has recognised that the energy market has moved on and that consumers now need a more holistic approach to getting the best value from suppliers and information and support on reducing their energy usage. This is vital in today's high cost energy world."