United Utilities ignites jobs row

Employment: Political uproar as utility lays off thousands of workers, but expansion plans bring some good news for Wales and Ulster

MARY FAGAN

A political row erupted yesterday following news of 2,500 job losses at United Utilities, the company formed by North West Water's pounds 1.8bn takeover of Norweb, the regional electricity firm. The lay-offs compare with 800 previously projected and will be largely in the core water and elecricity operations.

Ian McCartney, shadow employment minister, attacked the planned cuts as "a slap in the face for thousands of hardworking employees". He added: "United Utilities is among the most profitable utilities in the country, and there is absolutely no need for these redundancies. Yet again the taxpayer is to be landed with a huge bill for unemployment benefit as employees are sacrificed to give a quick fix to the balance sheet."

Brian Staples, chief executive, said: "It's regrettable and we do not like it. But it is a fact of life in the industry today. The best people across both businesses will go forward with the group."

The job cuts in the core businesses emerged alongside plans to dispose of the group's retail, contracting and process equipment divisions, which employ about 4,000 in the UK and elsewhere. United also intends to pull out of power generation, an activity inherited from Norweb, which the new ownership feels is too small to be "meaningful".

United also hinted that it might seek further acquisitions in its drive to be a super-utility. The company said: "Ways are being explored of extending the group's utility activities into Europe whilst at the same time watching with interest the continued rationalisation in Europe."

The group said that the savings from the Norweb merger would be pounds 140m a year by the end of the decade, about 40 per cent more than had been originally thought.

Earnings enhancement in 1996/97 will also exceed expectations and real dividend growth of 11 per cent per annum is "possible".

United will make a provision of pounds 104m this year, largely to cover severance costs. Gearing at the end of the year will be 90 per cent, rising to 100 per cent next year but quickly falling back to between 75 and 80 per cent. The planned divestments, which the group said could take some time to achieve, could cull a further 10 per cent.

The move was broadly welcomed among City analysts. But some warned that United still faces the uncertainty of price control reviews at the end of the decade by two watchdogs, Ofwat and Offer. According to one analyst:"There is not much to get worked up about here except what appears to be a strategic decision to retrench into the core utility operations." The group's shares moved up 14p to 611p.

Separately, Calor Group yesterday warned of redundancies to come, and British Rail's engineering development unit announced job losses.

Calor, Britain's biggest supplier of bottled gas, warned more than 300 workers at its Slough headquarters, close to London, that there would be redundancies following a decision to close the office by next year. The move forms part of a plan to redistribute head office functions between existing regional offices and a new customer management centre to be established this year near Leamington Spa in Warwickshire.

The company refused to give further details ahead of a preliminary results announcement due this morning, but the business is known to be facing difficulties.

British Rail's engineering development unit is to close by the autumn with the loss of 58 jobs. BR had hoped to sell the Derby-based unit, which specialises in development of prototype rail vehicles.

Comment, page 25

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
News
ebooksNow available in paperback
Life and Style
tech
News
The 67P/CG comet as seen from the Philae lander
scienceThe most important scientific breakthroughs of 2014
Arts and Entertainment
Ian McKellen as Gandalf in The Hobbit: The Battle Of The Five Armies
film
Arts and Entertainment
Sarah Koenig, creator of popular podcast Serial, which is to be broadcast by the BBC
tvReview: The secret to the programme's success is that it allows its audience to play detective
News
Ruby Wax has previously written about her mental health problems in her book Sane New World
people
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Marketing Services Manager - (communications, testing, DM)

£32000 - £35000 per annum + benefits: Ashdown Group: Marketing Services Manage...

Guru Careers: Finance Account Manager

£Neg. (DOE) + Excellent Benefits: Guru Careers: A Finance Account Manager with...

Ashdown Group: Java Developer - Hertfordshire - £47,000 + bonus + benefits

£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

Ashdown Group: Direct Marketing Manager - B2C, Financial Services - Slough

£45000 - £55000 per annum + Benefits: Ashdown Group: An exciting opportunity h...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas