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Letter: Utility job cuts no harm to taxpayer

Sir: David Blunkett's accusation that taxpayers have picked up the cost of job losses in the utilities ("Utility job cuts `cost taxpayers pounds 805m' ", 14 October) is unfounded.

While it is true that in the electricity industry staffing levels have been reduced, they have been done so largely through voluntary severance and early retirement packages. Such satisfactory settlements have meant these individuals have not needed to rely on state benefits. In fact many of them are paying income tax on their pensions.

At the same time the industry contribution to the Exchequer is considerable. Since 1990 the Government has received around pounds 24bn: sale proceeds from privatisation amounted to some pounds 15bn and currently the industry pays over pounds lbn per year in corporation tax. Last year alone the industry's annual VAT payment was pounds 2.5bn.

As with any commercial business, it is not appropriate to employ more people than is necessary. One of the results of such increasing efficiency is the falling cost of electricity to all customers. Domestic prices are now 11 per cent less than six years ago, after allowing for inflation. Industrial prices under contract are as much as 16 per cent cheaper in real terms than in January 1994.


Chief Executive

Electricity Association

London SW1