Npower, owned by Germany's RWE, revealed Friday 550 call center employees at its offices in Stoke on Trent, 430 in Sunderland, 400 in Oldbury and 80 in Leeds would be laid off. Much of Npower's remaining customer service workforce will be outsourced, including to Tata Consultancy Services, which operates call centers in India.
The layoffs came shortly before Npower -- which has been hit by a series of customer service complaints after the introduction of new computer systems -- was set to introduce price hikes of as much as 11 percent for its 900,000 customers in Britain's northeast, the daily Northern Echo reported.
The company said in a statement the layoffs were being made as part of a restructuring to improve customer service and keep consumer bills low.
"I understand that these changes would be incredibly hard for some of our employees and we'll be doing everything we can to support them over the next few months," Npower Chief Executive Paul Massara said.
But, he added, "this restructure is necessary if we are to deliver the levels of service our customers deserve. All calls would still be answered in the U.K. We would have the flexibility to keep call waiting times down during busy periods, and continue to keep costs down so we can keep bills down."
The move brought immediate criticism from the opposition Labor Party, which has accused the coalition government of Prime Minister David Cameron of being too soft on the country's "Big Six" energy providers and has called for a price freeze on consumer bills.
"Npower is one of the biggest employers on Teesside (in County Durham), and we are losing jobs that are vital to our local economy so we must do something to persuade the company to change its mind," Labor MP Alex Cunningham told the BBC. "But they are only interested in profit, as we have seen from their huge price increases in energy prices in recent times. All they want to do is maximize their profits."
Labor Party leader Ed Miliband and shadow Energy and Climate Change Secretary Caroline Flint called in September for a 20-month consumer energy price freeze as well as new measures to improve "competition and transparency" in the wholesale and retail markets.
Flint has claimed Cameron is "too weak to stand up to the energy companies" while asserting that under his watch "the energy companies have increased their profits on the back of spiraling bills for hard-pressed consumers."
After media reports indicated the government was scrambling to come up with its own version of a price freeze, Cameron denied he was on the defensive.
"I want to help households and families by giving getting sustainably low energy prices," he said in a statement published by The Independent Saturday. "The only way you can do that is by increasing competition and rolling back the costs of some of the (green energy) levies on people's bills. I said that's what we were going to do. That is what we're going to do, and I think that's a very positive step forward."
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