British Gas is to cut 850 jobs as part of a "transformation programme", the energy group Centrica has announced today.

Around 1,450 positions within Centrica are to go, which, following redeployment, use of fewer contractors and the removal of vacant positions, is expected to lead to approximately 850 job losses.

The reduction in positions will be realised primarily across managerial and support functions, but wherever possible, affected employees will be redeployed across the group, Centrica said.

As a consequence of the job losses and a number of associated costs, an exceptional charge of approximately £100 million will be declared in 2004. The changes are expected to yield an operating cost benefit in excess of £90 million in 2005.

This reduction is due to the acceleration of elements of its British Gas "transformation programme" and the "streamlining of some supporting functions".

The group – which employs around 39,000 staff in the UK – said that there would be no impact on the number of engineers and other staff who deal directly with customers.

Centrica Chief Executive, Sir Roy Gardner, said: "This announcement marks an important step in realising the benefits of our business transformation and will contribute to the delivery of British Gas' eight per cent operating margin target for 2005. It will also enable us to invest more time and resources in the delivery of enhanced service to our customers.

"However, we recognise that this is a difficult time for those involved and will make every effort to support them through this period of change."

British Gas is recruiting call centre staff as well as an additional 1,080 engineers in 2004; following the success of its Engineering Academy, it plans to introduce apprenticeships into call centres later this year.

(gmcg)