... and Southern Water axes 2,000

ScottishPower is to almost halve the size of the workforce at Southern Water, the privatised company it bought for pounds 1.7bn earlier this year, through a combination of redundancies and disposals.

More than 700 jobs will go through a voluntary redundancy programme at Southern's main water and sewerage business, while a further 1,340 employees will leave the company after the sale of 14 non-core subsidiaries. The job reductions will be completed by March 1999.

The Worthing-based company currently has 4,450 staff, of which 2,218 work in its 20 non-regulated businesses.

The sell-offs will raise around pounds 70m, with an extra pounds 30m benefit from property disposals. The cut-backs, which will cost pounds 21m mainly in redundancy pay, will also generate annual cost of pounds 52m.

Mike Kinski, brought in to run Southern after the takeover, gave a damning view of the company's previous board, all of whom have since left. He said too much had been spent on duplicating administrative functions while customer services investment had been neglected.

The businesses to be sold off include an estate agency chain, a computing company and a vehicle-leasing operation. Though they accounted for more than half Southern's staff, they generated just 14 per cent of the group's sales and 7 per cent of its profits.

Mr Kinski insisted the "vast majority" of the staff involved would keep their jobs when the businesses were sold, and disclosed he had received several approaches from outside firms.

Dilys Plant, the head of external relations for Ofwat, said Ian Byatt, the water regulator, had been warned in advance about the job cuts. He said: "The key issue will be whether or not there is any deterioration in service. We have said in the past we wouldn't want to see companies drive down costs and adversely affect customer service."

ScottishPower yesterday revealed a 31 per cent rise in half-yearly pre- tax profits to pounds 167m. It raised its dividend payout by 19 per cent to 18.5p.

The announcement was preceded by a violent storm which cut off 16,000 ScottishPower electricity customers. By late last night 9,000 homes were still waiting to be reconnected.

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