NATIONAL GRID NEWSLETTER

THE THREAT TO THE NATIONAL GRID NEWCASTLE SITE:

WHO'S REALLY TO BLAME?

Members will be aware that the Union has been in very serious negotiations with National Grid over the future of the Newcastle site, which is under threat of closure despite achieving cost savings of £3m.

GMB has also been campaigning hard on this issue, including a meeting with Ofgem's Managing Director for Networks, after National Grid pinpointed the Regulator's price control review as being responsible for driving the need for the Company to focus on efficiency measures.

It now appears that National Grid, and Chief Executive Steve Holliday in particular, have been seriously misleading the Newcastle workforce and shop stewards, their local MPs, and GMB officials, about the background to the proposal to close the Newcastle site.

Let's look at the facts:

1.         National Grid tell GMB representatives and local MPs that it is the Ofgem price control review that has caused the problem.

This is referred to in a letter (5^th January 2009) that Steve Holliday wrote to Stephen Byers MP, which stated: "National Grid performs essentially regulated monopoly activities in the UK and as such is subject to price controls from the Regulator, Ofgem. The price controls examine National Grid's cost base, including all controllable costs, such as the tasks carried out by our Shared Services Centre."

2.         Ofgem vigorously refutes any suggestion that the blame for any decision to close or scale down the Newcastle operation lies with the Regulator.

On 9^th June 2009, Steve Smith, Managing Director of Networks at Ofgem, wrote to GMB stating: "As an independent company with fiduciary duties to shareholders, if National Grid believes that changes to its operations in the north east are necessary to improve efficiency, then they would of course make those changes irrespective of any price control settlement……Our proposals are a package, with no specific requirement on National Grid to move to the frontier in shared services or any other cost area and certainly no requirement on National Grid to offshore activities."

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3.         Ofgem refer to an exchange of correspondence between Steve Holliday and Alistair Buchanan, Chief Executive of Ofgem, in which Steve Holliday admits that the decision to implement an efficiency drive at Newcastle is a National Grid one, taken in the interests of shareholders.

The letter states: "Steve Holliday concludes his response by agreeing that, in the same way that it is Ofgem's responsibility to undertake price control reviews to protect the interests of customers now and in the future, the responsibility for management decisions about the future of particular operations rests with National Grid." 

The facts are clear.

• The decisions about the future of Newcastle are being made by National Grid management.

• They are not being driven by the Ofgem price control review.

• Nor are the decisions being made in the interests of customers, but by the "needs" of shareholders.

• National Grid made a profit in the last financial year of over £2.9 billion, a 12% increase on the previous year.

• Earnings per share increase by 14% and dividends paid to shareholders were 8% higher than in 2008.

By trying to blame Ofgem, National Grid has exposed itself as being untrustworthy, unreliable and dishonest. Trade Union members and their families whose futures are under threat need to know the truth. They deserve nothing less for their hard work, loyalty and the contribution they have made to the success of a company making multi-billion pound profits.

The Trade Unions will be stepping up the campaign to prevent the unjustified closure of the Newcastle office and the destruction of local jobs. Members will be kept fully informed of developments as they occur.