Siemens pledged this week that it would not force redundancies when it takes over National Savings in April. But the German electronics giant has offered no written guarantee to the government-run savings institution.
Accountancy Age has learned that if Siemens manages to prevent mass redundancies it stands to receive half of the #45m set aside to pay for job losses. National Savings will inherit the remaining #22.5m.
Siemens Business Services is due to take over National Savings operations on 1 April this year. The institution has signed a ten-year contract with Siemens, including the option of a five-year extension, to take over most of its work.
Under the contract, almost 4,000 staff will be transferred to the company, including up to 20 of National Savings’ 30 accountants. But once transferred, National Savings will have no input as to how those staff are employed.
Siemens may well redeploy them to work on other projects outside National Savings.
There are fears that the transfer could lead to four-figure job losses at the agency, which manages more than #63bn of investments on behalf of 30 million customers.
In a recent report, the National Audit Office found that financial controls at National Savings were so lax that it was not possible to gauge the level of fraud, reconcile transactions or explain suspense accounts worth millions of pounds.
Two weeks ago, the institution appeared before MPs at the Public Accounts Committee to explain what steps it had taken to strengthen its financial management following the criticism from the NAO.
National Savings chief executive told the PAC that the restructuring will see the current staff slashed from 4,000 to just 120 in a ‘core’ service.
A National Savings spokeswoman said the level of possible redundancies was represented in the contract drawn up with Siemens by the #45m set aside.
‘The incentive is there for Siemens to find jobs for all these people.
But no-one can guarantee job security,’ the spokeswoman said.
Siemens told Accountancy Age, however, that it wanted to employ National Savings staff and would be able to create roles for them all.
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