Ovo Energy CEO must explain £40m payments, following job cuts in Scotland

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The chief executive of Ovo Energy has been asked by MPs and unions to explain £40million in loans and cash transfers, after cutting hundreds of Scottish jobs.

Stephen Fitzpatrick’s company received £17million in furlough payments after taking over the Perth-based retail division of SSE in January 2020.

The Perth-based company employs around 700 people, with bases in Edinburgh and Cumbernauld, where hundreds more work.

The businessman – whose company has come under fire for suggesting people cuddle their pets and ‘star-jump’ to keep warm as bills soar – is now removing around 1 700 jobs as part of a restructuring.

Accounts filed at Companies House show Ovo was charged £21million by parent company Imagination Industries – also controlled by Fitzpatrick – to cover “brand royalties”.

Meanwhile, nearly £20 million has been invested by Imagination Industries in other business ventures he has set up, including a flying taxi business and a prosecco dispenser.

Unite general secretary Sharon Graham and SNP MP Pete Wishart demanded an explanation, along with assurances that the money was not misappropriated, which could have saved jobs at Ovo.

Graham said: ‘There are a lot of questions to be answered about Ovo’s accounts – at the very least there shouldn’t be a penny more of taxpayers’ money spent on Ovo until they provide answers.

“At this time Ovo’s offices in Perth, Edinburgh and Cumbernauld are going to be closed, putting hundreds of jobs at risk.

“Unite has asked the company to open the books before any layoffs are imposed on the workforce.”

Wishart added: “When Ovo took over SSE, they came with all sorts of commitments to develop the site, maintain the jobs and grow.

“Instead, what we find two and a half years later is that they are in fact going to close, creating a huge hole in Perthshire’s labor market.

“This hole is going to be very difficult to fill and it is bitterly disappointing – some of the financial issues need to be properly investigated – we need to be confident that the money has not been used in other businesses which could save jobs at Ovo.

“I think Mr. Fitzpatrick needs to explain exactly what happened here, and there are serious questions about how some of that money was moved around some of his businesses.”

Wishart said intense talks took place on Friday with Ovo executives.

He said: ‘Unfortunately Mr Fitzpatrick was not present but other senior staff were there.

“They say they want to achieve these cuts through voluntary departures and there are plans to create a new hub in Glasgow.

“But it was overall disappointing – why close a base in Perth to open a similar one elsewhere? and it seems unlikely that so many jobs will be taken up by voluntary departures.

In January 2020, Ovo was fined £8.9 million by regulator Ofgem for overcharging customers.

The group reported a pre-tax loss of £176million on revenue of £4.5billion in 2020.

It became the UK’s third-largest gas and electricity supplier, with around 4.5 million customers, when it took over operations from SSE.

In an interview earlier this month, Fitzpatrick said without government action to reduce bills there would be a “tragic situation in which UK households could not afford to heat their homes”.

Other deals revealed in the accounts that are being questioned by Unite and Wishart include a £5.6million loan from Imagination Industries to Vertical Aerospace – a company that builds electric air taxis and was listed on the Stock Exchange of New York last year for £1.6 billion.

The company has also loaned £4.4m to Imagination Industries Incubator, £1.6m to software development company Imagine Just 3 Things and millions more to a company called Imagination Industries Aero.

An undisclosed sum went to prosecco company Della Vite Trading.

There is no suggestion of illegality or wrongdoing by Fitzpatrick or anyone at Ovo.

Fitzpatrick said, “I founded Ovo Energy with my own savings in 2009 and still own over 60% of the company.

“The Ovo Brand Licensing Agreement was put in place in 2014, as we prepared for external investment, and is a joint commercial agreement put in place to protect brand ownership.

“Licensing fees are budgeted annually as normal business costs and have been referenced in all of our accounts filed with Companies House for the past eight years.

“Imagination Industries pays full UK tax on its license fee income and has already reinvested these funds into the creation of several new businesses, including Vertical Aerospace, a Bristol-based electric aircraft company.”

Referring specifically to Ovo’s Scottish operation, an Ovo spokesperson said: “Scotland is a great location for our business, which is why we are making it a center of operational excellence and the one of our three offices.

“We are opening a new Ovo Academy in Glasgow, creating opportunities in the city that hosted COP26, for those who want to be at the forefront of the green revolution in the UK.

“As we close some of our offices, there is an opportunity for remote working.

“We are committed to investing in Scotland – to creating better-skilled, better-paying jobs in Scotland.

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