The company, part of the German group E.ON, admitted on Thursday that its use of India had a negative impact. From today, Powergen said, all calls from its six million customers would be answered in the UK. It is to expand centres in Bedford, Bolton, Leicester, Nottingham, and Raleigh in Essex, and recruit and train 980 staff this year.

For five years the firm used the sub-continent to answer ten per cent of incoming calls. Powergen's managing director, Nick Horler, said, "When customers contact us, they need to be confident their query will be fully resolved quickly. Although the cost of overseas outsourcing can be low, we're simply not prepared to achieve savings at the risk or expense of customer satisfaction."

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The announcement was seized upon by union leaders as evidence that offshoring does not work. A spokeswoman for the consumer body Energywatch confirmed that last autumn it was receiving complaints about Powergen at a rate "twice the industry average.

In 2002 the company took over TXU Energy and it had serious problems merging the two databases, she said.

"Customers with billing problems have been phoning the company, and when those problems weren't resolved properly they complained to us", she added.