October 10, 2018

The kids are alright for Clydebank energy man.

Paul Richards is aware of the good fortune he had in his early life. Now he is determined that others are given the same opportunity.

Mr Richards grew up in the Faifley area of Clydebank and won an assisted place to attend the prestigious Kelvinside Academy in Glasgow. He prospered at the fee-paying school and went on to gain a masters degree at the University of Aberdeen, which ultimately led him to a place on the British Gas graduate management programme.

Mr Richards acquired a broad grounding at the utility giant, and after leaving British Gas went into management consultancy, working for Capgemini and Vision Consulting. But all along his ultimate ambition was to start up his own business. And when he did, he resolved that he was going to make sure that people in his hometown were going to benefit.

“It was always apparent to me that my friends from home and my friends from school were much the same. But my friends from school had more opportunities,” said Mr Richards, who launched Clydebank-based challenger player Together Energy in 2016.

“It always made sense to me that when I set my own business up, I would come home, and I would make sure that I created some of the extra-curricular opportunities and horizons for people from home that haven’t been as fortunate as I have been.”

Together Energy, which is based in Clydebank Business Park, has acquired around 60,000 customers in the two years it has been operating.

Mr Richards had actually developed the model while working as a consultant, having scoped out a project for a Polish company which had been looking to move into the UK market.

That move did not get off the ground because the cost of coal plummeted. But Mr Richards saw merit in the proposals. “So, I took the business case, and built the company up myself,” he said.

A key part of his strategy is to keep operating expenditure as low as possible. “Our cost to come into the market has been lower than anybody’s in the UK,” said Mr Richards, who owns 74.6 percent of the equity in the business.

“There’s 60-odd active suppliers in the market just now. Because we have got the experience and we have got good grounding in the industry, we have managed to build up the systems and the processes we need, rather than having to spend lots of money on consultants and third parties.”

Alongside the tight focus on costs is a deep social commitment. The company now employs more than 100 staff, the overwhelming majority of whom come from what Mr Richards said are the “bottom 10 percent of postcodes” on the basis of the Scottish Index of Multiple Deprivation (SIMD).

Around 40 of those colleagues have been taken on through the company’s partnership with Street League, a charity whose mission to eradicate youth poverty through participation in sport.

“These are kids that would never think of university, or any real qualifications, being open to them,” said Mr Richards, who offers a gateway to higher education through a partnership with the University of Strathclyde. “They are even earning a £17,000 basic [salary].

“But, the flip side of that is you don’t need to teach them empathy. That is a hell of a lot harder to train than coming to work on time, [and] making sure you iron your shirt. They’ve got it instinctively. Most of them have grown up in poverty.”

It is a rich pipeline of talent. Indeed, three people are now attending university at Strathclyde, with another four on the access course.

But Mr Richards acknowledges the strategy is not without its difficulties. For while many of these young people possess raw, unharnessed potential, their lifestyles can be chaotic. Many had previously been told not to expect much of a future.

Mr Richards said: “It’s not always easy, but there are things that should be difficult that become very easy. Getting the right culture for your business when you are recruiting from there is very easy. People realise how well you are looking after them and become very loyal to the company. Loyal staff means loyal customers.

“They also care about the brand, so when customers are phoning and complaining they really care about it. The harder piece is accepting that their lives are volatile, and you have staff who can be high potential one day, and pretty much AWOL the next day. Taking a three, four-year view on the growth of the individual [is important]… is hard, but I’d rather be dealing with that than a homogenous culture. Where things are difficult, the fixes are much easier than where they are difficult for a massive corporate.”

As part of the nurturing philosophy Mr Richards has instilled, staff are offered a range of perks to boost their prospects and well-being. Declaring that the school system has “failed” many of his young recruits, he has employed a full-time teacher (who taught him at Kelvinside) to help with literacy and numeracy. An addiction counsellor is on hand, and there is a gym on the premises, supported by personal trainers. Free health insurance is provided to all staff through Vitality.

Mr Richards believes the investment can help people make telling adjustments to lives which bring benefit in the long term. Besides, the company also gains from having healthy, skilled staff.

“We can give someone who has been structurally poor 17, 20, 25 thousand pounds a year [but] they will still have spent all their money by the end of the month, because they are actually comfortable with not having money,” Mr Richards said.

“And when you start to offer things like university and private health care… these things start to change how the guys view money, how they view their disposable income, how they spend it. They start to take a longer-term view.”

Mr Richards added: “We don’t want to change them particularly. We’d like them to live till their 80. Just now they are going to live until they are 58 (based on local average life expectancy). It’s not about changing them, it’s just about changing some behaviour, so they are a little bit more consistent in the workplace, and they have as full a life as possible.”

Together Energy has emerged at a time when the energy sector is never far from the headlines, be it because of price rises or poor customer service. One especially hot topic is the introduction of an energy price cap, a move designed to protect consumers on the generally more expensive standard variable and default tariffs.

Mr Richards agrees with those who argue that the cap may discourage households from switching – potentially missing out on big savings – because they believe any price under the cap is a good deal. However, he agrees with the principle of the measure, which will be phased in this winter.

“We have never priced anywhere near the cap,” Mr Richards said. “But I do think Ofgem are doing the right thing, particularly for the most vulnerable in society. It’s a few hundred pounds for some people. Hopefully the message will remain for people to keep switching.”

Together Energy has recently shifted its selling strategy from the ultra-competitive one-year market to longer term deals. “We can’t play in that [one-year] market, we are looking to be a long term business,” he said. “We are not looking to sell out fast or anything else. The two to three-year market made much more sense to us. And that lock-in fixed income, coupled with the fact you are not having to have a renewal conversation every year, is helping drive down the op-ex (operating expenditure), which is then driving better savings on to the customers.”

As for his overall ambition, Mr Richards’ goal is to “consolidate well-paid work in Clydebank, and be Scotland’s number one energy company”. So far, so good.

Six Questions

What countries have you most enjoyed travelling to, for business or leisure, and why?

For eight months I was fortunate to work in Mumbai and Pune and I continue to go once a year to India because it’s a fascinating county. It’s also where I proposed to my wife.

When you were a child, what was your ideal job? Why did it appeal?

When I was very young I watched a TV programme about acid rain and I really thought the end of the world was about to happen. I decided I would like to be an environmental scientist and try and save the world.

What was your biggest break in business?

I keep experiencing great opportunities but definitely, it was securing the seed investment to enable Together Energy to happen.

What was your worst moment in business?

I am a bit regretful about moments in my late twenties when I was working in the gas industry and I joined my first leadership team. I feel I let myself down by being both a bit naive and maybe over-confident in those early meetings. I quickly learned to listen first and not assume I knew all the answers.

Who do you most admire and why?

My younger brother, Michael, who lives with a number of disabilities and never lets it hold him back in life.

What book are you reading and what music are you listening to? What was the last film you saw?

I’m in the middle of The Second Sex by Simone de Beauvoir, which is a really interesting study into modern feminism. I listen to all sorts of music on Spotify but you can’t beat some 1990s dance tunes. The last film I saw was The Black Klansman.

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It was actually a pleasure talking to Lis. Many Utility firms can be abrupt and use jargon. There was none of this and although it is the first time we had spoken together it felt like talking to old friends.