Union says Aviva staff “paying for board failure”

Staff at Aviva whose jobs have been placed at risk in a £400 million cost-cutting drive are paying “the price of boardroom failure”, a union said today.

The Norwich-based insurance group, which employs 18,500 people in the UK, has warned that up to 800 jobs could be lost under a restructuring being overseen by new chairman John McFarlane.

He took the helm earlier this year after chief executive Andrew Moss stepped down following a shareholder revolt over pay and share price performance.

But David Fleming, national officer for the Unite union, said: “Our members face being asked to pay the price of boardroom failure and Unite is dismayed that what started out as a shareholders’ revolt on executive pay will result in a jobs cull. This is totally unacceptable.”

The cost-cutting drive will focus on removing layers of management, while Aviva has said it could guarantee only 70 per cent of the jobs in the UK life and pensions department.

Up to 800 UK jobs are at risk but Aviva said its record of keeping role reductions to a minimum meant the figure was likely to be lower.

Scots-born McFarlane – a former non-executive director of Royal Bank of Scotland – has already begun the process of jettisoning non-core businesses and hopes to save £400m by 2014 through simplifying the business.

Fleming urged Aviva to “come clean” about the extent of the cost-cutting programme in the UK.

He said: “What started out as an initiative to cut bureaucracy and duplication at senior and middle management levels under the banner of ‘Project Simplify’ has quietly turned into a major job cuts programme.”

Aviva recently announced a 10 per cent drop in half-year operating profits to £935m, less than the figure of around £1 billion most analysts expected. The weaker performance was linked to higher restructuring costs and the weakening of the euro against the pound.