Another 2,000 jobs to go as Direct Line slashes costs

Direct Line, the insurer that owns Churchill and Green Flag, yesterday said it will cut a further 2,000 jobs in the UK on top of the 1,236 it axed last year.

The insurer, which had to be spun out of the taxpayer-controlled Royal Bank of Scotland last year on European regulator orders, said it needed to make the reductions to "regain competitive edge".

The job losses will come largely at its head office in Bromley, and across support functions including human resources, risk, communications and finance. Just over 500 jobs will go at Bromley and another 80 in Croydon.

Direct Line said the cuts would help to ensure that its cost base comes down to £1bn by the end of 2014, which is £130m less than the 2011 figure.

The cost of making the cuts, including redundancies, onerous property leases and transferring away from RBS computer systems to its own new ones, would total £440m by the end of 2014. Half of that will fall this year.

Unite, which has several hundred members at Direct Line but no union recognition, described the cuts as a "savage blow".

Dominic Hook, national officer for finance, said: "The fact that Unite, the union with the largest number of finance sector workers in the country, has been refused recognition makes it easier for Direct Line to announce these savage cuts out of the blue.

"Unite will continue to strongly oppose anti-union bias where it exists in the finance sector and will give all the support we can to our members at Direct Line on an individual basis," he added.

The company's chief executive, Paul Geddes, said: "This is another important step in the ongoing transformation of Direct Line and an important part of our aim to regain competitive edge.

"While we continue to invest in the business with the aim of winning in a market which is changing fast, it's clear we need to become more efficient to deliver the good service and value our customers expect."

A Direct Line spokeswoman said: "We are still built like a bank and we need to be built like an insurance company. Since the flotation away from RBS we have taken full control of our own cost base."

Mr Geddes added: "We have not made these proposed changes lightly and understand the impact they will have on our people. As we have done in the past, we will deal fairly and carefully with those impacted, and do all we can to support them through these changes."