2,000 Scots fear for their jobs as the Prudential plans £195m cut in costs

Key quote

"This means at least six months of uncertainty in the lives of loyal staff based at Stirling. We are looking for clarity and transparency from the Prudential. We expect the company to enter into a genuine dialogue with Amicus with the aim of ending uncertainty and achieving the best possible outcome for the staff." - Amicus spokesperson

Story in full TWO thousand Scottish workers face a six-month wait to discover their future after insurance firm Prudential announced a £195 million cost-cutting plan in an effort to turn around its fortunes.

The firm yesterday began a review of its struggling UK operation, admitting jobs could be lost at Craigforth, near Stirling, where 2,300 staff work.

The union Amicus criticised the announcement, saying it created "unnecessary uncertainty" for the workforce at Britain's second-biggest insurer.

It is the latest in a series of employment blows for Scotland's economy, coming a month after electronics firm Simclar closed its plants in Ayrshire cutting 220 jobs, and eight weeks after NCR, the cash machine producer, revealed it would stop production in Dundee, putting 650 out of work.

Prudential said 2,000 of its 6,000 jobs in the UK were at risk, split between Stirling, Reading and London. Workers yesterday said it was widely rumoured 1,100 of the total would come from Stirling, mostly from IT and customer service departments, but the company declined to comment. A further 1,000 redundancies are expected from existing "offshore" staff in Mumbai.

Prudential yesterday revealed operating profits of £1.98 billion last year - up 15 per cent on 2005 - but indicated cutbacks were necessary to keep its underperforming UK operation in shape.

Nick Prettejohn, chief executive of Prudential UK, said the group was in discussions with outsourcing firms and had "yet to determine" whether the cost savings would come from "off-shoring" to low-wage countries such as India or outsourcing to other companies. Last month, it announced up to 130 jobs would go from Scotland to India over the coming year.

Anne McGuire, Labour MP for Stirling, said: "I have written to Prudential's chief executive seeking to confirm what the situation is in Stirling.

"Obviously, I'll be doing all I can to persuade them to remain in Stirling, where they make a significant contribution.

The company is the largest private sector employer in the city and therefore a valuable element of our local economy."

A spokesman for Amicus said: "This means at least six months of uncertainty in the lives of loyal staff based at Stirling. We are looking for clarity and transparency from the Prudential. We expect the company to enter into a genuine dialogue with Amicus with the aim of ending uncertainty and achieving the best possible outcome for the staff."

But privately, some staff have expressed surprise that the axe has not fallen sooner. A senior worker at Stirling yesterday said: "Cutbacks have been on the cards for some time now. It is grim but the only real shock today was that they haven't yet decided how many will go and from which site.

"A lot of folk were expecting to be told today that they were redundant."

Another said: "Recently there have been continuous reviews of jobs and we have had to frequently re-apply for jobs and go through waiting periods to find out the outcome, so this is almost like business as usual - its part of working at the Pru."

The worker added that the company was holding briefings with staff and sending out e-mail alerts to keep them informed.

Enterprise officials said Stirling's buoyant economy was well-placed to cope if Scottish jobs are cut in the Prudential review. A spokeswoman for Scottish Enterprise Forth Valley said: "The area is doing extremely well at the moment, particularly in Stirling. Unemployment is consistently lower than the national average, the area is well-connected by road and by public transport and there has been £750 million in investment in Falkirk's economy in the past four to five years.

"Obviously there has to be concern at the suggestion of any job losses but it is certainly not a picture of doom and gloom."

She added that Scotland's financial services industry directly accounted for 113,000 jobs. "It is a big and robust sector," she said.

Prudential's review follows a troubled past few years for its UK operation, including a takeover attempt last year by rival, Aviva. Last month, it sold the loss-making credit card and loan business, Egg, to Citigroup for £575 million. Egg lost £145 million last year due to "difficult trading conditions in the UK personal loans market".

Yesterday's cost savings are part of a wider plan to make the firm more competitive. Mr Prettejohn said he was "confident" of making the savings within three years and would give further details on the future of the jobs at stake by the end of this year.

The Amicus spokesman expressed concern that, although it had 400 members working at Craigforth, it was unable to access the site for meetings. "It is one of the issues we'll be seeking to address with the Prudential as soon as possible," he said.

Craigforth, close to the M9 at Stirling, was once the HQ of Prudential's subsidiary, Scottish Amicable, the financial services company whose separate brand name was ditched in 2001. It was built in the early 1950s for workers transferred from its former offices in Glasgow.

David Nisbet, a Merrill Lynch analyst, welcomed Prudential's announcement of a "refinement" of its existing UK business strategy as opposed to a radical shake-up.