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The question I would have for Bob Scott [chief executive of CGU] is how does this advance his strategy? CGU is big in the UK Their ambition was to do the same in Europe. This merger brings more exposure to the UK and more exposure to non-life insurance.” Mr Hitchins said CGU should have bought a life insurance company in Italy, Germany or Spain. He tipped Allianz as a potential bidder for CGU, with Norwich Union also looking vulnerable.Spokesmen for CGU and Norwich Union disagreed, saying that rival bids were unlikely, as an overseas player would not be able to match the synergies of the two British groups, which have been estimated at £200m a year within three years.There may also be regulatory concerns over some aspects of the deal. The merger will give the combined group 19 per cent of the UK general insurance market. The life insurance side of the business will be less of a problem, with the two companies accounting for 9 per cent of the total UK market.The two companies said both markets were fragmented enough to satisfy the competition authorities.The merger will create a new insurance giant, leapfrogging the Prudential, which has been Britain’s leading insurer for more than a a century. The new company will have with premium income of more than £25bn and over £190bn of funds under management. The strategy is to use greater scale to drive down costs and use the powerful domestic base as a springboard for expansion into the pensions and life business in Continental Europe.At the same time, the group plans to scale back business in the risky and less popular general insurance market and will put CGU’s US general insurance operation up for sale in a deal that is expected to raise more than £1bn.The deal will be structured as an all-share nil premium merger based on the relative valuation of the group.

On Friday’s closing prices that would give CGU shareholders 55 per cent of the new business with Norwich Union investors accounting for 45 per cent.The merged group, whose name is to be revealed today, will be based in London. Although around 1,000 jobs will be lost in Norwich, it is understood that there will be no cuts at Perth the former head office of General Accident.This is because of the terms of an agreement made when Commercial Union merged with General Accident two years ago.The combined group will be the fourth largest insurer in Europe behind Axa of France, Allianz of Germany and Generali of Italy CGU has been advised by Goldman Sachs. The deal, which was agreed by both boards on Friday, was codenamed “Project Albert”. Norwich Union has retained Dresdner Kleinwort Benson.The board structure of the new group has already been agreed. CGU Chief Executive Bob Scott will head the new combine until his retirement next year, when Norwich Union’s Richard Harvey will take the helm.CGU’s Chairman Pehr Gyllenhammar will chair the new group with Norwich Union’s George Paul as deputy.CGU’s Peter Foster will be finance director, with Norwich Union’s finance director Mike Biggs taking over the general insurance operations. Philip Scott of Norwich Union will be head of the combined life insurance business.Norwich Union, which de-mutualised in 1997 and came to the stock market in the same year, has been seen as too small to survive as the insurance industry consolidates.The deal will increase the pressure on Royal & Sun Alliance which has long been regarded as a takeover target.. The UK has achieved an “unemployment miracle” in cutting the jobless total since the mid-Nineties, but the Netherlands has done even better, according to the newest member of the Monetary Policy Committee.

The UK has achieved an “unemployment miracle” in cutting the jobless total since the mid-Nineties, but the Netherlands has done even better, according to the newest member of the Monetary Policy Committee.
Stephen Nickell argues that while both countries have achieved a performance which other European countries would do well to imitate, the latter has been more successful at creating employment than the UK. Professor Nickell, writing with Jan Van Ours in the latest issue of Centrepiece, the magazine of the LSE’s Centre for Economic Performance, says both the UK and the Netherlands have successfully changed their wage bargaining and benefits systems to help bring down high jobless rates.In the UK, weaker union power, tougher benefit rules and lower taxes on low-paid employees have reduced unemployment by 3.9 percentage points between 1990 and 1995, the authors estimate. The Netherlands achieved a similar reduction but in addition introduced active policies to match people with jobs. This helped boost employment levels by 15-20 per cent during the Nineties, whereas there has been little increase in the UK’s employment rate between 1990 and the present.A separate report published today also looks at the recipe for jobs market success. The Employment Policy Institute calls for the Government to cut red tape and boost provision of venture capital if the UK is to match America’s jobs performance.

The report’s author, John Philpott, says the secret of US success is not a deregulated and flexible labour market, but rather a high degree of entrepreneurialism.”At present budding entrepreneurs in the US find it easier to obtain venture capital than their US counterparts and face a regulatory environment which makes it relatively easy to set up an operate,” he writes.. The Ford motor company, which was accused of institutionalised racism at its factory in Dagenham, east London, has taken advice from the Army in its drive to overhaul its equal opportunities policy. The Ford motor company, which was accused of institutionalised racism at its factory in Dagenham, east London, has taken advice from the Army in its drive to overhaul its equal opportunities policy.
A “diversity manager” has been appointed with specific responsibility for improving the record of promoting black and Asian candidates – and women – within Ford UK. A similar post has been created solely for Dagenham, which employs a quarter of the company’s 26,000-strong workforce.Other steps include “diversity committees” to focus on the interests of staff from ethnic minorities at each of Ford UK’s 23 plants and offices, hotlines for reporting racial harassment and formal equal opportunities reviews to monitor progress.The Army was one of several businesses and organisations approached by Ford personnel executives to compare best practice, particularly on the sensitive task of countering charges of racism and broadening the racial and gender profile of senior staff.The move followed unofficial strikes at Dagenham last autumn over complaints of racist bullying. There have also been allegations of whites-only recruitment among its highly paid truck drivers, and the company suffered further embarrassment when it emerged that faces of black workers had been removed from advertisement posters in Eastern Europe.John Gardiner, Ford UK’s head of corporate affairs, said: “Although the Army are worlds apart in terms of their organisation, structure and the way they do things, there are always ways we can improve and new ways to do things.”Mr Gardiner admitted that the numbers of calls to its hotlines had been low, but he said it would take time to show if the changes were having an effect.The issue is not one of recruitment – an average of 17 per cent of Ford’s staff are from ethnic minorities, rising to 38 per cent at Dagenham – but this falls to a tiny figure at more senior levels, and there are relatively few women managers.Bob Purkiss, the equal opportunities commissioner who galvanised the Army’s ethnic minority recruiting by conducting a formal investigation into the Household Cavalry, said Ford should set targets and encourage junior and middle managers to make the changes work. He said: “With the Army they drove it constantly from the top and that’s what Ford has to do if they want to make it work.

The biggest thing is making sure their duty managers, supervisors and particularly line managers are monitoring.”In 1998, the Household Cavalry recruited 62 soldiers and two officers, 1.8 per cent of its ranks, from ethnic minority communities, compared with just eight in 1997.. Defence chiefs are meeting today to decide whether to award a £1bn missile contract for the Eurofighter to an American firm or a European consortium led by BAe Systems. Defence chiefs are meeting today to decide whether to award a £1bn missile contract for the Eurofighter to an American firm or a European consortium led by BAe Systems.
The contest has been one of the most intensely fought procurement battles of the last decade, with BAe executives warning that thousands of jobs and European technological know-how will be at risk if Raytheon of the US is selected instead. The Ministry of Defence’s Equipment Approval Committee has the choice of recommending either the Meteor missile, being developed by the Anglo-French joint venture Matra BAe Dynamics, or a upgraded version of its existing Amraam missile. Some industry sources believe the decision is so politically delicate that the EAC will leave it to the Prime Minister, when he chairs a meeting of the defence and overseas policy committee.In a last-minute bid to sway the decision, Raytheon will set out proposals on Wednesday for increased European involvement in its programme. This follows a letter from President Bill Clinton to Tony Blair last week, urging him to award the contract to Raytheon. The Raytheon offer is expected to involve giving European defence companies an enhanced work share and access to top-secret missile technology.The Meteor consortium has already signed up Boeing to be part of its team, with the aim of selling the missile on F15 and F18 fighter jets around the world.