YORK call centre staff need to improve their skills or risk losing their job to India and the Philippines, a Government Minister warned today.

Trade Secretary Patricia Hewitt made the comment as she unveiled a report commissioned last December in the wake of Norwich Union's parent company, Aviva, announcing plans to export 2,350 posts overseas.

Ms Hewitt insisted call centres had a bright future in this country and will employ one million people in only three years' time - an increase of 200,000.

But, in the report on "offshoring", she warned that British staff often lacked vital "soft skills", such as communication and customer service.

She also raised the alarm over "the frustration of being put on hold for ages", and claimed the call centre industry suffered from a poor image.

The warning comes after Gary Withers, Norwich Union Life's chief executive, said yesterday that the company will continue to operate in York with about 3,000 employees.

However, Mr Withers said that big pressures to cut costs remained, after there was a one per cent drop in sales of life and pensions generated by Norwich Union Life's headquarters in York to £1.494 billion.

Ms Hewitt is now demanding that call centre firms boost training and qualifications at every level, from the most junior staff to management.

She said: "Improving the customer service and skills of our call centres are the best ways of preparing for the future."

Meanwhile, new automated technology that would improve performance has not been installed because of the high cost, poor training and "resistance to change".

The report concludes: "UK call centres should not compete with offshore contact centres on the basis of low costs, but they can by improving quality, demonstrating a viable alternative."

Updated: 10:38 Thursday, May 06, 2004