The bitter dispute between the AA and the GMB union has escalated with the recent departure of five call centre staff from the broker's insurance operation in Newcastle.

According to a GMB spokesman, the AA has been sacking permanent staff and replacing them with temporary staff in a bid to cut costs.

GMB members have been picketing the Newcastle base in protest at what they describe as an "asset-striping exercise" by new owners, venture capitalists CVC/ Premira.

Paul Maloney, GMB national secretary, AA section, called the AA "vindictive", adding: "Staff are being treated with total contempt and disrespect. "

The AA confirmed last month that it would not be moving its insurance call-centre operation to India. But it admitted that future restruc-turing was likely to lead to more job cuts.

An AA spokesman said: "Less than 10% of AA staff belong to the GMB and the union is trying to bolster that by making false claims. We have not been sacking long-standing staff and replacing them with cheaper temps.

"Unfortunately, some night-shift positions were no longer tenable, but we offered reasonable terms to those who left us."

He added: "Any job losses in the insurance business will be mitigated by jobs created through new business coming in."