Annex 2
DTLR PROPOSALS TO ADDRESS TWO-TIER WORKFORCE
ISSUES—A SUBMISSION TO MINISTERS
1. INTRODUCTION
The modernisation and improvement of public
services is a major plank within the programme of Government.
We wholeheartedly support the philosophy of pluralism of service
provision within the public sector whereby the best of the public
and private sector come together to deliver high quality, value-for-money
services to local citizens.
Since the ECJ ruled on the application of the
Acquired Rights Directive 1977 to outsourcing in 1993 through
the Schmidt judgement transferred staff have had guaranteed
terms and conditions and staff taken on during the contract have
been employed at market rates. This has been done in agreement
with the client in order to give greater flexibility and to increase
value-for-money.
It would not be possible to price new staff
at local authority pay rates or their equivalent within the current
price structure. Furthermore, there would be serious constraints
on the contractor's ability to achieve savings as the contract
develops over time. These savings are built into the PFI financial
model at the outset, and failure to deliver them will affect the
financial structure of the project.
2. AN ALTERNATIVE
EMPLOYMENT MODEL
Over the summer there were discussions between
member companies which resulted in a proposal for an alternative
way forward which would not result in a "Fair Wages Resolution",
to which we would be implacably opposed. This model is similar
to that which was considered prior to the General Election by
officials and Ministers. It has the advantage of being contract
driven in response to a Government Policy Statement (similar to
Staff transfers in the Public Sector) and, thus, able to respond
to the desire to treat staff fairly without removing the flexibility
of PCs to continue to bring value-for-money to the table and to
respond to changing client requirements.
In the light of the statement at the Labour
Party Conference by Stephen Byers and the subsequent press release
by DTLR, we now put forward this model as a possible "starter
for 10" to meet the concerns expressed and to deal with these
issues in the short and long term. We shall, of course, be responding
to the consultation in due course, but felt it would be helpful
to place these thoughts before Ministers at this stage in the
process.
The following proposals are designed to represent
a significant movement towards the concerns of the trade unions.
It would be difficult to see how they could recommend their rejection
as being in their member's interests. It is important that the
proposals should apply to staff involved in both "hard"
and "soft" services. This would help ensure the support
of the more moderate trade unions.
1. Hard and soft service staff to transfer
to the private sector operator. The trades unions to be involved
in the selection process and client bodies to be obliged to take
into account the past track-record of bidders in industrial relations
matters. [This is similar to the MoD "Code of Practice for
TUPE Transfers in MoD contracts" Clause 10]
2. Since it is not possible for transferred
staff to remain within the PCSPS or NHSPS, transferred staff to
be given membership in the proposed BSA Group GAD Pension Scheme
which will be as comparable as is possible to the NHSPS. This
Scheme is currently being developed by Prudential Corporation
Plc and is the subject of discussions with GAD and HM Treasury.
It should be available before the end of the year.
3. All staff to transfer under TUPE with
a guarantee of no changes for the lifetime of the contract without
the agreement of the employees. (Exceptions would have to be made
for changes imposed by legislation)
4. Unions to be consulted on terms and conditions
of new recruits, excluding pensions, and to be able to negotiate
with PC regarding these.
5. New employees to be hired on terms and
conditions broadly equivalent to the original protected terms
and conditions. It will be essential to ensure that such a requirement
is included in the bidding process and that any increased costs
arising from this requirement are adequately built into the contract
price. They must not be allowed to become a disincentive to future
PFI projects.
Private contractors are already having to deliver
better quality services for less cost than DSOs where services
are tendered under outsourcing, PFI or PPP contracts. It is inevitable
that these proposals, whilst promoting a more harmonious industrial
relations climate, would increase employment costs. It would therefore
be essential for the unions to agree to co-operate on a contract-by-contract
basis in changes to working practices, shift patterns, etc, so
as to increase the pace of change in delivering quality and efficiency
improvements. (The recent proposals to relax changes to terms
and conditions by virtue of ETO reasons will be helpful in this
regard.)
3. WIDER IMPLICATIONS
These proposals raise issues of equal pay across
the workforces of private contractors as a whole which will have
to be addressed. Such arrangements must be limited to the contract
in question. It would not be acceptable to private contractors
that, by paying new staff in public sector contracts on broadly
equivalent terms to transferred staff, all other equivalent staff
across the company had to be paid at similar rates. This would
be highly damaging to business and unacceptable to other public
sector and private sector clients. If there is a problem under
employment law, this can best be addressed jointly with Government.
The current review of TUPE would be an excellent place to address
this issue.
October 2001
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