Examination of Witnesses (Questions 60
- 79)
TUESDAY 12 JUNE 2007
DR NEIL
BENTLEY, MR
DAVE PRENTIS,
MR WILL
WERRY AND
MS RACHAEL
MASKELL
Q60 Chairman: We will take
that as read.
Mr Prentis: Yes, take that as
read. I will concentrate on the way in which we are talking about
commissioning and competition in the markets in the voluntary
sector. My worry is that approach will undermine something which
is very, very dear in the hearts of people of this country, which
is a strong, vibrant, independent voluntary sector. We have got
60,000 members of the voluntary sector and we believe it should
be independent, innovative and it should campaign for progressive
social change and it should fill in the gaps that the public sector
provision misses at the moment. Its advocacy role is absolutely
essential within our society. We are very, very concerned that
a dogmatic push towards markets and competition in the voluntary
sector will weaken the role that the voluntary sector has had
traditionally over the centuries, let alone decades. It is that
strength that we think we should be retaining because it makes
a huge contribution to our society. The one thing that tends to
be forgotten in all of this, and you would be surprised at a trade
union General Secretary saying this, I am totally committed to
voluntarism in our communities. I think voluntarism is at the
heart of community, people doing things in their spare time for
other people. We have hundreds of thousands of volunteers, not
paid, just doing it for people's welfare because they want to
give something back to society. I think the whole system of voluntarism
in this country which is really based on the community and voluntary
sector is under threat by the direction of travel that we could
be going down if commissioning in the markets is brought in to
that particular sector. Why would volunteers work for multinational
companies? Why would volunteers work for organisations making
profits? It does not work that way. I think it is an unintended
consequence that this Committee should put at the top of their
agenda when they are looking at the use of the community and voluntary
sector. When we talk about markets and competition, we believe
that there is not just one third sector. When you look at the
way in which it is divided into small, middle and large organisations,
there are just 306 of the 190,000 which receive 39 % of the total
annual income for all charities. The Charity Commission is saying
that small charities are being squeezed. What we would like you
to look at is how this will be exacerbated in the rush into market,
competition and commissioning. We believe an unintended consequence
is that this direction of travel will lead to increased insecurity
for the voluntary sector organisations, many of which do not want
to be part of this commissioning process. In a nutshell, and I
am not going to go through all the points I was going to make,
if the community and voluntary sector involvement in public services
is based on the principles of markets and competition, you are
going to lose a distinct value of that particular sector. As you
go along, more resources in the voluntary sector, very tight resources
will have to go into winning contracts, less will come from grants
and donation. It will skew how these organisations operate and
it will make them less and less effective in the jobs that they
are doing for our society. It will convert voluntary organisations
into service providers. The independence, the advocacy role will
go out of the window, campaigning and advocacy to identify gaps
in public service provision has always been an important factor
of the work they do. They help to develop it smoothly so that
it can be taken up by the public sector itself. Work has moved
from the voluntary sector and back into the public sector knowing
that they can get special, not advantage but a better feel for
the way in which public services run. As the voluntary sector
and community sector will have to prioritise winning contracts,
all that development work they do for us at the moment, and the
investment they place in that, and the ideas they come up with,
will go completely out of the window because contracts will be
all important. What it says in the contract will be the thing
that dominates whether that organisation stays in being. The voluntary
sector is not homogenous, you cannot talk about the third sector.
The people who are involved in it are very, very different, some
do not want to provide services and yet could be pushed into it.
The competition angle means that the scarce resources which, say,
Barnardo's, who we work very closely with, the National Children's
Homes and other children's organisations have, they will be competing
for contracts against each other. What will happen is you will
push down the pay, the conditions, the training that workers in
those organisations get and we have all the experience of it,
it will be like school cleaning, it will be like cleaning in hospitals,
the lowest contract wins and then those particular contracts are
no longer fit for purpose. It will push down standards in the
voluntary sector, something that we cannot possibly as a Government,
and as people wanting to improve our public service, want. You
cannot lose sight of the transformational role of the community
sector. You cannot lose sight of the advocacy role. You cannot
lose sight of its independence. What we will do is fragment far
more than we need to do. There is also the equity issue, that
the voluntary sector will not be able to talk about the equality
issues in the way that we can, in the large public sector. Eighteen
per cent of voluntary sector workers are disabled, in the public
sector and private sector it is only 13 %. They will be pushed
down in the rush to make sure that they are lean organisations.
Their whole way of working will be affected by what is proposed.
The point I would like to make to you, and I shared a platform
with Ed Miliband on the voluntary sector Unison organised event
in order that we could talk about how we get improvement through
the voluntary sector, something that we are absolutely committed
to, Ed Miliband made a very, very strong point, which I think
is at the heart of what this Committee should be looking at. He
said that as far as he was concerned the third sector was one
of support rather than one of substitution. I think this Committee
should lay that down as a premise, as a preamble, as a principle
by which it judges how far we take public service provision being
transferred into the voluntary sector. It should not be a matter
of transfer, it should be a matter of how the voluntary sector
and the public sector can work together to improve our public
services. Thank you.
Q61 Chairman: Thank you for
that. I am tempted immediately to ask you things but, in fairness,
let me ask very quickly if our other two witnesses would like
to say something.
Ms Maskell: Yes. Obviously I totally
reiterate all that Unison has presented there and welcome the
opportunity to answer questions today. As far as Amicus is concerned,
we are now part of Unite and as a union we, too, have got 60,000
members working within the not-for-profit sector. I think what
that does echo is that trade unions are represented over the sector
and are representative of the people on the ground in the sector
delivering services and therefore really do understand the impact
of certain policy decisions at this time on their organisation
but also on the service users. The whole raison d'etre
for organisations is to deliver to service users and therefore
in day-to-day experience they are seeing the impact of the whole
contracting market and what that means. Also, as unions, obviously
we see the impact on employees within the sector and the whole
experience of terms and conditions now being put in that competitive
realm. We are seeing a race to the bottom within the contracting
market and one thing we have experienced, certainly, is organisations
now turning to us with the plea that we cut terms and conditions,
whether it is pensions, training budgets or whether it is core
terms and conditions, additional allowances and so forth, in order
to meet the market demands to win the contracts because without
the contracts there are no jobs and it is a very painful decision
not only for organisations, going down routes that they do not
want to go, but also our members having to make those difficult
decisions. Likewise, as far as the stability of the sector is
concerned, and I think that is one of the most important things
to consider at the moment within public services, there is a public
understanding that in time of need you will get a service and
there is an expectation of what that service means. Obviously,
reform is important, however within a contracting environment
there is less stability. For a start, we are talking about short-term
funding cycles, as has been the experience to date, often 12 months
long. If you can imagine the experience of an employee in that
scenario, once the clock starts ticking on that 12 month period,
you will be wondering at the end of that period how you are going
to pay your mortgage, feed your family and what about your own
career and opportunities there. What we find is that within three
year funding cycles that is not long enough to bed in somebody
as an employee. Extend that to a service and thinking strategically
about designing a service and delivering services, there is no
way within a three year period that can be delivered. Certainly
if we are talking about delivering at the public services where
there is that stability moving into this insecure environment,
what are we saying to the public within that environment about
what their expectations can be of the public service delivery?
We would also express real concern about this whole concept of
the ethos of the third sector and what this whole contestability,
marketisation, is actually doing about the ethos. Again, we have
organisations coming to us and saying, "Do not put out a
press release about the shocking funding situation because if
our organisation is named we know we will not be winning the bid
next time round". While all the right words are coming out,
we want the third sector to be strong on advocacy, the reality
is that they are not able to be strong on some of the issues which
really do impact on the eventual delivery of service. Why? It
is because they are in direct conflict with their funders regarding
the funding of human policies which are detrimental to the service
users. Straight off, organisations are being silenced in this
whole environment about third sector working together, we have
found organisation by organisation, and I think the children charity
example is key in that. Organisations which used to work very
collaboratively, very closely together to produce the best services
possible, for instance for children and young people, are not
speaking to each other now because there may be something that
they can put in their bid which will give them the edge over the
other organisation. It is direct conflict, almost war, trying
to win these contracts, and the huge financial cost to organisations
has contractors swinging between organisations. It is incredibly
painful for these organisations, stopping them planning and, needless
to say, a very serious detriment to the employees within the sector.
Actually if you think what the impact on the service user is,
often the most vulnerable in our society, they are no longer able
to have those stable relationships with an organisation. Often
it takes, for instance in areas of mental health, a long time
to adjust to a particular way the service is delivered to find
that constant change can often be more detrimental than having
the service in the first place and, therefore, the whole contracting
environment is damaging to those who closely depend on the services.
One thing that we would say about the whole thing of closeness
of the commissioning as well is that it does throw out a huge
bureaucracy for organisations. One thing that we are finding is
that organisations which would have been putting resources into
the front line of delivery of services are now putting resources
into form filling in order to draw down resources for the next
cycle. For small organisations which had a niche market and a
very specific delivery this is very damaging for their organisation
and many are just not able to engage in the process. I am sure
many other comments will come out within the process of questioning
but that is just by way of introduction.
Q62 Chairman: That is very
helpful. Thank you for that. Will?
Mr Werry: Thank you, Chairman.
I can hardly say absolutely nothing, can I, after all that.
Q63 Chairman: What you should
do, really, is just say something so we can understand what the
Commissioning Joint Committee does.
Mr Werry: Thank you, Chairman.
That is all I want to explain. It is an inter-disciplinary body
covering all the disciplines in local government, wider local
government I might perhaps call it, all the disciplines involved
in commissioning work and in competition plus the local government
contractors' organisations and the in-house organisations. Our
objective is to produce practical guidance to practitioners, for
which purpose we are trying to get to the bottom of exactly what
different propositions and initiatives are trying to achieve.
Our object is to try and work out who is going to have to do what
to make that happen, if possible without too much collateral damage.
I like to think of it being a fairly street level exercise. We
do indeed produce guidance about that, including recently the
third sector guide. I have to say I sense that your objective
might be something similar; looking at the subject in a street
wise fashion, in order to sort out the practicalities. If so,
I am delighted to co-operate in any way I can. Perhaps I ought
to add, among all these disciplines, I was myself an auditor,
a district auditor for Birmingham long ago, but I have put that
behind me and I try to accommodate all the other viewpoints that
we collect.
Q64 Chairman: Thank you very
much. I think what is interesting, listening to most of you, is
that up until this point it is fair to say we have had people
come in and give us undiluted enthusiasm for increased third sector
provision, despite Ed Miliband saying on record that he wants
to expand third sector provision, that is what he sees as the
direction of travel. Our job is to say, "Look, if that is
the objective what flows from that" and that is what we are
trying to explore. Let's start with basics, then. As I say, we
have had these enthusiastic accounts given to us about the great
virtues of using the third sector, the added value that comes
from that. Listening last week to Turning Point and Rainer, where
they were pointing to the kind of things they were able to do
and the way they were able to do them because they were not the
State, my question would be, if it was the case that the third
sector is able to provide services in a way that has advantages
over the way in which the State can provide services, then presumably
we would want to use them, would we not?[3]
Ms Maskell: If I can start by
giving you an example of one of my representatives, a social worker
who worked for the local authority, he was funded in such a way
that he had a caseload of over 30 people to look after, moved
to third sector and had eight. If those kind of resources are
switched, so we are talking about more resources being made available,
then obviously you are going to able to deliver a far superior
service. But the whole argument is the fact that there is additionality,
and we recognise that that is the third sector's prime purpose.
It is good at moving on the debate, at working and finding creative
solutions to situations, and has always done so, but also it is
there as an addition, so you have the core service and then, with
the extra resources put into that service, of course you can deliver,
if you like, a top service. We want to see that across the board
but that takes money to able to deliver, so we are talking over
and above. We are not saying "more for less" because
the sums do not add up.
Q65 Chairman: Dave Prentis,
you talk about gap filling, and you think that is fine, but more
than that is not fine. It is clear the Government is not interested
in gap filling; it is interested in developing mainstream, third
sector provision, as it is interested in developing private sector
provision. It wants a mixed economy of provision. Now, apart from
an ideological objection to this, if this is either more efficient
or it produces better services, why would we not be interested
in it?
Mr Prentis: When I mentioned gap
filling that was part of a whole range of issues around the voluntary
and community sector, including the innovative role and advocacy
role it plays, and the way it could transform the provision of
our public services if we do it on the right basis. What concerns
us more than anything in the increasing role of the voluntary
sector is yes, that we should take measures to improve and probably
increase the role of the voluntary sector, but it should not be
based solely on markets and competition. It should be based on
what the voluntary sector does best, and that is not necessarily
part of the equation. We talk about if there was a level playing
field, if it was not an ideological push, if we were looking at
how we could improve the voluntary sector, and in our submission
to you we come up with a number of recommendations about how this
can be done without using competition and without using markets.
We do talk about full cost recovery, which is a major issue because
when the voluntary sector has taken over the work it is not getting
full cost recovery, and that is the Audit Office saying that,
not me. Rachel has mentioned contract length and the way in which
a bidding process takes away from the other work that the voluntary
sector organisations are undertaking, but we are not saying that
we want in any way to restrict the voluntary sector; we want to
expand it, to make it better, to help us develop solutions, but
we want it more collaborative rather than competing with each
other for contracts. The smaller voluntary sector organisations
will go under because they will not be able to provide the resources
needed for the bidding process; they will not be able to provide
decent pay and conditions, and lots of their resources will go
into putting in bids and tendering which they will not get. And
all our experience of commissioning and of competition is that
over time it goes to the big players, and is that what we want
the voluntary sector to become?
Q66 Chairman: But if the claims
that are advanced for the third sector are true, that is, that
they have characteristics which enable them to offer a better
quality of service than the State can provide in a variety ways,
if that is true and you may dispute it, then presumably we would
want to develop that provision, would we not?
Mr Prentis: You are talking in
generic terms that the principle could be true. We are not that
far away from you because what we are saying is it should be a
level playing field, and if there is to be development of a particular
voluntary organisation we need to know that it will improve things.
But the whole emphasis on markets and competition is it is a bidding
process, and usually under that process the lowest tender wins,
and it becomes very much a means of not being able to talk about
quality and how we can improve it. As a union we have 1.3 million
public service workers; we have never ever argued that everything
has to be in the public sector. What we have said is that the
push through commissioning and through contracting is leading
to a worse service, it may be cheaper but it is a worse one, and
you are saying, "If we could prove this", but show us
the evidence because nobody has yet.
Q67 Chairman: Can I add this
to my questioning? I was expecting, you, Neil, to be rather more
negative about this, because when you think of the arguments about
bringing the private sector into public provision over the years,
here in a sense it seemed to me from your point of view the argument
had been largely won, that is, that it was absolutely appropriate
for the private sector to provide a range of commissioning functions,
but no sooner are you there than suddenly the Government gets
enthusiastic not about you, but about the third sector and wants
to bring them into the picture, and I thought you might find this
a little bit threatening.
Dr Bentley: Not threatening in
the slightest; the CBI believes competition works. We are very
much in favour of an increased role for the voluntary sector.
All of our work being produced on public service reform is founded
on the principle of the mixed economy and diversity of supply,
and we talk all the time about public, private and voluntary sector
working together to deliver that. The best provider, whoever the
public sector Commissioner decides should deliver a public service
should be based on who is the best provider, from the private,
the voluntary or the public sector. I think that what we are seeing
is developments of new models of delivery, and yes, the voluntary
sector can reach parts of the community that other sectors cannot
reach. I am sure Rainer, Turning Point and Stephen Bubb from Acevo
have probably been here telling you about what long traditions
they have working in communities. There are lots of examples where
they are able to do that better than the public sector, for example,
but what we are seeing developing is also the private sector and
the voluntary sector working together in joint bids to work with
the public sector. It is particularly prevalent at the minute
in offender management where we have seen Turning Point and Rainer
and the private sector organisation called Serco working together
to get ex-offenders back into employment, and we think that is
an excellent model and the way forward for public service provision.
I think some of the issues that Dave and Rachel have been raising
about contract length, funding, terms and conditions of employment
all come back to public sector procurement skills and market management.
How does the public sector procure to deliver services? All of
these, funding issues and employment terms and conditions and
contract lengths, have to be properly considered and the public
sector needs to think about properly funding these contracts to
get the best quality service, not driving down to the lowest cost.
None of us wants public services on the cheap; none of us wants
a return to local government compulsory competitive tendering;
we all have an interest in making sure there is proper funding
for public services, and that responsibility lies with the public
sector Commissioner to make sure they have all of that right before
they go out to tender.
Q68 Chairman: On exactly that
point we had, as I say, Turning Point and Rainer last week, and
we have heard it from others, who when asked what for them is
the big issue, say it is the Commissioner, and it is their demand
for what they call intelligent commissioning, and they think at
the moment there is too much unintelligent commissioning going
on. Is this true? Are you remedying it?
Mr Werry: Thank you, Chairman.
It is a fair point but it always needs looking at more deeply
when people say that. The people who say it are, by and large,
the people who lose and the people who are not getting enough
work, and they say it of all sectors, of course, not just local
government or whatever. I am very anxious to get to the bottom
of why it is that we have particular types of contracts and what
size contracts should be, and things of that sort, and that is
part of the reason why the small third sector bodies are not getting
much of a crack at the whip. It is because so much of procurement
is directed towards maximising savings and competitive clout and
all the rest of it. Small contracts are very unfashionable so
it takes a bit of an effort to get them established, and this
goes right to the heart of the argument about the third sector—that,
by and large, the big third sector providers do not need any particular
change, which may very well lead people to put your own question
in a slightly more forceful fashion, Chairman, which is if the
third sector is so good, why are they not winning now? That is
the crunch question. I think there is an answer to that for the
small third sector providers which is that so many things are
geared up to bigger contracts for bigger operators. It is not
because there is not a level playing field; you just cannot make
the level playing field right. The intelligent client has first
to decide which sorts of service provider are going to give them
the best deal and if, indeed, they give it to big service providers—well,
leave it like it is. It is ideal for that. But, of course, if
that was the case there would be no work at all virtually, apart
from a bit of lotting and things of that sort, as Neil has mentioned.
Apart from that there would be very little in it for them, and
they complain about that, and I confess I feel a little bit of
sympathy for that. I feel intuitively that there must be one or
two, or perhaps more, types of work which the right small third
sector bodies would be very good at. I cannot prove that, there
is no evidence whatsoever that I know of to prove that, but I
think it is worth a try, and that means that to make something
happen purchasers are going to have to recast the packages and
contract conditions and payment mechanisms and all the rest of
it which they use at the moment. I do not expect them to do it
at the drop of a hat because for every winner there is going to
be a loser, so you burn your boats if you do that because big
contractors are not going to apply, I should not think, for a
welter of small contracts, and possibly not the in-house organisations,
so it is a pretty fundamental change we are asking for. Nevertheless,
I think with care it should be tried, and then it will find its
own level, I think. We will start to suss out what things small
third sector bodies really are good at, and of course if we establish
there is some particular line of country they are good at then
we go a bundle on that, and authorities would normally arrange
for that sort of work to be offered in such a form that they would
readily tender for it.
Mr Prentis: You can always find
any argument that you can agree on 70 % but it is the 30 % which
causes the difference. Neil would see advantage in the voluntary
sector developing public service work as long as it is in the
image of private sector delivery, and this is the problem with
markets and competition, that what we are doing is mirroring the
private sector within the voluntary sector and obviously it is
of interest to the private sector advocates like Neil, but the
issue which you have to face is the vulnerability of the voluntary
sector as well and the fact that you are creating a vulnerable
work force by pushing through commissioning and markets in the
model of the private sector. When I did a CBI conference with
John Hutton and John Cridland both of them were arguing that the
way to get public service reform is to raise the morale of the
work force, and the commissioning process is worsening the morale
of the work force both within the public sector but especially
in the voluntary sector, which you are saying may well be able
to improve the public services. I think we have given you details
of the survey that UNISON commissioned but what it found was that
to win contracts on costs led community and voluntary sector organisations
to cut staffing, pensions and training, and that was impacting
on service delivery; it said that one major charity with a commitment
to staff training and development has had to cut its training
budget by 50 % in the last two years in order to compete, and
that staff were expressing great concern about the lack of continuity
of care for service users caused by reductions in staffing levels
and turnover. That is what has been created by the model based
on commissioning in the market. Other models could work and the
voluntary sector could be developed, but the only model that is
being talked about at the moment is this competitive environment
through which work is transformed.
Q69 David Heyes: I am having
some difficulty forming a question on that. I am so taken with
what Dave and Rachel said which matches my own experience as a
voluntary sector manager before I became an MP. Given what you
say is the truth it is difficult to formulate questions that do
not have heavy bias within them, but I will try. I will give you
an example that might provoke you into giving more examples from
your experience. My local area does not have a debt advice service
for this any more, and it is because the CAB[4]
who won the contract from the LSC[5]
and faces competition, saw that that undermined the voluntarism.
We had a very strong voluntary group of people giving the advice
free of charge and the introduction of paid staff and the requirements
of the contract meant that there was an exodus of volunteers.
The competition that took place to make sure that the CAB won
the contract meant ultimately they were not able to offer sufficient
rates of pay or working conditions or pensions to be able to retain
the staff; huge advertising costs because of increased staff turnover
and so on, just a spiral of decline, at the bottom of which I
do not have a money advice service in my area and I am battling
with the LSC to get something done about it. That is my experience
of the real world and the question is would you like to expand
on that from the experience of your members?
Ms Maskell: I certainly would
and I am very familiar with the example you gave because I know
that for the CAB to win back that contract the employees were
working 24/7 excessive hours as were the volunteers to try and
ensure that service delivery was up to scratch, and yet they still
lost that contract, so I think it does show people within the
sector were more than dedicated to try and work to win things
for their own organisation, and that does bring in the point about
people working in the sector. We know from research that 20 %
reduction in their salary is one of the prices they paid for working
in the sector, and therefore over dedicated to deliver the service
for those that most need it, and they too are echoing concerns
you raise. I will give a couple of examples around the pain of
contracting. There is a public example about voluntary action
in Manchester where they lost a contract to the Scarman Trust,
and as a result of that all the community links were lost and
therefore, although on paper it might have been a cheaper bid
that came in, what you lost was the value of the sector, the links
into the community, the relationships, which is often how the
sector works. It is not a very neatly boxed sector, and unfortunately,
as a result of that, the service delivered is far worse for the
people in Manchester because, if you like, the heart of what an
organisation can deliver might cost a little bit more but it was
at such value. How do you put a price on some of those factors?
Another example is an organisation which delivers social care
within housing associations. That organisation lost a contract
to a private sector organisation not familiar with the territory
which then subcontracted on the work to another organisation employing
people on little over the minimum wage, and certainly for those
working within the contracts the ability to be creative was ripped
out of their job descriptions, and for those people dedicated
to the sector it lost all meaning, and therefore you are losing
the very things which the sector is so well able to deliver. With
those examples, what it shows is that the third sector delivers
on a slim financial level in order to be able to deliver the best
service it can, and therefore it is not about charging too much
for the contract; it charges what has to be delivered. One thing
we are incredibly fearful of is that this whole contestable market
is just a Trojan horse down to the private sector involvement,
because it can come in cheaper because the terms are worse, and
I would want to draw to your attention the fact that of all organisations
77 % have said they are experiencing turnover problems, and retention
problems of employees in the sector, recruitment and retention
is 16 % across the economy, 21 % in the third sector. Now, if
you are talking about delivering services to vulnerable people
that has a damaging effect on those services, so if you put into
the equation the cost of the contract retaining employees and
expertise within the sector it is equally important. Finally,
when talking about organisations contesting for work, what we
are often talking about is going to multi sources of funding and
multi contracts. One small project may well have contracts within
a number of organisations, a number of PCTs, a number of local
authorities, in order to deliver a service, each one having its
own bidding mechanism, its own auditing process. From a very small
organisation it just gets totally tied up in a whole bureaucracy
in order to deliver what it knows how to deliver, but unfortunately
the layers are put in between which are costly for the organisation,
so that does need to be pointed out.
Q70 David Heyes: Does anybody
else want to kick into the open goal I have created?
Dr Bentley: I think the example
of organisations losing contracts happens all the time. The point
I made earlier is the public sector Commissioner is choosing the
winner based on a set of criteria which they have set out in the
bidding process, and if they are funding and willing to choose
another provider, whoever that is, to deliver that service, then
they have made that decision based on transparent and open criteria,
and if that service fails or if the service delivery is impaired
in some way, then that provider is not going to win the contract
second time round because they will not have delivered what the
public sector Commissioner wanted. Now, that is part of contestability
and part of the competitive market which is about trying new ways
of working, driving up innovation, driving efficiency and helping
to improve the service delivery to users. Now, if that is not
the case in certain circumstances then the current incumbent will
not win again.
Q71 David Heyes: What you
have just said is completely at odds with what you said earlier
about the rhetoric about partnership and public and private working
together. On the one hand you put forward that argument and want
to have it sit with the opposite argument which is it is a harsh
world, and whoever fights hardest wins.
Dr Bentley: It is, and they are
not incompatible. You have competitive processes to decide who
is going to win a contract, which you can do on your own or within
a partnership with other organisations to bid together for contracts,
and once you have won it then you have to work in partnership
with the public sector to make sure you are delivering the best
contract possible to make sure you maintain that contract and
win the service on re-bid. Those are the principles we believe
are delivering the public service reform.
Q72 David Heyes: We would
say these issues can be addressed in getting commissioning right,
so would it be legitimate, in picking up concerns about staff
retention and employees getting proper working conditions and
as part of the commissioning process, to specify good levels of
pension and levels of pay that were consistent with comparators
in the public sector? Is that happening? Can you give us examples
of where that is working?
Dr Bentley: Last year the Institute
of Employment Studies did some research on behalf of the CBI to
look at these issues of good employment practice in contracts,
and they went round and interviewed contract managers, employees,
union representatives and employers to talk about these very issues
and terms and conditions of employment. We have set out a set
of 10 good practice guidelines and the first is that public sector
procurers must take good employment practice into account when
they are choosing whoever they want to deliver that service, whoever
the best provider is, and that has to be a priority for them in
terms of terms and conditions, investment in skills in training,
in terms of good employment relations and pensions. It is all
set out in the report which I would be more than happy to share
with you.[6]
That is why we engage with the TUC and other public sector unions
to work on these issues; why we are sitting down together to work
on developing employment compact in public services around skills
and access to unions and access to employment advice. All of this
is about joint working together to address some of these issues.
Q73 David Heyes: Is Neil's
rhetoric about getting the commissioning right and so on happening
in the real world?
Mr Werry: It does not happen in
tender evaluation, which is the crunch point. Are conditions of
employment a legitimate factor in tender evaluation? In general,
no, and it is important for us to think about why that is. It
is because TUPE[7]
and the way in which TUPE has been managed in the United Kingdom
is designed to make it not a factor in tender evaluation. What
happens now is that the employees of the service currently employed,
whoever is employing them, move to the new provider, and the more
that third sector bodies move into services on annual contracts
or period contracts, the more they themselves have to cope with
this. It has been made particularly watertight in the United Kingdom
because, although it is European legislation, the British Government
has exercised a right which it was given by the EU to apply it
to pensions as well, for which TUPE European style does not apply,
and they have gone beyond even that to say that while the contract
is running the employer almost always will need new starters to
fill any vacancies, and the requirement now is that they have
to be given the same terms and conditions as the transferred staff.
So the law is very hostile.
Dr Bentley: I do not think it
is because TUPE requires the information and consultation of employees
before the point of transfer. They have to be involved in the
process of transfer and before the decision is made to transfer
employees. What we are saying, and we have evidence to back this
up, is that public sector employers need to be considering this
more in the procurement decision-making process and to involve
employees in that process to make sure they understand what is
going to happen. This is about managing change and I do not think
the public sector has been brilliant at managing change through
this process, which is where you get the instability and uncertainty
referred to earlier on.
Mr Prentis: If you want to know
what is happening on the ground rather than what we talk about
as theory read the report that we put before you, False Economy:
The costs of contracting and workforce insecurity in the voluntary
sector. Very briefly, the voluntary organisations suffer all
kinds of job insecurity, threats of job losses, changes in terms
and conditions, groups such as the elderly and disabled are particularly
vulnerable, 12 % of the workforce are in temporary contracts;
there is major evidence of worsening staff/client ratios to meet
the contracts; and again—and this is an issue for the public
sector—local authorities more often than not are focusing
on cost rather than quality, very similar to compulsory competitive
tendering which you should all have learned from. The profound
unease amongst staff usually amounted to what one described as
a "sword of Damocles" hanging over them, and usually
they had to wait until the last minute before they found they
definitely were able to remain in employment. The issue about
TUPE is that it does lay down basic European rights but we all
know that private companies are getting round TUPE by employing
agency workers, paying the rates they want to rather than the
rates for the TUPE staff. There is still a two-tier work force
within this country despite the commitment of the Prime Minister,
which was genuine, and there is still a major issue of lack of
monitoring of that agreement which came from the Prime Minister.
I have to give him his due, this agreement came directly from
him, and yet when it comes to monitoring across the public sector,
what monitoring takes place? It does not.
Q74 David Heyes: One way of
addressing these concerns about staff being inadequately treated
is good trade union organisation, so I want to hear how difficult
it might be to organise in the voluntary sector compared with
the other areas—
Mr Prentis: Very briefly, the
voluntary sector is fragmented. You are looking at the bigger
organisations like Barnardo's, and we are very large in those
bigger organisations. In the smaller ones where you get turnover
it is quite difficult because of the fragmentation, but despite
that there is no aversion to the trade union in the voluntary
sector. The one thing we know about the voluntary sector is that
we really do work closely with the employers. Many of the things
Rachel and I are saying are the employers in the voluntary sector
and the people who have developed it have developed it out of
commitment rather than they want to be making private sector bonus
salaries that we all read about. They are happy with their lot
and they want to make a difference within society. They are as
much concerned about what is going on as trade unions and staff
are.
Ms Maskell: One thing we note
within Amicus is the voluntary sector is the fastest growing sector
of the union. Putting that in context, we are faced with turnover
challenges but also organisations are totally geographically spread,
so we may have one organisation employing 2000 people but, in
fact, there are only ever about five or six people working on
over 100 projects, and it is trying to build that organisation
which is a constant challenge for us. The majority of employers
within the third sector are employing one person. That is the
challenge.
Mr Werry: Perhaps I should apologise
for raising the question of TUPE at all, Chairman, but it is useful.
Whatever happens the voluntary organisations, or the small ones,
are now going to be in the position of having all the problems
of staff transfer which we are talking about; they will not be
using their own staff for a term service contract which they tender
for; they will be receiving the local authority staff on transfer
who will bring all their conditions of service with them and,
indeed, their pension rights. How different people might abuse
this procedure I would not wish to go into, but I think we should
flag up that there is this major problem which the small third
sector bodies need to address.
Q75 Chairman: Is it a problem?
Mr Werry: I do not know because
it has not really arisen yet. The volume of contracts at this
level is fairly small, as we have heard. The large third sector
bodies know all about it and are geared up to it and know they
are going to receive the staff.
Mr Prentis: There is a major problem
with pensions and training.
Q76 Mr Prentice: Would that
always be the case? Let's say a local authority wanted to float
off fostering services to a third sector organisation. Are you
saying that third sector organisation would be obliged to take
the local authority employees that were dealing with fostering?
Why could they not just advertise and hire new people?
Mr Werry: That is a fair point.
It is not every contract that attracts TUPE. The law is a bit
different from what happens. The law is that if the work is to
be done in a sufficiently different way under the new contract
then the staff who did it in some different way do not transfer.
That is the law of TUPE. But the weight has been taken off that
because the United Kingdom government has gone out of its way
to say in the Cabinet Office code of practice that even where
TUPE does not apply the Government expects its principles to be
applied, and by and large they are. What that adds up to is that
there are very few exceptions to the TUPE rule.
Q77 Mr Prentice: I am not
an expert in TUPE but does this mean, if the TUPE regulations
were going to apply in work that is transferred between local
authorities and the third sector, we would not see much work going
across because TUPE would be just too restrictive?
Mr Werry: Well, it might have
that effect, I could not say it would not.
Dr Bentley: I think what we need
to avoid is TUPE avoidance in the third sector. I am sure colleagues
will talk about the trade unions supporting the third sector but
I am not sure there is the capacity to make the resources in the
sector available to deal with transfers of staff. I honestly do
not know, because there has been a huge amount of build up of
resource in the private sector to be able to do this. They are
very complex regulations and there are complex processes to be
gone through, but I am sure if this came up in your discussions
with voluntary sector organisations they would be able to advise
you, but it is certainly a big issue about capacity building and
capacity and professional HR management.
Q78 Mr Prentice: We have had
some very good memos submitted and I am looking at a memo from
Amicus that says this about the CBI: "The campaign by the
CBI to push for a system of competitive neutrality in public service
contracts is ... part of a campaign to bypass the third sector
and privatise public services rather than constructively reform
them."[8]
So that is what Amicus thinks, that this is all a smokescreen,
and you just want to privatise these public services.
Dr Bentley: We are very much in
favour of bringing in the voluntary sector. The work we have done
on competitive neutrality has been endorsed by the voluntary sector
and we work very closely with the voluntary sector in developing
a lot of our policy positions. The organisations you have been
talking to come along to our events and have been involved in
our policy making or involved in the work we have been doing.
Q79 Mr Prentice: Why is there
such a misunderstanding, then, between the CBI and the unions?
Dr Bentley: There is an ideological
difference between whether there should be other providers involved
in providing the public service, and we do not believe there should
be that division, but there should be a mixed economy of supply.
3 Qq 1-58 Back
4
Citizens Advice Bureau. Back
5
Legal Services Commission. Back
6
CBI, Working Together: Embedding good employment in public
services, May 2006 Back
7
Transfer of Undertakings (Protection of Employment) Regulations
(TUPE). Back
8
Ev 118 Back
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