Memorandum submitted by the Cleaning and Support Services Association

 

The Cleaning and Support Services Association (CSSA) is the UK trade association for the contract cleaning sector. CSSA members account for some 70% of the turnover in that sector and employ around 250,000. In preparation for this submission the CSSA has recently undertaken a survey of its membership. The sample group surveyed for this report consisted of companies ranging in turnover from £100,000 to one of over £100 million, with the large majority consisting of SMEs.

 

Background

 

The focus of the select committee call for evidence is the financial support needed for SMEs in the current economic crisis.

 

When CSSA members were surveyed about current policy issues, financing costs, while important, were not a key priority. This is because some 80% of the costs of a cleaning contract are variable labour costs and these are therefore covered by payments from clients.

 

However, a number of issues did emerge where Government policy is putting extra burdens on business, right at a time when these burdens are most counterproductive. The CSSA would encourage the Committee to focus on these burdens at the same time as financial issues so as to ensure that the Government does not give with one hand and take away with the other.

 

This issues raised by CSSA members are late and disputed payments, TUPE, National Minimum Wage and Sickness Benefits.

 

Late and Disputed Payments

 

CSSA members are reporting an increase in late and disputed payments from clients. It seems that increasingly, clients are either unilaterally pushing out payment terms or creating disputes about the quality of service in order to hold back on payments.

 

This created a significant cash flow problem for smaller businesses and pushes then into the hands of their bankers for extensions to working capital, which are becoming prohibitively expensive. The CSSA calls on the Committee to press for a speeding up of payments from all Government and private clients to service companies, to prevent them from needing to access further finance.

 

The CSSA welcomes Lord Mandelson's commitment to swift payment by central Government, and hopes that this will be extended to local Government and the NHS also.

 

TUPE

 

CSSA members have also raised the issue of TUPE compliance as a significant extra cost imposed by Government. TUPE is of great importance to cleaning businesses due to the large number of contracts that are transferred every year.

 

TUPE legislation has proved troublesome to CSSA members due to the complexity of laws surrounding it. Members questioned have stated that inconsistencies in legislation have proved problematic to them, and this is something the Government should look at as a matter of urgency. In particular, the judgement in the Redcar/Middlesbrough case on equal opportunities appears to conflict with current TUPE legislation. CSSA members seeking to meet the requirements of this equal opportunities case law may well find themselves falling foul of TUPE and vice versa. The CSSA is very willing to work in conjunction with the Government so that this can be addressed

 

The CSSA is currently involved with BERR in setting up a working party aimed at publishing a best practice guidance document for cleaning companies on TUPE. The present thinking within the CSSA is that if agreement on guidance can be reached, the CSSA will ensure, to the best of its abilities that all CSSA members abide by it.

 

National Minimum Wage

 

A number of CSSA members are concerned about the impact of recent and future rises in the National Minimum Wage. The CSSA will be making an oral submission to the Low Pay Commission on this subject. This is particularly important for those cleaning contractors that are subject to competition from the informal economy. Any commitments the Government can give on tackling illegal working would be welcome, as tackling illegal competition is preferable to worsening conditions for legal workers in response.

 

Sickness Pay

 

The cleaning industry is characterised by a significant level of staff turnover, which can exceed 100% per year in some businesses. One of the effects of such high turnover is that where employment rights begin from day one of employment, this can place a significant burden on a small firm. The CSSA has received a number of representations from members where because of long terms staff sickness and the need to recruit extra staff to cover, contracts have become unprofitable.

 

It would be helpful for small cleaning companies if sickness benefits could be delayed until three months after employment starts. This qualifying period would assist in managing out the exploitation of sickness benefits that does occur.

 

Oral Evidence

 

The CSSA would be delighted to give oral evidence to the Committee should the opportunity arise.

 

December 2008