Enterprise Bill

Written evidence submitted by UNISON (ENT 15)

ABOUT UNISON

UNISON is one of the UK’s largest trade unions, serving more than 1.3 million members. We represent full-time and part-time staff who provide public services, although they may be employed in both the public and private sectors. The union’s members include full-time and part-time staff working in local authorities; the NHS; police and justice; universities, colleges and schools; the electricity and gas industries; the water industry, the Environment Agency; transport and the community and voluntary sector. This gives us a unique knowledge of employment and skills issues.

INTRODUCTION

UNISON welcomes the opportunity to submit evidence on two aspects of the Bill: Part 4: Apprenticeships and Part 8: Public Sector Employment: Restrictions on Exit Payments. There are particular concerns UNISON members have with these sections of the Bill and we hope that members of the Committee will give careful consideration to the impact these clauses may have.

UNISON is particularly concerned with the proposed cap on public sector exit payments. Despite the Government’s manifesto pledge that this would only affect the best paid public sector workers, these proposals will affect many staff on low to moderate salaries including midwives, nurses, librarians and social workers if they have given long service to the public sector.

On apprenticeships, UNISON welcomes the proposals for 3 million new apprenticeships and the statutory protection of the title apprenticeships. However more information and clarity is needed to ensure that the funding and delivery of public sector, quality apprenticeships are guaranteed to meet the prescribed targets.

CLAUSE 35: RESTRICTION ON PUBLIC SECTOR EXIT PAYMENTS

UNISON is particularly concerned that, despite the Government’s rhetoric around the best paid, ‘fat cat’ civil servants, these proposals will affect many staff on low to moderate salaries such as midwives, nurses, librarians and social workers if they have given long service to the public sector.

UNISON believes these proposals will significantly hinder negotiations and agreements necessary to public service reorganisations and proposed "efficiency savings". They will also have a hugely negative impact on employer flexibility, industrial relations and staff morale at a time of huge change.

When first introduced, the then Treasury Minister, Priti Patel said: "This commitment, which will be included in our 2015 General Election manifesto, will cap payments for well-paid public sector workers at £95,000. Crucially, those earning less than £27,000 will be exempted to protect the very small number of low earning, long-serving public servants."

The Conservative Manifesto itself then said "We will end taxpayer-funded six-figure payoffs for the best paid public sector workers." (p.49). However, the Bill as it stands, with the inclusion of pension "strain" payments, will affect those on lower incomes with long service. This was clearly not the initial intention nor what was stated in the manifesto.

UNISON would like to see the following changes made to the Bill:

· Pension strain payments to be excluded from the exit payment calculations;

· An exemption for people with salaries on or below average earnings (currently approximately £29,000). If the exemption for pension strain payments is not possible the exemption for low to moderate earners becomes vital;

· A protected period of 2-5 years where an employer can demonstrate they are in the middle of an ongoing restructuring programme;

· Clarification that settlements made at an early conciliation stage are excluded from these calculations;

· The inclusion of a mechanism for index linking in line with pay and prices.

Concerns with pension "strain" payments

The impact will be felt much more for long-serving employees in local government where pension "strain" payments are included in the calculations of the exit payment amount to be capped.

Under the Local Government Pension Scheme (LGPS), the current pension regulations mean that if an employee is made redundant past the age of 55 they are automatically entitled to early retirement without any reduction in pension. This would not be a lump sum payment but means that they will be entitled to access their accrued pension early.

However, as part of this agreement, the employer has to pay the pension fund a lump sum to compensate the scheme for having to pay an unreduced pension much earlier than anticipated – this is known as a "strain" payment. In effect, the employer is obliged to compensate the pension scheme for each of the additional years of pension payment, which might be over 10 years.

For many in the LGPS on moderate salaries with short service this would not breach the proposed cap but for those with long service (over 20 years) who are made redundant at 55 could be affected.

Under these proposals, an individual staff member’s length of service and age could become determining factors in employers seeking to avoid the complication of this arbitrary cap. This may be discriminatory.

Schedule 4 of the Bill is very clear that the Pensions Regulations will be amended to allow for this cap. This makes a nonsense of the 25 year "guarantee" of no more meddling with the Public Sector pension Scheme benefits.

Moreover, the Schedule also makes it clear that where a pension "strain" payment would breach the cap the consequent options will mean that either: the actual pension in payment will be reduced or the member will have to find a lump sum to buy out that reduction. UNISON does not believe either of those options are acceptable. The former means less income and in latter case employees will have to pay upfront costs to their pension scheme for losing their jobs.

NHS specific concerns

In the NHS, even without the inclusion of pension strain payments, the proposed cap will affect nurses, midwives and paramedics with long service. These issues were subject to very recent high level negotiations where a higher level cap was set to mitigate against penalising long service in key front line services. The recent Exit Payment policy for the NHS was signed off by Jeremy Hunt and the Treasury team in February of last year.

This cap delivered on the Department of Health’s objective of capping high payments made to senior staff with short levels of service, whilst not penalising those with long service in mid-range salaries and earnings which include payments for working around the clock.

Since then, NHS trade unions have been in further negotiations with employers and the Department of Health on further changes to the NHS redundancy scheme. Whilst there are still some issues of minor detail to iron out, these talks have been productive, and it had been the aim of the negotiators to use the summer period to consult members on draft proposals. However, the announcement of the 95k cap has set this timetable back significantly and has the potential to permanently de-rail this piece of work.

UNISON believes that altering a collective agreement through legislative routes is likely to inhibit confidence of trade unions and their members and employers in collective decision-making and industrial relations in the NHS and further undermine the trust and confidence of NHS staff in the Government.

Early Conciliation settlements

The proposals in the Bill to cap public sector exit payments conflate two different sets of circumstances through which staff are compensated for leaving a job: those where organisations use a payment as an alternative to legal claims (Early Conciliation); and those where jobs are removed and staff are made redundant.

Early conciliation is generally used in situations where an employer would otherwise need to respond to litigation. The government recently introduced a mandatory legal duty to attempt early conciliation prior to engaging in Employment Tribunals in recognition of the burden such tribunals place on employers and employees alike. Not least the financial burdens of the litigation process itself.

The proposals as they stand seem to conflict directly with the Government’s recognition and promotion of the many benefits of early conciliation settlements. The concern is that to place a cap on settlements made via this early conciliation process would create a perverse incentive for employees to avoid settlement at this optimum stage.

This is completely at odds with the Government’s desire to reduce red tape and regulations, leading to an increase in litigation, bureaucracy and administration costs which would have to be funded by taxpayers.

The importance of Index linking

Finally, UNISON feels that if this cap is introduced there must be a commitment to index linking to ensure it meets its original intention without becoming more and more punitive over time.

CLAUSES 20 AND 21: APPRENTICESHIPS

UNISON welcomes the proposals for 3 million new apprenticeships and the statutory protection of the title apprenticeships. However, more information and clarity is needed to ensure that the funding and delivery of public sector quality apprenticeships are guaranteed to meet the prescribed targets.

UNISON’s specific concerns are listed below:

1. Public service employers may end up paying more in than they get out

In England it is likely that many public employers would not get back what they will pay in to the upfront levy, as staffing levels in the public sector continue to contract following public sector budget cuts. There needs to be a guarantee that public sector employers will get more than they put in.

2. Public sector levy funds will be used for private sector apprenticeships

UNISON believes that the public sector should deliver its fair share of apprenticeships but only to train public sector workers. Given that the NHS, police and probation, education and local government are already under severe financial constraint, the proposed levy on public sector is an extra skills tax raised through PAYE. These services already make provisions and contributions for staff training and development. There is a danger that these funds will be diverted to apprenticeship placements outside the public sector.

UNISON believes that it will be necessary that the Skills Funding Agency (SFA) continues to run and fund the National Apprenticeship Service (NAS) and the Apprenticeship Grant for Employers (AGE) to co-support apprenticeship schemes for the (non-levy paying) SMEs sector and the voluntary and community sectors which deliver contracts in the public sector.

UNISON also believes that providing apprenticeships should not be a mandatory condition in winning public procurement contracts. The provision of apprenticeships should be treated like any other social criteria that is considered in a public contract award. This might include social criteria, such as payment of the National Living Wage, for all age groups regardless of whether they are on an apprenticeship or not, equalities considerations and the delivery of quality of service though higher level skills. Underpinning the creation of apprenticeships through public procurement contracts with an emphasis on price only and quantity over ‘price- quality’ ratio will not deliver the quality public sector apprenticeships needed to meet identified skills gaps.

3. Mismatching of skills through public procurement apprenticeships

The types of skills for which apprenticeships exist do not necessarily match up with the roles for which vacancies and shortages exist. It is, therefore, likely that apprentices may not be able to get a job with the employer they trained with because their apprenticeship was of a low quality.

Through the use of public procurement selection criteria processes, SMEs are to be encouraged to offer apprenticeships in their public procurement contract bids. The concern here is that SMEs and Voluntary Sector organisations may offer apprenticeships or have apprenticeships running which are not congruent to the workforce planning needs of that sector. These apprenticeships might have no interaction with the relevant public body, so the benefit that apprentices could bring to the public sector would be lost.

UNISON is concerned that unless there is joined-up workforce sector planning linked to public procurement contracts, career progression planning will be more fragmented for both employers and employees and a miss-matching of skills with a ‘skills drift’ will occur in public procurement apprenticeships.

4. Shifting of public service staff budgets to apprenticeships

UNISON is concerned that the apprenticeship levy may have the unintended consequence of undercutting training and skill development opportunities for existing staff who are already employed by an organisation. If the public sector has to pay for additional apprenticeships (outside their existing employee workforce) then there may be a danger that existing staff training budgets will be diminished as employers begin making compulsory PAYE contributions to the levy. This money will therefore not be available for their own training and operational budgets.

5. Public sector will need to use the levy to fund existing employee apprenticeships and will be restricted to create new apprenticeships within limited staff capacity

UNISON believes that any new apprenticeship posts in the public sector should only come into existence, as part of the levy target scheme, with consultation and consideration of existing workforce career progression planning and identified workforce staff skill shortages. Public sector employers should have a right to be able to use the levy funds to prioritise apprenticeships that match their own employee workplace skills development and career planning needs.

The capacity for public sector employers to take on additional apprenticeships must be proportionately restricted and limited to resources and staff capacity, and clear guidance should be issued to public sector employers which sets out their right to:

· Prioritise levy funds to meet the training and skill needs of the existing workforce

· Disregard apprenticeships which are not needed as part of workplace planning

· Review of health and safety and quality impacts on staff capability to mentor and supervise any newly created apprenticeship posts

· Refuse to create apprenticeships that would displace existing employees at a cheaper apprenticeship price

6. Ensuring high quality of new apprenticeships

UNISON believes that more will need to be done to ensure the delivery of new high quality apprenticeships as well as improve the existing quality of apprenticeship schemes.

The latest report from Ofsted, which inspected 45 apprenticeship providers in early 2015, suggests that a large number of the newly created apprenticeships were substandard. Many are using government money to accredit existing, low-level skills.

UNISON believes that:

· The Government’s apprenticeship reforms and Ofsted’s concerns and recommendations will need to be addressed in the BIS Area reviews consultation

· All apprentices should be given the option to receive an accredited qualification if mandatory qualifications are not being offered on their apprenticeship

· The new levy apprenticeships can become part of wider workforce development packages so that employers can use them to develop and prioritise all existing employee training and development needs

· Clarity is needed on the future of National Occupational Standards (NOS)

· There needs to be a price-quality ratio calculation used for the levy which factors in both decent payment of apprentices and quality of apprenticeships. This will prevent a ‘race to the bottom’ and delivery of poor quality apprenticeships

· In the newly proposed Institute for Apprenticeships (IFA) there should be a widening of the board’s membership to include trade unions

· Mandatory monitoring information needs to be collected from employers and providers to ensure that the current wide range differences in quality, pay, terms and conditions and types of qualifications offered to apprentices is streamlined

· The Secretary of State’s report on progress towards meeting the apprenticeship target needs to be strengthened with the inclusion of more detailed information in the annual report.

February 2016

 

Prepared 11th February 2016