Government pledge will herald end to two-tier workforce, says union

Trade unions are predicting a return to in-house contracts in
social care after a government pledge last week to eliminate the
two-tier workforce created by privatised council services.

But councils have warned of the cost implications of the guidelines
from the Department of Trade and Industry, which say that the pay
and conditions of new staff in contracted-out services should be
“no less favourable” than those of staff transferred from
councils.

Owen Davies, social services officer for public sector union
Unison, said thousands of social care staff in contracted-out
services would benefit from the deal.

“There’s been a huge contracting out of social care services which
has driven down wages,” he said. “Well over half of domiciliary
care services are contracted out because of the enormous cost
pressures on local government to find cheaper alternatives.

He predicted that many contracts would return in-house “because the
private sector will no longer see public services as a rich place
to pick up profits”.

Existing staff had their terms and conditions protected when
services were contracted out under the Transfer of Undertakings,
Protection of Employment (Tupe)regulations. Until now private
employers have been required only to give new staff “broadly
comparable” terms. But under the new agreement, they will be
obliged to offer new staff terms that are “no less favourable” than
those offered to transferred staff.

The agreement has angered the Confederation of British Industry,
which has accused the government of “capitulating” to union
demands.

City law firm Trowers & Hamlins warned that the change would be
a “real concern” to employers delivering public services under the
Private Finance Initiative.

“Arguably it restricts the private sector’s ability to deliver
services in the most efficient manner,” said a spokesperson.

The Employers’ Organisation, which represents local government,
said the new guidance “could have important implications for the
costs and nature of contracts”.

But “no less favourable” does not mean “the same”. “Contractors
will be able to offer different packages of terms and conditions so
long as overall they are not less favourable,” a spokesperson said.