Beginning of the end for two-tier protection? By Heather Wakefield

15 Nov 10
Winston Churchill is not one of my heroes. But in one area of public life he remains a beacon of sanity and good practice that puts present day coalition politicians to shame

Winston Churchill is not one of my heroes. But in one area of public life he remains a beacon of sanity and good practice that puts present day coalition politicians to shame. His support for the protection of pay and conditions of employees delivering outsourced public services and for minimum wage legislation set a standard that today’s ministers would do well to remember and emulate.

Lack of protection for pensions, pay and conditions when outsourcing takes place is a critical issue for thousands and thousands of Unison members and public servants everywhere. And all the evidence shows that they are right to fear a life on bargain-basement pay and conditions and no pensions if their jobs are parcelled up and handed over to the next successful bidder. Take home care - 85% of which is now outsourced. Most home care workers - doing skilled work once undertaken by district nurses - are forced to survive on the hourly National Minimum Wage rate of £5.93. There is little training, poor conditions of work and consequently high turnover, unhappy clients and failed contracts.

School meals workers, hospital and civil service cleaners, porters, housing benefit staff and other white-collar workers who join outsourced contracts all find themselves earning less than employees transferred from the public sector as the coalition’s race for to the bottom for lower pay and higher profits gathers momentum. Some have languished for many years on minimum wages. And we hear that the Con-Dems are intent on attacking the basic Tupe rights of our members forced to transfer to external providers too.

Yet in 1891, Salisbury’s Tory (yes, Tory) government agreed a Fair Wages Resolution which required employers with government contracts to pay at least the wage level recognised by the sector or paid within the locality in which the contract was run. It applied throughout Britain to all levels of government and was explicitly designed to prevent contractors undercutting collective agreements or local wage settlements.

The Trade Boards Act - which reinforced the Fair Wages Resolution - followed in 1909 under Asquith’s Liberal government and was promoted by Churchill as then President of the Board of Trade.  Trade Boards – which became Wages Councils with wider scope than simply pay in 1945 – were regarded as necessary by Churchill to ensure that workers received a living wage in industries where employers’ bargaining power outweighed that of the employees.

Introducing the legislation Churchill said: 'Where you have what we call sweated trades, you have no organisation, no parity of bargaining, the good employer is undercut by the bad, and the bad employer is undercut by the worst.'

An understanding of the link between fair wages for the lowest paid, their purchasing power and buoyant demand to promote a successful economy also underpinned Franklin D Roosevelt’s introduction of the US federal minimum wage in 1938. As FDR said:'I am a firm believer in fully adequate pay for all labour. But right now I am most greatly concerned in increasing the pay of the lowest-paid labour – those who are our most numerous consuming group but who today do not make enough to maintain a decent standard of living or to buy the food and the clothes and the other articles necessary to keep our factories and farms fully running.'

As the coalition government gears up to deliver its ‘regeneration’ of the private sector through outsourcing of public services, there is none of this plain common sense – let alone the compassion - which motivated even Churchill and Roosevelt to protect the living standards of the lowest paid. Vast swathes of our public services are apparently destined for unproven and unaccountable multinationals or very local, and very underfunded voluntary organisations – Cameron’s ‘little platoons’ - in the coalition’s unrepentant war on the welfare state and all those who work in her.

That should be a huge worry for service users and workers alike. For alongside its desire to hand over our public services to unproven, sometimes unknown and often unsuccessful external providers, the government is also determined to deregulate the labour market, putting already low-paid workers at the mercy of cut throat competition and cowboy contractors who will undercut those who want to treat their workers well.  The quality of services will suffer alongside our members.

Right in the line of fire in local government is the 2003 Two Tier Code of Practice, giving new recruits on outsourced contracts ‘fair and reasonable terms and conditions which are overall no less favourable than those of transferred employees’. The Cabinet Office Statement of Practice, which says that Tupe principles should apply in public sector procurement, and the Fair Deal for Pensions, which provides for broadly comparable pensions to be provided by contractors, are all set to go. ILO Convention 94, which modernised the Fair Wages Resolution, was ‘denounced’ by the Thatcher government in 1983, so removing an international protection enjoyed by many other nations.

Add to this Cabinet Office Minister Francis Maude’s recent edict to major contractors to reduce their contract prices and you have a recipe for disaster. As the public sector is broken up and parcelled out, so private contractors dependent on the public sector like housing maintenance company Connaught, go bust. Those who survive must reduce their prices or lose procurement power, so the inevitable happens – our members pay and conditions are squeezed even further as the first casualties of these procurement wars. Churchill may have fought them on the beaches, but he didn’t fight them when they worked for external companies providing public services. He protected and respected them. Let us not forget that either.

Heather Wakefield is head of local government at Unison

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