14 February 2003
A last-minute intervention by Prime Minister Tony Blair is likely to avert a public row at Labour's local government conference this weekend after unions were granted substantial concessions to end the two-tier workforce.
As Public Finance went to press, the Best Value Review Group, consisting of unions and the private sector, was being recalled to be told of the latest deal forged at Number 10 this week.
The deal, which will be published in an employment code, is a major breakthrough for the unions – Unison, the T&G and GMB – granting them changes to vital definitions on terms and conditions and introducing an arbitration clause to govern disputes.
The private sector, particularly the CBI, is likely to be furious after successfully halting similar changes to the code several weeks ago.
Blair called the union general secretaries to Downing Street at the beginning of the week and was understood to be keen to end one of the major divisions blighting his public services reform agenda before the local government conference, which begins on February 14 in Glasgow.
Under the terms of the code, any private contractor providing local government services will have to give new staff pay and conditions 'no less favourable' than those of former council staff.
Under the originally proposed code, which was forced through by former local government secretary Stephen Byers last year after the group failed to come to an agreement, terms would have been 'broadly comparable' to those of transferred staff. Unions argued that this was too vague and open to abuse.
Blair has also agreed to remove a line stipulating that 'broadly comparable' pay and conditions could reflect the local labour market. Unions were fighting a rearguard action against this, as it could have allowed the private sector to set pay levels in line with local labour market conditions, such as lowering pay in areas where workers are in abundance, significantly undermining national pay bargaining.
Another clause in the code will stipulate that unions and the private sector have to agree on a national arbitration mechanism or Blair will enforce one. A source close to the talks said this was the strongest indication yet that the prime minister favours binding arbitration.
Unions have argued that this is vital to make the code enforceable and give it teeth. Now they are hoping that they can come to an agreement on an independent arbitrator, such as a panel or individual whose decision on whether the code was being violated would be binding.
The new code brings to a close nearly two years of constant tussles between government ministers, the private sector and the unions. Unison first brokered the deal for a review of the two-tier workforce at the 2001 Labour Party conference and Blair promised to look again at the issue after a painful defeat over the Private Finance Initiative at the 2002 conference.
A source said it bought Unison's long-running campaign to a close.
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