Many of the savings from outsourcing the Audit Commission’s work could come from cutting the pensions of transferred employees, a union said today.
Prospect, which represents commission staff, has called for urgent meetings with the four firms that won the ten audit contracts. It hopes to start meeting them next week.
When the commission announced the contracts yesterday, it said they would save an estimated £30m a year in total audit fees. Combined with £19m a year in internal efficiencies, the commission expected to save a total of £250m over five years, or 40% of total audit costs.
But Richard Hardy of Prospect told Public Finance that he feared that the savings could be ‘mainly cutting our members’ pensions’.
Ahead of the tender, the commission’s legal advice found there was no requirement for the government’s Fair Deal policy on pensions to apply. This would have ensured the transferred staff were given broadly comparable pensions.
Hardy said that without Fair Deal, the union was resigned to the fact that ‘the companies were not going to meet the expectations our members would have if they had stayed in the public sector’.
The ‘key thing’ for staff being transferred to these firms was now to find out what the pension provision would be.
‘We will have a meeting with the winning bidders over how we move forward with them. Forty per cent savings is quite a lot, and we wonder where these are going to come from, if not our members’ terms and conditions. But we have to wait and see,’ he said.
‘What we hope is that they will not hope to get away with the bare minimum.’
Speaking to PF after the winning bidders were announced yesterday, Audit Commission chair Michael O’Higgins said: ‘The [commission’s] board takes the view that the terms and conditions should be decided by the bidders.’
He added that ‘high-quality firms’ had won the tenders, and that staff could see any changes to pay and pensions ‘even out’ through other benefits.
But Hardy said that, ahead of meeting winning companies, he thinks this would be ‘optimistic’.
He added: ‘I think that some people will do very well, and senior positions will have salaries that are applicable for senior staff in partnership-owned organisations. But for lower-paid staff, I don’t see their pension being made up by pay increases.’
