TUC hail end to two tier public service workforce

Commenting on the government’s commitment to end the two tier workforce set out in a letter to the TUC from Cabinet Office Minister David Milliband, TUC General Secretary Brendan Barber said:

This is a very good result from the intense discussions we have been having with the government over recent months and a clear victory for a sustained union campaign. It honours another agreement made at the Labour Party’s Warwick Policy Forum.

But most of all it is a victory for thousands of mainly low paid public service workers. No longer will private companies be able to win work from the public sector purely by cutting the terms and conditions of staff.

It builds on the agreement in local government that has worked well.

We now look forward to rapid implementation across the public sector through agreement between public employers and relevant unions, and will look to the Cabinet Office to aid implementation if necessary.

We also welcome the commitment to put in place arrangements to monitor and evaluate how the Code is working in practice, in consultation with the trade unions.

The letter from the Minister for the Cabinet Office, David Miliband, setting out the Government’s commitments in detail follows:

Dear Brendan

Two tier workforce
Thank you for your response to the consultation on the two tier workforce. I am grateful for the constructive approach you have adopted, and am pleased with the way in which the social partners, including trade unions and employers, have worked together with the Government on this. I have consulted colleagues and am now in a position, after careful consideration, to confirm how we intend to move to an early announcement.

I am delighted that we are able to deliver on a commitment given by the Prime Minister in September to extend the two tier agreement to the wider public sector, employing some five million workers.

I am sure you and your colleagues will welcome this as a significant step forward, particularly when taken together with other measures, such as the minimum wage, to ensure good employment practice in the workplace. We believe fair treatment at work is part and parcel of the move to achieve a more flexible and adaptable workforce to deliver the best possible public services to local communities and I look forward to the support of trade unions in this drive.

I would now like to set out the principles that will underpin the announcement and, in doing so, I will respond to points raised in your letter.

a) Consistency with the Best Value Code
The Government intends to adopt the Best Value Code as it stands, which appears to have worked well in local government in respect of pensions; two options - either membership of a good quality employer pension scheme or stakeholder pension as set out in the Code - will be offered. Employees of private contractors are not admitted to unfunded public service schemes, whether they are transferees form the public sector or new entrants.

The Code’s provisions for informing staff and unions - consistent with the Cabinet Office’s Statement of Practice for Staff Transfers - should apply. Departments will also put in place, following discussions with trade unions, arrangements to monitor compliance and evaluate the impact of the Code. Departments will identify a named individual to deal with any concerns over compliance. We will of course wish to adopt the BV Code Alternative Disputes Procedure model and have consulted with ACAS on how to take this forward.

I confirm that the Code will apply to sub-contractors and the Arms Length Management Organisations (ALMO’s). We will also consider urgently whether the arrangements can apply to work transferred agencies.

b) Timing
The Code will apply to new contracts, including projects in procurement up to the Invitation to Negotiate stage, from the date of the Government’s announcement.

c) Coverage
The rollout will extend the coverage to a very significant number of public sector employees. I am happy to clarify the situation in the following areas:

Public Corporations and Trading Funds: these are bodies - such as the Post Office - that receive a significant share of their income through trading activity and have substantial operating independence. It was never intended that the Code should apply to commercially driven organisations.

Independent Sector Treatment Centres: the Code will not apply to ISTCs. It is not expected that this initiative will involve the transfer of NHS staff to the private sector. However, there is a technical possibility that isolated TUPE transfers could occur, under the secondment model which is proposed for NHS staff. Bidders for ISTC contracts have not been required to make allowances for the Code and it would not be appropriate for the Code to apply to them.

Retention of Employment model for NHS PFI contracts: We are strongly committed to the Retention of Employment model and believe it would be impractical to impose two different sets of rules on contractors. DH Ministers are prepared to discuss how further assurances could be given to staff who are not eligible for RoE that they will not be disadvantaged as a result of two tier workforce issues.

Education: I do recognise your concern for fair treatment for FE and HE staff and would like to respond as follows. First, we would expect both HE and FE sectors to use PFI Value for Money best practice where appropriate and practical. As they are independent institutions these decisions of course lie with the institutions concerned and their sponsoring bodies, but our position is clear. Secondly, my officials have been in touch with the employers in FE and He to pave the way for such discussions, which your colleagues should be well placed to take forward. I very much hope that these discussions reach a positive outcome, consistent with our aim of ending the two tier workforce.

Finally, in the case of Academies, which are classified as independent schools, I can give you the assurance that staff transferring from predecessor schools would be protected by TUPE. I shall ask my officials to look at how proper engagement can take place to ensure that two tier workforce issues are addressed.

Next Steps
Following the announcement, service level discussions between departments, employers and relevant unions should focus on the detailed implementation of the Code, within the framework I have outlined. There might also be a number of more detailed points on the general application of the Code that can be followed up with Cabinet Office officials.

It remains important however that there are opportunities in the future for employers and unions to subsequently discuss how the Code is operating in specific sectors. There could well be issues over its application in relation to specific types of contract not so far considered and it should remain open to employers and unions in each sector to agree sensible variations where that is necessary in particular cases.

I look forward to your positive response to the announcement. I believe that these commitments represent a significant step towards our shared goals, and I am pleased that they have been developed in partnership with union and employer representatives. If you need any further clarification of points in the letter, your officials should contact Peter Kane in the Cabinet Office.