The Court was ruling on a Dutch case where the Province of North Holland had required coffee machines – of all things! - to have certain environmental labelling. And whilst the Court ruled against the Province on the details of the case (beccause it had just required certain eco-labelling rather than including the underlying environmental standards to be met in tenders), the judgment defines what the public sector is required to do to so that social and environmental objectives can be included in the procurement process.

The EU procurement directives are currently under review, and unions are arguing for clearer language on these issues, so the Court judgment will be very helpful in setting down how that language could be drafted. But the Court’s judgment is also immediately applicable to all public procurement in the UK, and the Government should make it clear to all that social and environmental standards can and should be included in all future contracts.

The Fair Trade Advocacy Office, an NGO with which trade unions in Europe work closely, welcomed the judgment. Its Executive Director, Sergi Corbalán, said “we welcome the confirmation by the European Court that Fair Trade criteria can be supported through public procurement under the current EU rules.”

Those employees setting up their own public service mutuals will hopefully have entrepreneurial drive in buckets, as the track record of public service mutuals  in the open market is looking decidedly patchy.

What’s more the government is committed to ensuring that a level playing field exists that enables all qualified providers to compete, with new rights of appeal given to those that feel excluded from the commissioning process.  There are to be no favours for fledgling mutuals in an open and competitive market.

We reported before how employee-owned social enterprise and ‘big society’ pin ups Central Surrey Health lost out in their first competitive bidding process to Assure Medical, owned by Virgin.

Earlier this month we also saw DA Partnerships, the employee-owned mutual set up by staff in advance of the abolition of the Audit Commission.  DA Partnerships has now folded and become a wholly owned subsidiary of audit firm Mazars as a result of managing to secure only one local audit contract in a market where Ernst and Young, Grant Thornton and KPMG shared the rest between them.  Those ex-Audit Commission staff learned the hard way what empowerment means in the market.

Many supporters of mutualisation have argued that specific conditions need to be put in place to develop and grow the sector, a key tool being the use of long term contracts that incubate fledgling mutuals, providing some breathing space to develop sufficient experience and capacity to compete in the market.

In their report of June 2011, the All Party Parliamentary Group on Employee Ownership stated that they favoured “longer contracts for employee led mutuals, such as five to seven years in length, and do not see any conflict if the ultimate aim is increased diversity in supply.”

Several other organisations including Co-operatives UK, the Kings Fund and Association of Public Service Excellence have called for long term commissioning to be used as a way of nurturing the growth of public service mutuals.

I suspect that there is real concern among the mutual sector about the government’s stated commitment to embed open competition across all commissioned services.  Providers will be granted rights of appeal where they feel they have been “unfairly excluded from the commissioning process”.

But no doubt this will be music to the ears of large private sector providers looking for an uninhibited access to public service contracts and, I suspect, to the legal teams they employ.

Promoting the release of Open Public Services 2012, an update to the government’s white paper released last July, Cameron reiterated his “instinctive belief” that a combination of individual consumer choice and increased competition and diversity of provision was key to securing innovation and value for money in public services.

The TUC’s response to last year’s white paper provided ample evidence to show that opening up public service markets actually has the opposite effect, leading to a concentration of provision in the hands of unaccountable private providers.  At the same time services became increasingly complex and fragmented, with the greatest impact on the most vulnerable. 

To see David Cameron’s diversity of provision in action, let’s take a quick look at developments in the NHS under his open public services agenda.

In September last year, community health services in Surrey were awarded to Assure Medical, owned by Virgin, despite competition from the celebrated employee-owned Central Surrey Health.  In November, Circle Healthcare, the ‘social enterprise’ majority owned by private investors, took over the management of Hinchingbrooke Hospital in Cambridgeshire.  Earlier this month Suffolk’s community health services were taken over by Serco.  Currently Serco and Virgin are the two preferred bidders in line to take over Devon NHS children’s services.  And looking ahead, George Eliot Hospital NHS Trust is considering the outsourcing of its management, with Circle Healthcare, Care UK and Serco in line for the award.

So much for diversity, accountability and the breaking up of monopolies.

Yet the ambition set out by the government yesterday is to extend commissioning and competition across the virtually the entire range of public services, including sensitive areas such as prevention, detection and investigation of fraud, debt management and enforcement services, immigration and visa administration and support for looked after children.  This last area demonstrating that the lessons of Southern Cross have clearly not sunk in.

As well as extending commissioning, the government is also looking to embed competition by introducing new rights and complaints processes for service users and providers who feel that they have been excluded from competition and choice in public services.  The government are keen to enshrine a new “right to choose” for service users, already described as “unworkable in practice” by the Institute for Government.  In addition, potential providers will be given “a right of appeal to an independent organisation when they feel that they have been unfairly excluded from a commissioning process”.  Every service must be open to competition, every commission open to every provider.

This creates a whole new layer of complexity and cost, with consultants and lawyers no doubt lining up to seize the opportunities. And it also undermines any attempts by public authorities to use the commissioning process to nurture and grow new forms of provider such as mutuals or social enterprises, with few wanting to risk “unfairly excluding” the corporations who will be willing and able to challenge every case .

While Open Public Services 2012 brought little new to the table, it was perhaps the government’s boldest statement yet of its privatising intent.

But the Public Services (Social Value) Act 2012 has some potentially far reaching implications for the commissioning of public services.  Trade unions and community activists should take note.

With cross party support and government backing, Tory MP Chris White’s (heavily amended) private member’s bill gained royal assent on 8 March.  The aim of the Act is quite simple, to require public authorities to ensure that they procure services in a way that provides ‘social value’.  The complexity arises around what is considered ‘social value’ and how best it is identified, evaluated and monitored.

The Act applies across the public sector in England and Wales, including central government, non-departmental bodies and agencies, the NHS, local authorities, police, fire and rescue services, housing associations and the criminal justice system.  The key part of it requires that, while remaining within EU procurement rules

The authority must consider –

(a)   how what is proposed to be procured might improve the economic, social and environmental well-being of the relevant area, and

(b)   how, in conducting the process of procurement, it might act with a view to securing that improvement.

Of course, this sits very comfortably with a government bent on outsourcing as much public service provision as possible and, in theory if not practice, likes the idea of social enterprises, voluntary organisations and charities picking up some of the work.  Social Enterprise UK have been keen supporters of the bill from its inception and were elated at the arrival of the Act.

While the TUC will continue to press the case for publicly owned and accountable public services, we have long campaigned for the strengthening of social value in procurement and, as such, we welcome this legislation.

That said there are a number of potential problems that we should be alive to.

The most obvious point to make is that social value does not come cheap.  And with public spending cuts intensifying, the ability of public authorities to go down this route is severely limited, particularly in those areas facing the biggest cuts and upheaval such as local government and health where outsourcing is most rife.

There is also the danger that as part of the procurement process, social value becomes overly defined and commoditised.  While the public sector client needs to be clear about the value it is seeking to acquire and how it will be measured, there is a threat that this could be become a bureaucratised process or a box ticking exercise that stifles genuine social innovation.  Overly prescribed outcomes may also create mission drift within voluntary and community providers who end up chasing narrowly defined outcomes rather than serving their social purpose.

Moreover, requirements for bidders to demonstrate social value may well favour only those providers who have the capacity and means to undertake the kind of Social Return on Investment type analysis that will offer the quantifiable outputs that the procurement process might require, namely large charities and private enterprises. 

The Economist estimates that there are currently £80bn worth of public contracts currently being contested in national and local government and this is likely to increase to over £140bn by 2015.  They quote an investment banker, Caroline de la Soujeole, who calls this “a golden age of outsourcing” and the number of corporate events aimed at public sector outsourcing is growing each week.  Corporate providers are lining up and increasingly adept at displaying their social value credentials, or ‘partnering’ with others who do a better job of it.  As we’ve pointed out before, evidence under this government shows that this is where the business is likely to flow.

Sp we need to ensure that social value is defined in its broadest sense and is based on a genuine dialogue between public service providers, users, communities, unions and other stakeholders.  The definition of social value will differ in different contexts and between services, providers, communities.  We need to ensure that we’re capturing the right kind of value and this can only come through an informed commissioning process that meets genuine need defined through that process of dialogue.  And we need to ensure that social value is applied to all potential providers, so this isn’t just an exercise in giving public contracts to charities or social enterprises on the assumption that they ‘do a bit of a good’.  Social value must apply to any provider, whether the service stays in-house or goes out to a contractor from the private or community sector.

The scope for trade unions and community activists to use the new legislation to support living wages, investment in local employment, training and apprenticeship schemes and labour standards is evident.  This new Act makes this a more tangible proposition.  But concerted local organising and campaigning will be necessary to ensure that we are setting the agenda on social value and making procurement work to deliver the right outcomes.

As colleagues have blogged before, public sector pay supports local and regional economies, ensures fairness and transparency and promotes equal pay. Moving away from this to a system that would entrench the North-South divide for generations is unfair, inefficient, makes no economic sense, will increase inequality and is simply not supported by the evidence. A move at this stage would also pull the rug from under the independent pay review bodies, who have already been asked to investigate the question and won’t report until July.

The issue of local and regional pay rears its head every few years under Governments of different persuasions, but usually goes quiet when the complexities and risks are exposed. This time round, the Government fired the starting pistol in the Autumn Statement, when the Chancellor asked the public sector pay review bodies to look at how public sector pay could be made “more responsive to local labour markets”

Four of the independent pay review bodies are currently conducting these reviews , gathering detailed evidence from unions and other stakeholders, and are due to report in July. The TUC has just submitted formal evidence, as have the health unions that make up the NHS staff side.

These reviews don’t cover the whole public sector workforce (see here for more details), but their investigations will gather evidence and views to inform decisions about future policy. Any move to introduce local pay in the Budget - however limited – would be in bad faith, undermining these reviews and the independence of the pay review bodies.

In the TUC’s evidence to the Office of Manpower Economics, which supports the pay review bodies, we argue a series of points.

Our starting point is that paying nurses, teachers and Jobcentre staff less in the poorer parts of the UK is simply unfair. The jobs require the same level of skills and qualifications as they do in wealthier areas, and can be more challenging in low income areas where public sector workers have to deal with the consequences of inequality such as poorer health. Most people would say that it is fairest to pay people for what they do, not where they live.

It is also clear that local pay will damage the economy: cutting public sector pay in the poorer areas of the country will take money out of people’s pockets that they would otherwise spend on private sector goods and services, causing a knock-on effect on the whole economy as demand is choked off in sectors like retail.  For instance, if local pay led to a 1 per cent pay cut in the North West, this would take £190 million out of the regional economy – and that is before the multiplier effect on the private sector is factored in.

Far from making it easier for private companies to take people on, it would weaken the economy in the very areas where the recovery is at its most fragile. It is not credible to suggest that the public sector is crowding out the private sector when the latest figures show there are an average of 5.6 unemployed people per vacancy – a figure that is much higher in poorer parts of the UK such as West Dunbartonshire (31 claimants per vacancy) and Middlesbrough (23 per vacancy).

Third, the evidence for local pay does not stack up. Outside London and the south east of England, there is in fact little difference in earnings between regions. Regions tend not to have homogenous labour markets, but to have pay “hotspots” within regions, which are similar to hotspots elsewhere in the country. IDS research based on ASHE data finds that, excluding London and the south east, the median weekly earnings for full time employees in April 2010 only differ by £48 between the lowest and highest paying regions.

Advocates of local public sector pay argue that private sector pay is set in line with local labour markets. In fact, IDS found that big multi-site private employers like supermarkets generally have national pay arrangements with some local additions to reflect the higher cost of living in London and the South East: very similar to the flexibilities that already exist in the public sector. Rather than geography, the main determinants of pay levels are skill level and qualification level, and large private companies often use international rather than local pay data.

Fourth, local pay is inefficient. At the moment it is not clear whether the Government is looking to localise the process of pay bargaining as well as pay itself. If bargaining is localised it will mean replicating the evidence-gathering and negotiating process in thousands of public sector employers, taking up significant time and resources and requiring skilled input. Local managers will either be diverted into dealing with these complex negotiations instead of managing services, or will turn to expensive consultants to provide support, further building up costs… or both.

And actually applying local pay, whether or not it is bargained locally, is fraught with difficulties. Would pay be determined by where someone works or where they live? Would it be measured against local housing costs and if so would it be the rented or owned prices? How would rural areas with higher travel costs be compensated?

There is also a big equality risk to local pay. The current national pay systems such as Agenda for Change in the NHS have been developed with detailed equality-proofing in mind. Localising pay, especially bargaining, could increase the risk of unequal pay and expensive and time consuming equal pay challenges.

Finally, one of the arguments used by supporters of local pay has been that there is a gap between public and private sector pay. We have written about this many times (see here, here and here for some examples), highlighting the differences between the sectors: yes, median pay in the public sector is higher than in the private sector, but that disguises important differences between the sectors: more people have higher qualifications in the public sector (doctors, teachers); the gap between top and bottom pay in the public sector is smaller than in the private sector, as is the gender pay gap; and higher paid people are paid less in the public sector. The real difference is endemic low pay and out-of-control top pay in parts of the private sector.

And a postscript: the politics of all of this are interesting, with senior Liberal Democrats expressing concerns about the idea and some briefing trying to downplay the weekend’s coverage.

Follow @payfairnow on Twitter for updates on the TUC’s campaign for fair pay

And the Department hasn’t been using one of the obvious ways to massage statistics like this – making everyone wait longer to bring down the extremes – because median waiting times have fallen too:

This is good news from new statistics; why aren’t Ministers trumpeting this? You’d have thought they would be keen to claim that the cuts aren’t hurting.

There’s a couple of answers that spring to mind. One is to look at when the waiting times came down – this is a Labour success, not something you’d want to highlight if your story is that everything the last government did was a failure.

But I think the deeper answer is that the government is in difficult position – if they make too much of good news like this it undermines their case for the Health and Social Care Bill. The Prime Minister has been reduced to insisting there’s a crisis in the NHS that needs radical surgery. The latest government line is that the Bill may seem extreme, but desperate measures are necessary. If the Bill isn’t “unavoidable and urgent” it is impossible to justify.

When a government ignores good news about the NHS and prefers to tell us everything is in crisis you have to doubt their commitment to it. That’s why tonight’s Save Our NHS Rally is so important.

It may be a bit late for you to get to Westminster (starts at 6.00) but you can take part on line:

• Tweet about the event. Don’t forget the hashtag, #SaveOurNHS.
• Sign your name: Add your name to the big online petition to drop the Bill, started by Dr Kailash Chand. Sign the petition
• Adopt a Peer: Use our campaign tool to match yourself up with a member of the House of Lords and lobby them over some of the latest amendments to the Bill. Adopt a Peer
• It’s good to talk: Start a discussion on any bulletin boards or online communities that you use.
• Get the media involved: Visit your favourite newspaper or online media sites and leave a comment on the latest news stories about the NHS.
• Share the video: Watch UNISON’s “New NHS” video on YouTube and share it with your friends. NewNHS video
• SMS for the NHS: Text a message of opposition to the Bill to Unite’s Unite4OurNHS campaign. Text “NHS” and your message to 86888.

The key findings of ‘Living on the Edge’ are as follows:

• The value of NJC earnings adjusted for inflation is now at a shocking 10% below its 1996 level
• This is the result of a combination of low or below inflation increases since 1996, a pay freeze since April 2010 and the employers’ failure to pay up on the Chancellor’s promised £250 for those earning below £21,000
• The value of earnings has fallen by 13% since 2010 alone
• 38% of part-time and 8% of full-time workers earned less than the Living Wage of £7.20 in 2011
• 280,000 part-time workers earn less than £6.63 pence an hour
• 160,000 full-time workers earn below £8.72 an hour
• Hourly earnings for all full-time and part-time workers throughout the pay scale are lower than the rest of the public sector
• Three quarters of full-time workers earn less than their private sector equivalents too
• In contrast, mid-point basic pay for chief executives of district councils rose by 50% between 1998 and 2007 and by 75% for upper and single tier councils
•  A further 6% increase in 2008 saw CE’s of districts enjoy a rise of 27% over 10 years and those in upper  and single tier councils a pay increase of more than 50%
• Outside of London 84% of the lowest paid council workers live in the council area in which they work and 50% in London – a much higher proportion than for the rest of the public or private sectors
• More of the highest paid live and work in the same council area than in other sectors too
• 440,000 workers are in the lowest quarter of earnings and many are dependent on in-work benefits to survive
• The only ‘local government’ households on  lowest quartile pay where net earnings are above the poverty line are those with a single adult working full-time and a couple household with two earners
• For all equivalent households with a dependant, net earnings are at or below the poverty line

Presented with the above findings, few would guess that they depict the pay profile of local government workers – except perhaps for Chief Executives. In contrast to the popular image of the over-paid and over-pensioned pen pusher, ‘Living on the Edge’ tells a tale of the real poverty faced by many UNISON members working on the front-line . The same people – mostly women – who are increasingly covering posts left vacant by the myriad redundancies falling on councils. The same people who regularly work unpaid overtime to finish the job. The same people who told us in a 2011 survey that they are reducing spending on food shopping, home maintenance, holidays and going out. The same people who once kept local economies going with their spending power.

Even more shocking is the fact that the findings in ‘Living on the Edge’ describe only part of the squeeze on our members’ pay and conditions. Encouraged by the NJC employers, some councils are cutting pay even further at local level. Others are halting pay progression and many are stopping unsocial hours payments to already poorly paid care workers and others. Car allowances for social workers, home care workers and environmental health officers have been slashed in a majority of councils and others are also charging for parking at work.

‘Living on the Edge’ also issues a challenge to the Coalition’s misplaced belief that public sector pay exceeds private sector pay and needs to be brought down to its level. It also shows that earnings cannot be ‘regionalised’   – ie reduced further in the North – without central government incurring the costs of increased in-work benefits as more of our members are pushed into poverty.

What will it take to win some respect for our members? The ‘hands off’ approach taken by CLG to all matters of pay and remuneration (other –of course – than wanting to increase LGPS contributions) has to end. Government needs to recognise that further cuts of the kind inflicted so far cannot be passed on any longer to a workforce stretched beyond belief and decency. The Local Government Employers need to know that loyalty and motivation are fast disappearing  and working for the council is no longer a positive choice but is becoming an act of last resort. And without our members’ earnings, local economies will sink further into crisis.

It’s all been said before of course and so far no-one has listened. If there is no pay offer on the table tomorrow and the LGPS becomes more expensive with worse benefits, who knows what will happen? One thing is certain, it won’t be pleasant – for anyone.

Prior to the election David Cameron pledged no top down organisation to the NHS and on his billboards stated that he’d “cut the deficit, not the NHS”. Instead, borrowing is up, services are being cut and top-down reforms are being imposed on the NHS against the will of the general public and health professionals. This has not gone unnoticed by voters, those that think David Cameron hasn’t delivered on his pre-election assurances over the NHS outnumber those that believe he has by three to one.

So, as with many things in politics, it all boils down to a matter of trust. Cameron promised one thing on our National Health Service and then seems to do the complete opposite, so why would the general public believe his reassurances about his health reforms?

The YouGov polling shows that the even Conservative Party supporters trust health professionals more than the prime minster and his health secretary. A whopping six times as many people trust health professionals than the Prime Minister and Lansley over the health reforms. But so far the Government’s response has been to rubbish the views of the people working in the NHS, caring for the British public. Healthcare professionals have been accused of being self-serving, of seeking revenge over pensions and of not understanding the reforms.  Ministers have traded on anti-union rhetoric to the debate when reacting to the decision of the BMA to call for the withdrawal of the bill. When in reality this is a centuries old professional body making a brave stand against a bill that they believe will be detrimental to patient care. The Prime Minster and the Health Secretary might not value their views, but the general public do and so do voters too.

The list of medical and royal colleges, unions, other health bodies, patient groups and charities which oppose the bill is growing daily, the latest being 150 members of the  Royal College of Paediatricians concerned about the damage these reforms will do to health of children. It absolutely stands to reason that the people who work day in day out in the NHS are being listened to taken very seriously by the public.

This week MPs will have an opportunity to vote for the publication of the Department of Health’s Risk Register. This document will show an assessment of the potential risks of the Government’s plans. So far not even MPs or Peers have seen it, despite a ruling in November from the Information Commissioner that it should be published and shared. Imagine the uproar if patients were given a new medical drug where the possible side effects were unpublished. It would be incredible if MPs voted to remain in ignorance before the Bill became law.

So far 75 MPs including 13 Lib Dem MPs, have signed an Early Day Motion 2659 to call for its immediate publication. Please lobby your MP today and tomorrow do add their name too. If the government is confident about its reforms then it should publish the Department of Health Risk Register and this week.

Today’s poll shows the British public have full confidence in health professionals when it comes to the future of the NHS. The Prime Minister should too and drop his unworkable and unloved Bill before it’s too late.

Since taking office, the coalition government has placed great emphasis on the importance of the early years. It has pledged to extend free early education places to the 40 per cent most disadvantaged two year-olds by the end of the Parliament, in addition to the universal free offer for all three and four year-olds . For these families, most of whom have not previously used a nursery or childminder, access to 15 hours of free care will not only benefit their child, but could help the parents to return to work, study or volunteer. And despite cutting the amount of help available for childcare through Working Tax Credit in April 2010 (an average loss of over £500 per family), the Government has pledged that childcare support in the new Universal Credit will be extended to around 80,000 additional families. Currently, parents must work more than 16 hours per week to receive childcare support – in future this will be available to all working parents.

But these new entitlements will be worthless if parents don’t know about them in order to take them up. Family Information Services – small teams of trained advice staff based in local authorities – are there to help parents find childcare, as well as access other services for families. But recent Daycare Trust research has found that cuts to Family Information Services could undermine these key policy initiatives through a lack of support for parents to find out about their entitlements, which could mean that the poorest and most vulnerable families lose out. We have found widespread cuts to Family Information Services, a low-profile, but essential, service. In addition, we have warned that local authorities may be failing to meet their duties under the Childcare Act 2006, which obliges them to run a service providing information, advice and assistance about childcare, and to provide brokerage for parents who need extra help finding childcare.

Our recent survey of Family Information Services in England and Wales found:

• 76 per cent of local authorities have recent or planned cuts their budget for family information, 62 per cent have cut staffing and 45 per cent have reduced outreach activity.
• Five English local authorities were not offering childcare brokerage service, despite the obligation to do so in regulations.
• 22 local authorities in England have recently merged their Family Information Services into call centres or plan to do so by April. This figure in an under-estimate as we did not receive survey responses from three local authorities where we know that this has already happened.
• Where a merger into a call centre had recently occurred or was planned just three local authorities out of 22 had retained a second tier Family Information Service to deal with more complex enquiries.
• Only two-thirds of FIS managers believed their service was fully compliant with the Childcare Act 2006.

These worrying findings should provide a wake-up call to policy makers in central and local Government that the success of new policy initiatives relies on parents having high quality information, and support to access their entitlements. Our survey shows that where Family Information Services are properly supported they often provide an excellent service. By investing in high quality childcare information and brokerage now we can not only ensure families can access the services they need, but prevent poverty child poverty in the future.

Now some commentators have said that this is better than the original proposal to remove the cap entirely and that, in any case, almost no hospitals will get anywhere near that as there is not a market for a wholesale increase in private health provision in the current economic climate.

That misses the point however. The government is not trying to meet a market demand, it is trying to create one.

Cash-strapped NHS hospitals will try to help solve their financial difficulties by boosting the private sector. This creates a conflict of interest as it creates an incentive to try to get as many patients as they can to go private. It is also likely that the private patients will be those with “straightforward” procedures” that will be the most profitable, rather than those that are more complex and less profitable. This will certainly mean than there will be less resources available for NHS patients who are on waiting lists for these routine procedures.

In addition, because the cap is a cap on income rather than patients, individual NHS hospitals will gain a financial interest in benefiting from any medical developments and research. At present  there are rules that govern how NHS intellectual property is used to ensure that the whole NHS benefits from new treatments developed in one trust. This common good of both the NHS and the patients will be undermined if hospitals can patent and licence any new procedures or treatments.

Let’s not forget the difference between the NHS and the private sector. The NHS was set up so that access to health care would be based on need rather than ability to pay. The private sector is there to make a profit. Creeping privatisation undermines the whole ethos of the NHS and universal healthcare free for all becomes secondary to making money for a few.

We saw in the Chancellor’s Autumn Statement that the combination of attacks on pay and pensions is imposing massive cuts on the average living standards of public sector workers.

Little wonder then that yesterday’s joint report from the Audit Commission and Local Government Association on the future of workforce pay and employment in local government gives us real cause for concern.

The report tells us that, as councils face 26% cuts in funding between 2011/12 and 2014/15, workforce costs will be increasingly targeted.  This will be achieved in three main ways:

Cutting the pay bill

Councils are already cutting pay bills through a range of measures including pay freezes, increasing part-time working, reducing additional payments, such as over-time and mileage allowances, and cutting the number of agency workers and use of consultants.

It is worth noting that TUC research has found that public sector workers are the most likely to do unpaid overtime, with over one in four (26.3%) regularly putting in more than seven hours of unpaid overtime a week, compared to around one in six workers in the private sector (18.9%).  Cutting overtime pay while expecting depleted numbers of staff to maintain existing services means that the pressure will intensify to work longer hours without pay.

The report also points to councils exploring the potential for greater “local adjustment” within the national pay bargaining agreements.  It recommends that councils should “benchmark pay rates with public, private and voluntary organisations in similar labour markets”.  While it stops short of recommending local pay bargaining, it clearly links local variation with potential labour cost savings thus echoing the government’s direction of travel that we highlighted here recently.

Patrick Butler at the Guardian also rightly points out that the report doesn’t mention those councils, like Shropshire, who are trying to push through pay cuts by threatening to sack staff who refuse to accept enforced changes to their terms and conditions.

Shedding jobs

PricewaterhouseCoopers estimate that local government lost about 145,000 jobs in the last year, accounting for about 5% of full time equivalent posts.  So far, this has largely been achieved through recruitment freezes, early retirements and voluntary redundancies.

Next year will be more brutal.  The report states:

The numbers of compulsory redundancies are likely to increase as councils make further budget cuts following service and departmental reviews.

The report acknowledges that redundancy costs are spiralling.  This is why 43% of councils plan to reduce their local redundancy severance payments.

The increasing use of part-time work is another part of the strategy.  In the two years to April 2010, full-time working dropped by 4.1% while part-time working rose by 4.4%. The report attributes this, to some extent, to:

many people working shorter hours to help their employers cut labour costs and thereby minimise redundancies

Outsourcing

Outsourcing is clearly seen as a means to remove workers from the pay bill.  The report suggests that:

outsourcing helps to explain why the pay bill reduced by 5.6% in real terms between 2008/9 and 2010/11

One county council featured in the report estimates that of its 7,500 full time staff, around 2,000 are included in current outsourcing plans with the potential to outsource a further 2,500, leaving a remaining core staff of just 2,500 by 2014.

In their guide to insourcing, the Association of Public Service Excellence (APSE)   have shown that time and again local authorities have found service delivery to be more flexible, higher quality and better value for money when brought in-house.  None the less, increasing numbers of councils will view outsourcing as a means of cutting wage bills.

What is particularly worrying is where the axe is likely to fall most.  The LGA claim that 90% of councils have reduced senior management costs by employing fewer people or paying them less.

However, the proportion of staff earning over £50k represents just 7.6% of the total pay bill.  Those looking to find big savings through pay cuts are likely to target those who represent the biggest slice of the wage bill.  In 2009/10 most spending on pay was on three groups:

• Non-teaching staff in education, such as teaching assistants (35%)
• Social care staff (22%)
• Management and support services (14%)

No prizes for guessing what kind of workers fill these jobs.  As Heather Wakefield of UNISON comments:

Teaching assistants, youth workers and social care workers are among the groups facing the largest cuts – despite record youth unemployment and an ageing population. Low paid women are the biggest losers, as they make up 75% of council workers and 90% of the occupations worst hit.

Once again low paid women will be bearing the brunt of the cuts.  And, of course, those most reliant on the services being cut.

Of course most of the headlines were grabbed by the Chancellor’s announcement that he would impose two years of 1% pay-caps on public sector workers at the end of the current two year pay freeze (three years if you work in local government). At a stroke this announcement managed to undermine the ongoing negotiations around public sector pensions (which in part are about significant contribution increases in the context of a pay freeze); confirm the government’s intention to cut the living standards of public sector workers by 16.5%; and signal his seeming contempt for collective bargaining and fair negotiations. Having days earlier called on public sector unions to ‘get back around the negotiating table’ over pensions, the Chancellor effectively pulled the table away from them when it came to public sector pay.

Of course whether or not the government can hold to its 1% cap remains to be see. Previous governments of different political persuasions have struggled to maintain medium-term pay/incomes polices, particularly against the backdrop of turbulent economic conditions. Both Edward Heath and Jim Callaghan can testify to that.

But perhaps just as important as the announcement of the 1% cap, was the Chancellor’s call for Public Sector Pay Review Bodies to look at how public sector pay can be made ‘more responsive to local labour markets’.

Briefing the Times (here, sorry it’s behind a pay-wall), ’Whitehall sources’ implied that this was necessary because in some parts of the country the private sector had effectively been squeezed out as a result of its inability to match public sector wages. Of course this is nonsense. As the TUC’s northern regional secretary Kevin Rowan pointed out on the Today programme last week (here, 2hr 10mins) the North East has both the lowest overall wages (£200 a week less than London for full-timers) and the highest unemployment rate (11.6%) of any of the English regions. The private sector in the North East is not being ‘squeezed out’; it’s simply not creating enough jobs. Lowering public sector wages in the region will not improve this situation one iota.

The Chancellor’s announcement – which goes well beyond traditional London weighting-style arrangements – had little to do with ensuring healthy local/regional labour markets , and everything to do with signalling another lap in the race to the bottom on the pay, terms and conditions of public sector workers. It’s part of an ongoing assault on national pay frameworks – given a semblance of  intellectual ballast by the likes of CentreForum and Policy Exchange, and embedded in the government’s approach to public service reform.

Consider the government’s record so far:

October 2010 – the abolition of the nascent School Support Staffs Negotiating Body which would have helped determine pay, terms and conditions for 500,000 (mainly women, mainly part-time) class-room assistants, school administrative staff and support workers

December 2010 – the abolition of the so-called ‘Two-Tier Code’, which helped ensure that when public sector contracts were outsourced new starters had access to broadly comparable terms and conditions as their more established colleagues

December 2010 – Lord Hill, Parliamentary under secretary of state, writes to schools to stress that there is no requirement on schools seeking Academy status to stay within national pay bargaining frameworks, and that he will take this into consideration when assessing their application

I could go on – the Review of the Fair Deal on Pensions, the Health and Social Care bill which threatens a move toward localised pay and conditions, the Open Public Services White Paper with its commitment to open up public services to a broader range of providers and to decentralise ‘decision making’ to the lowest possible levels – the government’s direction of travel is clear. More fragmentation, more localised bargaining (if indeed bargaining takes place at all).

For unions this throws up some very practical problems. Resourcing hundreds, thousands or even tens of thousands of local pay negotiations would be incredibly difficult, particularly in the face of an another ideologically driven assault on facilities and facility time.  But a move to localised bargaining would not only be problematic for unions and their members. It would be bad for public sector employers, bad for taxpayers and bad for the UK economy as a whole.

Here are just five reasons why:

1) Localised bargaining is incredibly inefficient

There are over 3,100 secondary schools in England. Around 1400 of these are Academies. Lets presume that each of these schools takes Lord Hill’s advice, and decides to disregard national pay and conditions and moves instead to setting these itself. It doesn’t need a math’s teacher to deduce that this might actually consume a bit more time and effort than staying within the existing and time-served pay system.

This of course presumes that the average Head Teacher or Chair of governors has the time, inclination and skill to carry out the negotiations themselves. Many won’t. Instead they will rely on external consultants and HR advisors to do the job for them. The end result will be more time, more money and more effort – time, money and effort that could have been spent educating kids. Now imagine this scenario being played out right across the public sector. Imagine every GP consortium, every hospital trust, every local council, every NDPB, every Sure Start centre going through exactly the same process. ’Decision making devolved to the lowest possible level’. Chaotic, uncoordinated, inefficient – that’s the government’s vision for the future of public sector pay determination.

2) It could lead to an explosion in localised disputes

Localised pay bargaining will not only be chaotic, it will also potentially spark an endless round-robin of localised pay disputes. Unilateral, decisions to attack pay, terms and conditions by local councils up and down the country have led to bitter and, in some cases, prolonged disputes. At the moment Southampton, Birmingham et al are relatively exceptional cases – localised bargaining will see these sorts of disputes raise their head across the country.

3) It would reinforce and entrench existing regional economic disparities

Lets go back to Newcastle, and assume the government gets its way. A school cleaner in Newcastle now earns about  15% less than her counterpart in, say, Basildon (equivalent to the existing regional ‘pay-gap’). How does this help to boost the North East economy? How does it create new private sector employment? The simple answer is, of course, it doesn’t. With 15% less wages to spend in the local economy, the consequence of regional/local pay will be to shrink those regional economies already most vulnerable. And the fact is this will not be restricted to the public sector. Lower public sector wages will drive a race to the bottom in the private sector as well.

4) It risks opening up the gender pay gap and leading to increased gender inequality

The struggle for equal pay – at the negotiating table and in the courts – has been a constant for public sector unions and their members over the past few years. Thousands of Tribunal cases, long and complex negotiations to deliver equality–proofed pay systems (exemplified by Agenda for Change)  - its been hard, but important work. Now all of that is at risk if the government gets its way. Coupled with the abolition of the two-tier code, arbitrary pay freezes and uncoordinated local ‘decision-making’, we can expect the government’s plans to localise pay to result in a huge widening of the gender pay gap and, consequently, Employment Tribunal claims galore. But maybe the government has thought of this. They plan to charge huge fees to access justice through an ET .

5) Fragmenting collective bargaining will widen income inequality and damage the economy

As my former colleagues Chris Wright has pointed out, there is a pretty strong social and case for collective bargaining – its well accepted that high collective bargaining coverage is one reason why the Scandinavian countries have world beating levels of income equality. But there is also a more hard-nosed economic case. Writing about this in August this year Chris noted:

While the additional funding for schools is welcome, the inequitable distribution of resources is one further reminder of the favourable treatment that free schools receive at the hands of government in comparison to local authority schools.  

And the same can be said of Academies. In his speech the Chancellor praised the Secretary of State for Education for his achievement in getting 1,200 schools to convert to academy status in 18 months. However, a hugely influential factor driving this trend has been the enhanced funding package on offer to schools which commit to becoming an academy.

On a more positive note there has been a general welcome for the announcement that many more 2-year-olds from disadvantaged communities will be eligible for the free childcare entitlement of 15 hours per week currently available to 3- and 4-year-olds. The government is currently consulting on an earlier commitment to extend the entitlement to 140,000 disadvantaged 2-year-olds. Today’s announcement will further extend coverage so that 260,000 (or 40 per cent) of all 2-year-olds will  become eligible. Leading childcare organisations, such as the Daycare Trust, have welcomed this measure but have also warned that the decision to freeze tax credits and to withdraw the promised above-inflation increase in the Child Tax Credit risks excluding many more parents from the labour market.

The skills announcements in the Autumn Statement were largely focused on the role that a further expansion of apprenticeship opportunities can play in combating youth unemployment. An element of the new Youth Contract involves a commitment to make 40,000 apprenticeships available in the first year of the programme by offering employers an additional financial incentive to recruit a young person to be an apprentice. This builds on an earlier announcement by the government setting out a new initiative offering  20,000 firms with up to 50 employees that don’t currently hire apprentices an incentive payment of £1,500 to take on a young apprentice aged 16 to 24.

Supporting unemployed young people to access genuine apprenticeships is of course a positive measure. However, there are dangers of damaging the “apprenticeship brand” and compromising employers and young people if this option is linked to benefit sanctions under the Youth Contract programme.

The Autumn statement also highlights other policy initiatives on apprenticeships, including a review into quality and standards to address ongoing concerns about the poor quality of a significant minority of apprenticeships. In a contribution to a recently published IPPR book – Rethinking Apprenticeships –  the TUC has argued that regulation needs to play a role in building a quality apprenticeship brand by setting some minimum national standards, including a minimum duration, as is the norm in other countries.

After a two year pay freeze (and even longer in local government), the Chancellor announced today that pay increases in the public sector will be capped at an average 1% for the following two years. This comes at the same time as the proposed average 3.2% increase in pension contributions (phased in over 3 years), and inflation rates predicted to be around 3%. The TUC has calculated that this leaves public sector workers facing an average cut in their living standards of 16.5% by 2014-15.

There is also grim news on jobs, with the OBR estimating 710,000 public sector job losses by 2017 (see page 95). This figure is the total amount of public sector jobs the OBR predicts will go between the beginning of 2011 and the first quarter of 2017. It is a significant shift from the prediction set out in the last OBR report in March, which predicted 400,000 job losses between Q1 2011 and Q1 2016.

And the Chancellor’s promise to look at “how public sector pay can be made more responsive to local labour markets” will add to concerns that the government is moving to fragment national collective bargaining arrangements.

Localising and breaking up pay determination arrangements can lead to equal pay issues, entrench regional inequalities and lead to duplication of time and effort spent gathering data and bargaining in hundreds or even thousands of local bargaining units. There’s lots more on these issues here and here 

The study was released this week to suport EI’s UK affiliates (ATL, EIS, NASUWT, NUT and UCU) who are striking against Government plans to slash teacher and other public sector pensions, with some teachers losing more than £50,000 over 20 years from the value of their pension. It argues that if the UK government took firm action on tax evasion, the money released would be more than what is going to be cut from public sector pensions.

The study underlines the shocking extent of tax avoidance by multinational companies, totalling trillions of US dollars annually. It follows on from a previous study published in March 2010 by Global Financial Integrity, a research and advocacy organisation promoting transparency in the international financial system, estimating that current total deposits just by non-residents in offshore and secrecy jurisdictions were close to US$10 trillion.

EI President, Australian teacher union leader Susan Hopgood, said:

“Closing loopholes in international tax legislation will require changing attitudes, and calls for strong political will. The widespread acceptance of tax avoidance as a legitimate goal of large corporations must change. Unless this appalling and unjustified tax evasion is stopped, quality public education and other services will continue to be put at risk by cuts in public spending.”

Meanwhile ITUC General Secretary Sharan Burrow, another ex-teacher, said:

“Hundreds of billions of dollars are lost each year as corporations find new and intricate ways to avoid paying their taxes, and governments compete to attract multinational investment by cutting company tax ever lower.  Governments are effectively cheating their own people of corporate tax revenues which could be put to good use in ensuring quality public services.  They need to focus on ensuring companies pay their fair share, instead of cutting back government services, reducing wages and reducing peoples’ rights at work through misguided fiscal austerity measures.  This report will help bring the scandal of corporate tax avoidance into the public spotlight.”

The report was commissioned by the Education International Research Institute on behalf of the Council of Global Unions, which  brings together the Global Union Federations with the ITUC and the Trade Union Advisory Committee to the OECD.

However, it remains to be seen how tenable these positions remain in the face of a deepening crisis across the sector.  It seems that every week brings worsening prospects for jobs, funding and services. 

While this clearly makes a mockery of the government’s Big Society aspirations, it might be argued that voices of opposition in the sector have been muted.  But is this soon to change?

Anger is clearly growing and not without reason.  Not only are voluntary organisations facing huge cuts and loss of jobs and services but, as we’ve blogged before, the promised opportunities are failing to materialise as private enterprise looks to dominate the open public services market.

Just how bad are things in the sector?  A quick trawl through reports in the last few months gives you a good idea.

The NCVO’s Charity Forecast shows that charity leaders’ confidence is lower than ever.  As NCVO’s report says:

98 per cent of charity leaders expect economic conditions within the sector to be negative over the next 12 months. This is the bleakest outlook in the survey’s three year history, with confidence levels lower than they were at the height of the recession.

Evidence from the Labour Force Survey shows that employment in the sector has fallen by 5% in the previous 12 months.  In addition, part time working is on the increase and average earnings have fallen to just over £10 an hour.  NCVO and Third Sector Research Centre report that employment is down over two successive quarters following the flatline towards the end of 2010.

An example of the impact on the workforce can be seen at Quarriers, the Scottish social care charity.  All 2,000 workers there are facing pay cuts, around a quarter of them losing at least 10% of their take home. On top of that are reductions in sick pay, maternity pay, paternity and adoption pay, increased pension contributions and an end to automatic pay increases in future.  This is not an isolated case.

Funding is nose-diving.  London Councils, for example, plans to cut voluntary sector funding by 75% from 2013.  Funding to the sector will reduce from £26m in 2010/11 to £8m in 2013/14.

Services are clearly at risk.  A report by the Charity Finance Directors Group and accountants PKF shows a picture of uncertainty and confusion over government policy with charities facing significant funding shortfalls and difficulty in planning and delivering services.  Richard Weighell of PKF says in Third Sector that:

there is a fundamental imbalance between supply and demand in the not-for-profit sector; charities are seeing growing demand for their services but are unable to invest enough to provide these services effectively

This is borne out by a poll of 120 organisations in the North East by Vonne that found that a quarter were expecting to close in the next 12 months and almost half were likely to shed at least one service.  73% had seen funding decrease in the previous year, 64% are using reserves.  Yet over two thirds had experienced a rising demand for their services.  And a London Voluntary Service Council survey showed, 70% of voluntary organisations reported an increase in demand for their services but 75% were not confident in meeting that demand now or in the future.

No wonder then that rumblings from within the sector are growing.  Will 2012 be the year when the sector begins to fight back? Feedback from trade union colleagues at voluntary sector events suggests so.  Building effective links between us will be essential if a serious challenge is to be made.

Unions, charities and voluntary groups have worked well on individual campaigns such as The Hardest Hit  and Justice for All.  And there have been some interesting developments on a regional level, interesting discussions have been taking place between the TUC and voluntary sector partners in the North West for example. It will be interesting to see how things progress but my prediction is that trade union and voluntary sector relationships are bound to develop as next year’s cuts bite even deeper.

I came across a blog from Gibb’s Barrow who had this to say on the politics of positioning in relation to product development:

Some people believe that the best way to produce a successful product is to align it with power and influence … while this might be an effective short term strategy, it is often the very reason why products fail to meet customer needs, why infighting occurs within organizations, and why product plans fall short of their goals.

The parallels are clear.  It is time for voluntary sector leaders to re-assess their strategy with a focus on what they are for and who makes up their constituency.  There’s a long game here with very high stakes, short term damage to the sector and those communities that rely on it could take years to repair.  The noises I’m hearing suggest that a re-alignment may be underway.

The Big Society seems increasingly conspicuous by its absence in government circles.  It might be about to make itself heard once again.

So the Local Government Chronicle quarterly survey of local authority directors and chief executives is a particularly useful snapshot of how public service providers are coping with government-imposed austerity.

The latest survey (see LGC 10/11/11)  has some telling results, with three key themes particularly apparent.

Firstly, services targeted at the most vulnerable are those that have suffered the greatest impact in the last 12 months.  Confidence that local authorities will be able to deliver corporate aims in the coming year remains worryingly low across all service areas.  But there’s large variation. Of the identified service areas, only waste broke the 50% mark.  Around a third were confident that street cleaning, licensing, planning and cemeteries and crematoriums were safe.  Significantly adult social care, housing, homelessness and economic development all registered below 10%.

Secondly, fears that the brave new localist dawn will overtaken by councils’ urgent need to cope with cuts are well founded.  The “dominant themes” for the next 12 months were all issues directly related to cuts and restructuring.  The three most dominant were making spending cuts (95%), reducing workforce (69%) and alternative service delivery (46%), the last of these being a polite term for outsourcing.  Languishing far behind were housing (16%), big society (12%), public health (18%), school building (4%) and the green agenda (3%).

Thirdly, unsurprisingly, pessimism over the economy is increasing.  Confidence that the economy will be better in a year has fallen from +28 prior to the general election to -85.  Net confidence of avoiding a double-dip recession has fallen from -44 before the election to -83 today.

Research published by the Royal College of Nursing today finds that more than 56,000 NHS posts are set to be cut.  Half of these are clinical posts and one third of them are nursing roles. Particularly worrying is the finding that the pace of cuts is increasing. There are also a number of associated trends of cutting hours and replacing experienced staff with cheaper workers at lower grades.

The second example is the u-turn on waiting lists. One of Andrew Lansley’s early decisions as Secretary of State for health was to relax the 18 week target for the maximum time between referral and treatment, as part of an overall move away from targets in the NHS.  But last week it emerged that almost a quarter of a million patients (9.4%) on waiting lists at any time go more than 18 weeks without treatment. As UNISON pointed out in their response to the announcement, the cuts are an important underlying cause of growing waiting lists, and it does not seem that more resources will be made available to tackle the problem.

And of course, as all this goes on, the hugely damaging Health and Social Care Bill is still being debated in the House of Lords. Controversial votes on the role of the Secretary of State for Health and the autonomy of local providers have been postponed in order to avoid government rebellions. One of the key issues still to be debated is the clause that would remove the cap on the amount of money hospital trusts can make from private patients. The TUC and unions across the health service fear that removing the cap would further increase waiting lists, as cash-strapped hospitals allow private patients to jump to the front of the queue for treatment.

Members of the House of Lords have also been calling on Andrew Lansley to publish the risk register for the Bill, which the Information Commissioner has instructed the Department of Health to publish. Given the huge concerns about the dangers of the Bill that are uniting health workers , it is essential that the register is published to shed some light on the government’s own assessment of the risks.

The government is cutting the UKBA workforce by a third from 2010 to 2015.  The simple fact is that they do not have enough bodies to do the job.  That is the entire rationale for the Agency’s move towards the “risk-based” security controls at the heart of the spat.  Both May and Clark have an interest in maintaining the lie that the pilot has improved efficiency. In reality, it has always been about keeping down queues at ports and airports because there are not enough staff to process them.

PCS has been at the forefront of the fight against the cuts in the Agency, mobilizing our members for action. Mark Hammond and Sue Kendal, two PCS reps who had been at the forefront of the fight against cuts in the Border Force, were sacked by management last year on what we believe were trumped up charges. This is part of a deliberate strategy by the Agency to silence dissent and mask the effect of the cuts that have created disarray.

It comes as no surprise to PCS to hear Brodie Clark complain of the department disregarding due process and overriding the right of workers to a fair hearing where the outcome has not already been determined.  The irony for Brodie Clark, of course, is that as a senior manager in the agency, he was once in a position to do something to stop it happening.

PCS has long highlighted the damage done by the cuts programme and the consequential inability of the Home Office to deliver the service to the public that they are duty bound to. Instead of listening to us and taking remedial action, the department has tried to silence us and rubbish our claims. Recent events, however, now leave them with nowhere to hide.

The issue of immigration has, for far too, long been a political football for the press and the mainstream political parties.  More often than not, it is ordinary workers in the Home Office who are getting kicked.  This is grossly unfair, as they work hard to deliver the best service that they can despite the chronic lack of resources. PCS would welcome a more rational debate on immigration, taking full account of all social, political and economic factors. Perhaps then, we could have a serious discussion about a properly staffed department.

PCS is leading the fight against the cuts in the Home Office. We are campaigning for:

• Job security, fair pay and fair pensions for our members and for all workers
• An end to the damaging job cuts programme within the Home Office
• Negotiations on a properly staffed and properly resourced department
• The re-instatement of Mark Hammond and Sue Kendal and an end to victimization of PCS reps
• An end to the enforcement of a “no dissent” culture in the Home Office

On 30 November 2011, the victimized will find their voice in earnest.

The FT leads on an Audit Commission report ‘Tough Times’, which reveals that  most councils have had to ‘reduce the quality and quantity of services’ they provide in the face of a real terms funding cut of £3.5billion over the last year. In addition to central government funding cuts, councils are faced with a £1.2bn funding squeeze driven by a loss of income and the government driven council tax freeze.

As well as the direct impact these cuts are having on vitally needed services, they are also having a perverse impact on efforts by local councils to increase economic activity.

This Guardian article highlights just one such example – the possible cancellation of Liverpool City Council’s support for the Matthew Street Festival. While on the surface it might appear that the loss of a ‘Beatles-themed festival’  isn’t all that important, its worth bearing in mind that Liverpool City Council estimates the £900,000 a year it spends on the festival generates around £17m for the local economy.  Its a small illustration of the economic madness of government  forcing local councils to make swingeing cuts at a time when private sector demand is so fragile. Liverpool faces cuts of £102m over the next three years.

And to top it all off, and again as Liverpool unfortunately illustrates, the Audit Commision’s report also notes that councils in the ‘deprived areas in the north, midlands and inner London saw the highest cuts’. ‘Fairness at the heart of everything we do’ seems a very long time ago.

Fairness indeed.