Government plans to scrap outsourcing pay guarantee

The proposals are intended to cut the cost of outsourcing public services to the private and third sector, which currently deliver more than a third of the total. Francis Maude, the Cabinet Office minister, says that a further key aim was to make it easier for small-to-medium-sized business to go after public sector outsourcing contracts.

 

The plans will not affect TUPE, which ensures the protection of many of the employment terms and conditions enjoyed by public servants before they are transferred to the private sector.

 

But they would dismantle a voluntary code that the Labour government agreed with employers and the unions in 2003 to ensure that new recruits were offered pay and benefit terms that were “no less favourable” than those of transferred employees.

 

The aim at the time was to avoid the creation of a “two-tier workforce”, where some staff enjoyed much better terms and conditions than their colleagues doing exactly the same jobs.

 

But Maude claims that the situation “distorts the market when we are trying to encourage new entrants into the outsourced market”, which is currently worth £80 billion per annum. The government is also likely to turn to outsourcing in order to cut costs across the public sector. 

 

Susan Anderson, head of public services at employer lobby group the CBI agreed, saying that “we are in different times” and that “some firms cannot afford to compete on the existing pay packages”.

 

But the unions reacted angrily to the proposals. Unison said that “having people doing the same job on different rates of pay is not a recipe for a motivated and happy workforce” and would instead produce “chaos” and “strife” between colleagues.

 

The TUC agreed. “We would be opposed. This is no more than an attempt to drive down the living standards for low-paid workers,” it said.