Silver Lining for PPP cloud

Dave Watson

In November last year the STUC and Scottish Executive agreed a Protocol covering employment issues in Public Private Partnerships (PPP). UNISON Scotland played a major role in the preparation of this Protocol and has welcomed its introduction as an important step forward in protecting staff and eliminating the two-tier workforce.

Perhaps the most distinct Scottish aspect of Protocol is that it covers all Public Service Organisations (PSOs) in Scotland who enter into a PPP contract. Similar discussions south of the border tend to focus on particular public services. Once again this demonstrates the strengths of the devolution settlement and our ability to tackle cross cutting issues effectively.

The Protocol makes it clear that PPP is only one of several procurement options for public bodies. It is not even the preferred option. To translate this statement into practice much more needs to be done on the alternatives to PPP in Scotland.

Some of the alternatives require amendments to Treasury rules including new definitions of public expenditure in the line with European models such as the GGFD. Off balance sheet incentives inherent in the current block grant system and Departmental Expenditure Limits (DEL) also need reform. In the UK some £47bn of public expenditure is now off balance sheet. Enron economics is no way to finance our public services.

In Scotland progress could be made by providing capital grants on a genuine level playing field basis, giving public authorities a real choice between funding sources. There needs to be a substantial increase in capital funds and the freedom for all public authorities to borrow to fund investment. The Executive has made progress on this by giving local authorities these powers in the Local Government in Scotland Bill.

Other claimed alternatives to PPP, such as not for profit Trusts are still PPP schemes with a different form of company structure. In the main this is simply window dressing. Conventional borrowing remains the most cost effective and flexible method of financing public services. It retains accountability and enables public authorities to engage in genuine consultation with service users without the smokescreen of commercial confidentiality.

Compliance with the Protocol will be a contractual requirement in PPP contracts. For the first time the link between high quality services and good employment practices is explicitly stated. PPP contracts will not be awarded only on the basis of lowest price. The best option will involve other factors including quality and good employment practices and bids will be evaluated on these grounds.

Consultation with trades unions will start at the earliest stage and continue with full disclosure of information throughout the process. Openness should be the default approach. Union representatives will be members of the Project Board although this is not the only route that consultation and involvement should take. UNISON hopes that this protocol will also encourage public authorities to engage in a more meaningful public involvement and participation in all capital schemes.

The Protocol makes it clear that it is not a requirement of PPP that public sector staff transfer to the PPP company. This has been a major problem, with many public authorities being misled into believing they had no option. At the options stage PPP schemes should exclude services, particularly those that are not directly involved in maintaining the fabric of the building. If the contract does include services currently carried out by public service staff, a range of options can be considered as part of the consultation with the trade unions including staff secondment and bids from DSO/DLOs.

If staff transfer, TUPE (or the principles of TUPE) will apply and pension rights also transfer. Other options including redeployment will be considered for staff that do not wish to transfer. Changes to terms and conditions require agreement between the new employer and the trade unions. New staff recruited to work on a PPP contract will be employed on terms and conditions which are no less favourable overall to those of transferred employees. They must also be offered pension arrangements, which are the same, or broadly comparable using admitted body status where possible. This ends the two-tier workforce for future PPP contracts.

Whilst we welcome the Protocol as a major step forward in eliminating the two-tier workforce, that is only one of our objections to PPP schemes. PPP remains a costly, unaccountable and inflexible funding mechanism for Scotland's public services.