Under existing regulations, private contractors are bound to pay the council rate to former council employees who come over to the private sector under TUPE agreements as part of a contract to provide a local public service – but not to staff who join later.
Under the new code, private sector workers will have to get the same pay and conditions as their public counterparts. Public sector union Unison believes the new code will create a level playing field that could mean more services are provided in-house.
Ian Keys, partnership director at Pinnacle Housing, said the need to provide pensions and the restriction of pay cuts would mean extra long-term costs that will be passed on to local authorities.
"Some claim the new code of practice will affect the overall pace of change in the public sector but it is all a matter for the client," Keys said. "The provisions of the code could affect future deals but not those already in existence."
Other business leaders have also responded angrily to the changes. Norman Rose, director general of the Business Services Association, said the proposal flies in the face of the government's commitment to modernise public services. "There can be little doubt that the cost of these projects in local government is now set to rise as a consequence of this decision," he said.
"The increased cost will ultimately be borne by the council taxpayer, which, in turn, will reduce value for money."
Digby Jones, director-general of the CBI, said: "By enforcing an inflexible pay structure, the government have made it harder to reflect differences in regional economies."
"I am confident that when it comes to competing on quality, the public sector will beat private sector companies hands down, and more contracts will return in-house," said Dave Prentis, general secretary of Unison.
Source
Housing Today
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