Workplace update

This is not an exciting time for new policy initiatives and legislation because we are in the run-up to a general election, probably in the spring. No new initiatives are proposed, except for two major consultations in relation to local government, so we can look at the ongoing issues that need to be addressed over the coming months.

The government has been reviewing the effect of employment legislation and floating ideas for the next parliament. It claims the cost to industry has been less than anticipated and the additional regulatory burden has been borne well. The CBI, on the other hand, has produced a report on the real cost to business of new legislation, which makes for less attractive reading.

While there have been no new initiatives recently, a DTI discussion paper has been canvassing the idea of paid maternity leave, extended maternity leave and the right to return from maternity leave to a part-time job. These proposals could have a major effect on staff levels and contract prices. No action will be taken on them until after the general election, but they could be introduced soon after if adopted as policy.

The long-awaited local government Procurement Review is now under way. Chaired by Sir Ian Byatt, the review group has issued a 19-section questionnaire to which responses are due this month. This review covers all aspects of local government procurement, particularly best value, PFI and PPPs. Its report is due to be submitted in May 2001 and should have a profound effect local authorities' procurement.

A second consultation relates to Local Government Capital Finance Regulations. The DETR is seeking views on possible amendments that could make raising capital easier and may have a profound effect on the private sector local government market. The consultation also floats ideas regarding greater involvement of business in local government decision making, with the possibility of a 1% supplemental business rate if agreed by business to fund extra expenditure.

Pensions remain a major focus of discussion. In local government the admission agreement regulations seem to be settling down despite issues over employer contribution levels. The current focus is on those contracts where there is not an admission agreement and staff are transferred to a GAD-approved pension scheme operated by the contractor. Currently the Cabinet Office Policy Statement on bulk transfer agreements does not apply manditorily to local authority outsourcing contracts.The major problem that has been met relates to the post-service reserve, which is transferred from the LGIDS fund to the private sector pension scheme. This almost always falls well short of the sum necessary to give full day-for-day, post-service credits in the private sector scheme. This issue is being addressed urgently by the DETR, the private sector and the trade unions.

Part 2 of the Local Government Act 1988 for local authorities may not take into account non-commercial considerations in awarding contracts. There is agreement that these rules should be relaxed and new statutory guidance is due to be published by the DETR month. This will allow workforce issues to be considered in awarding local authority contracts.

The saga of TUPE continues, but there was little chance of any consultation before Christmas. Some say the consultation will be delayed until after the general election. This is not good for either clients or contractors since continued uncertainty regarding the application of the rules leads to workforce concern and apprehension. There has been a worrying trend in some local authorities to try to avoid the application of TUPE when taking a contract back in house. This has been resisted, generally successfully. There seems no good reason why the consultation should be delayed further.

Stakeholder pensions will be introduced in April 2001. All employers who do not offer an occupational pension scheme or a group personal pension scheme to employees will be obliged to offer a stakeholder alternative by October 2001. So far there are few large schemes available and few major providers expressing interest. Companies need to start considering their options early next year so they will be able to meet the government's timetable for introduction of this new breed of pension. Discussions are under way on a possible group scheme for outsourcing companies, and any developments will be reported in this column as they crop up.