Housing associations have warned that new employment rules might prevent them from bidding for council service contracts.
Housing professionals expect that councils will have to pay higher prices to attract competitive bids for services such as managing care homes. This is because, earlier this month, employers and unions agreed on an arbitration tool to settle so-called "two-tier" workforce disputes in local government.

The agreement means existing regulations aimed at protecting workers who deliver public services will apply to associations' contracts.

Barbara Laing, director of Anchor Homes, which manages more than 20 care homes in Southwark and Surrey, said: "This will act as a disincentive for us to bid on future contracts.

"As things stand, we have the flexibility to manage existing contracts so as to offer employees a range of incentives. In future, they would be unavailable."

Associations contracted by councils will leave themselves open to challenge if they fail to offer new employees terms and conditions that are "no less favourable" than those available to staff who were transferred under a TUPE agreement when the contract was signed.

The agreement will only apply to contacts agreed since April this year.

Some associations with more than one public service contract have complained that this could lead to "ring-fencing" of staff, as employers will be reluctant to transfer them to from one contract to another for fear of breaching the regulations.

Practices such as performance- related pay and salaries linked to the local employment market could also be ruled out.

Mark Lloyd, director of Ashley Homes, which has care home contracts worth £10m with Redbridge and Greenwich councils, would not rule out future bids but said: "The risks are already high and this risks tilting it over the edge."

However, a source at Unison dismissed the comments as scaremongering. "The changes are part of the government's agenda of having high-quality public services delivered by a workforce that is treated fairly, not one that is demoralised," he added.

The first big test of how the regulations will affect bidding could come next month when Birmingham council invites tenders to run its 30 care homes.

Source

Housing Today