Carillion: TUPE

Jo Stevens Excerpts

Wednesday 21st February 2018 Westminster Hall

[Eleanor Smith]

My hon. Friend is correct: this is about apprentices as well as all the other Carillion workers.

Vital contracts for delivering urgent public services are under threat. Their maintenance is an essential part of the way this country is managed under privatisation. Many long-awaited building projects, such as the Midland Metropolitan Hospital in Smethwick, are under threat and may never restart. Above all, however, I want to focus on the crucial issue of what specific assistance the Government will give to the tens of thousands of workers who have been made redundant and to the contractors whose contracts are now in doubt.

In January, my right hon. Friend the Member for Wolverhampton South East (Mr McFadden), my hon. Friend the Member for Wolverhampton North East (Emma Reynolds) and I met the Minister. At that meeting, I put to him four questions, which I ask him again today. First, will he bring Carillion public sector contracts back in house? If so, when and how? Secondly, what protections will he put in place for employees’ pensions, and will the Government meet union pension officers to address the many issues arising from liquidation? Thirdly, what guarantees can he give employees who were directly affected by the collapse of Carillion, and what programmes will the Government put in place to assist all those who have lost their jobs in this crisis? Fourthly, in view of the national significance of Carillion plc, will the Government set up a taskforce to deal with its collapse and all the associated fallout, and will that body include union involvement?

In response, the Minister told me that a lot of work had been done to prepare for Carillion’s liquidation. I have to say that it does not look like it. He told me that all public sector contracts would receive a smooth transition. What assurances can he give me that that will happen? He told me that the plan was to transfer the contract for the Midland Metropolitan Hospital to another company. What is the latest on that urgent matter? The Government have promised to set up a taskforce comprising the unions, business organisations and construction companies. What steps are being taken to protect transferred workers?

I refer the Minister to the letter from Frances O’Grady of the TUC on 30 January requesting protection of transferred workers’ terms and conditions. As the letter states, the transfer of workers employed on Carillion contracts in both the public sector and the private sector creates a significant risk of detrimental impacts on the pay, pensions and terms and conditions of all those staff. The letter calls on the Government to protect the livelihoods of Carillion workers and to ensure that they suffer no detriment from finding themselves employed by alternative providers of services.

The Government should, as a priority, look at ways of compelling public bodies to protect the terms and conditions of workers transferring to alternative providers. For example, the Cabinet Office should adopt a statement of practice on staff transfers that applies to all public bodies, including central Government and local government, the NHS, Transport for London and Network Rail. In that spirit, staff involved should be treated no less favourably than if the TUPE regulations had applied, and appropriate arrangements should be made to protect the occupational pensions and the redundancy and severance terms of staff in all types of transfer.

I call for voluntary TUPE agreements with new employers and for workers to be treated contractually as if they have continuous service. Will that be done? Will the Minister confirm that the Government’s objective is to ensure that Carillion workers’ rights remain the same, without any detriment?

[Jo Stevens (Cardiff Central) (Lab)]

Does not the sorry story of Carillion’s collapse illustrate exactly why there should be proper oversight of public sector contracts that are put out to private companies? We have seen problems in the Ministry of Justice with G4S and in the Home Office with Clearsprings. We should set the standard for employment terms and conditions through procurement. Does my hon. Friend agree that this is a real opportunity to do that?

[Eleanor Smith]

I agree. I have finished my speech. I would now like to give my colleagues a chance to speak and to hear the answers to my questions.

--- Later in debate ---

[Jo Stevens]

The hon. Gentleman mentions the Government taking responsibility and not standing back and doing nothing. Does he agree that, given the company’s three profit warnings, the Government should have done something before the collapse?

[Stephen Kerr]

Many issues relating to those profit warnings and the circumstances leading up to them need to be thoroughly investigated. Yes, at some point all of the stakeholders involved in this rather sorry story will have to explain and account for their decisions. That is right and proper and the way in which we run things in this country. We will learn from what we discover as we go through the process of inquiry. However, I congratulate the Government on acting pragmatically.

I now ask the Minister to act pragmatically on behalf of those workers who have moved from employment with Carillion to employment with a new private employer. We all know of the limitations of the regulations as things stand: TUPE applies only when a worker is transferred to a new company from an existing functioning company; it does not apply in the event of bankruptcy proceedings or analogous insolvency proceedings. I therefore ask the Minister to consider steps to provide, as my constituent said, some form of justice to Carillion workers who are transferred—thankfully, at one level—to another private company. Surely something can be done to protect the pay and conditions of those workers, because that is what would have happened had the contract changed hands: they would have been TUPE-ed across, as the saying goes. Instead, they have been caught up in the failure of Carillion.

It is wrong that these workers, through no fault of their own, should pay the price of lower pay and lesser conditions for doing the same job for a new company as they did for Carillion. When the Minister replies, I very much hope to hear that the Government will insist, at least in the transfer of public sector contracts from Carillion to new private companies, on a transfer of undertakings for the workers affected.

--- Later in debate ---

[Justin Madders]

I absolutely agree. While there has been some progress in finding apprenticeships for some of those who have lost theirs, there are still a huge number who have yet to be found one. We should not underestimate how important it is to get people trained in those skills that we will need in the economy in the future. I hope that more effort goes into that.

On the other companies in the supply chain and subcontractors, is the Minister able to tell us what analysis he has made of the number of companies in these sectors at risk of insolvency and the number of employees whose employment is in jeopardy as a knock-on effect of the liquidation? Has he done any analysis of the numbers affected who are perhaps working in another capacity on Carillion contracts—either through agency arrangements or zero-hours contracts? They are really little more than bystanders in this process and are powerless to do anything but accept their fate. I hope we are able to do something to assist those individuals.

As we know, when a particular function transfers, it is normally the case that staff are transferred over under the TUPE regulations. No one is suggesting for a minute that that is not a preferable situation to redundancy, but it seems that there are questions to be answered about the exact basis on which people will transfer over to their new employers. There should be no ambiguity from the Government on this. People’s existing contracts should be honoured in full. We should not have state-sponsored watering down of terms and conditions. The Government should not be a willing partner in the chipping away of employee rights.

[Jo Stevens]

Does my hon. Friend agree that this is an ideal opportunity for the Minister to confirm that TUPE, which obviously derives from the European Union’s acquired rights directive, will be maintained after Brexit, and that voluntary TUPE in these circumstances, to protect Carillion workers, could be offered as a commitment of that for the future?

[Justin Madders]

I certainly agree, and I would certainly like some clarity from the Government on a whole range of issues on the impact of Brexit. The acquired rights directive has been in place for some 30-plus years now. It is not perfect by any stretch of the imagination, but it is particularly important in situations like this.

Even if there is a full TUPE transfer, we should not pretend that it will be happily ever after. The reality is that, in the majority of occasions when people transfer over to their new employers, sooner or later that employer will look to change the terms and conditions. When they say they are changing terms and conditions, they mean they are watering them down. We have already heard from some of my hon. Friends that there is considerable anxiety about that. It is a practice that has to stop.

The Government should stipulate that any company running a contract providing public services should respect agreed terms and conditions and look to adhere to the highest standards possible that a responsible employer could adopt—proper rates of pay that provide a living wage, trade union recognition and collective bargaining rights and an occupational pension that is not paid into only when the employer feels like it but is there, as it should be, as part of deferred pay and as an essential part of the contract.

So TUPE applies a certain level of protection. It is far from perfect and often misunderstood, but, contrary to what many people think, it does not provide unlimited protection against changes to terms and conditions. It certainly has more than enough loopholes in it to allow a determined employer to ultimately do as it wishes. Because of the way in which our employment rights system works in this country, changing the terms and conditions of employees is easier to do than finding savings elsewhere. However, in these circumstances it is preferable to redundancy. Let us protect the jobs and get as many transferred as we can, but let us not for a second think that that is the end of the matter. Let us not perpetuate the merry-go-round of misery. Let us take the opportunity to say to whoever ends up running the contracts, “Please respect and protect the terms and conditions of the people who do the day-to-day work.”

The Prime Minister has said that the Government are a customer of Carillion, which is of course true, but we should be much more than a customer. We should be the champion of public services, the defender of the highest employment standards and an exemplar for the private sector of the kinds of companies that we want to see succeed in the country. Perhaps people thought Carillion was a success story at some point, but it was a success built on sand, on deception and on avarice. We should be and we can be much better than that.