26 September 2014

Your Choice - in built pension burden creates artificial loss to justify pay cut

Artificial hair; artificial cost burden on Your Choice
The below is in the nature of a guest blog by Unison, Barnet with added comment at the end by Mr Mustard.

At our meeting on Monday 22 September at ACAS HQ UNISON raised a concern that Your Choice Barnet (YCB) was being unfairly treated by Barnet Council.

I am referring to the Pension employer contributions YCB has to make to all members of the Local Government Pension.

For council staff the Pension contributions can be broken down into three parts

1.  Employee contribution variable % depending on salary level.
2.  Employer contribution 14.5 % for future benefits.
3.  Employer contribution 9.8% for past Pension Deficit 

The total amount paid by the employer equates to 24.3%.

Barnet UNISON has been investigating what has been happening in relation to Pension contributions since mass outsourcing started in early 2012.

What we have found is that YCB is having to pay 9.8% contribution towards the historic pension deficit accrued prior to outsourcing.

It is clear that this financial burden seriously inhibits the financial viability of YCB and does not reflect the true economic conditions for delivering the service.

In short the Council is imposing a cost on YCB which is not directly related to the service they are providing.

It is well documented that YCB is in financial difficulties otherwise why would they have had to attack low paid care workers on two occasions in the last 18 months.

To learn that the Council has chosen to impose another financial penalty on YCB when it has such a precarious financial situation is difficult to understand, which is why we have requested Barnet Council to remove this requirement.

Private sector being given favourable treatment.

Our investigations have revealed the following three private contractors, who won contracts to deliver services in Barnet, are not having to pay this 9.8% penalty.

NSL - Pension Fund Committee, 20 December 2011 at paragraph 6.3 it states:

“NSL will become an admitted body to the Pension Fund under a closed agreement. The agreement will be fully funded at the point of transfer and the contractor will pick up employer pension costs associated with future liabilities. Provision has been made in the business case both for the costs associated with a pension bond, and also for costs that the Council will retain in respect of the past deficit for these employees.”

Capita Re - Pension Fund Committee 9 September 2013 at paragraph 6.4 it states:

“The joint venture will pay the future contribution rate to meet any pension fund liabilities. The council has retained the element of the budget that pays for the repayment of the past service pension fund deficit.”

OCS Group UK Ltd - Pensions Fund Committee 18 March 2014 at paragraph 7.2 it states:

“Staff will transfer on a “fully funded basis”. This means that the pensions’ deficit will not transfer to OCS from Barnet in respect of these staff. The total deficit retained by Barnet has been calculated at £98k. £25k per annum needs to be retained from Adults and Communities budget to fund the repayment of the deficit over the lifetime of the contract.”

We are in the middle of a dispute over the 9.5% pay cut imposed on our members working for YCB. The knowledge that yet again the private sector is being treated more favourably than YCB is inexcusable.

If Barnet Council were to do the right thing and treat YCB like they have done with Capita, the 9.5% pay cut would be wiped out and the dispute would be over. It is that simple.

We have written to Barnet Council asking them to consider our request and do the right thing for the services and the loyal hard working low paid care staff who provide excellent services.

What the above means is that when the council or councillors say that they can't pay more than the "going rate" for carers (who should be paid a fair rate for a difficult job) what they are doing is comparing the hourly rate of a commercial company that doesn't have a pension deficit with one they own that does. This certainly isn't a level playing field. The deficit can only have been caused by the council failing to have invested enough in prior years and now to make up a shortfall they have loaded 9.8% onto the salary costs of Your Choice which makes losses on the hourly rates that the council itself pays Your Choice for care and used that to justify a 9.5% wage cut.

Pull the other one Barnet Council. You have decided upon both the income stream that Your Choice has and its costs. You own the company and are deliberately holing it below the water line whilst looking the other way. The council itself wasn't represented at ACAS either, they are making Your Choice management do their dirty work.

Please do not force some excellent staff to look for work elsewhere in other fields so that they can live a decent life. Disabled people need the continuity of care that dedicated and experienced carers provide.

Yours frugally

Mr Mustard

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