Labour has been accused of a pro-trade union stitch-up after private sector companies seeking government contracts were hit with fresh demands. Under changes to the social value model used since 2012, private sector companies bidding for work will get extra points for giving union representatives access to their staff.
Small print in the document released last week shows weight will also be added to bids from firms offering flexible working, pay above the National Minimum Wage and "progressive remuneration policies" to retain staff. Critics labelled the move an example of Labour kowtowing to union paymasters with measures that could hinder economic recovery via higher costs and more red tape.
The measures follow changes brought in by the Employment Rights Act in December, allowing union representatives to enter business premises to "meet, support, represent, recruit or organise workers." Earlier this year, then Energy Secretary Ed Miliband, now Foreign Secretary, was criticised for demanding green energy firms introduce pro-union measures if they wished to keep access to government subsidies.
The announcement comes as new Prime Minister Andy Burnham today begins a summer cost-of-living tour in which he will ask the public for ideas on how the Government can improve their lives. Shadow Chancellor of the Duchy of Lancaster, Alex Burghart, said: "These rules are a trade union checklist that will drive up costs for businesses and raise prices (and future taxes) for taxpayers... We may have a new Prime Minister but it's the same old Labour Party, forcing the rest of us to dance to the union barons' tune."
Changes to government contract weighting
So-called "social value" was brought in in 2012 to stop contracts being awarded solely to the lowest bidder. Under the changes announced by the Cabinet Office, it will account for 20 per cent of a firm's score towards being awarded a contract worth £5million or more, up from 10 per cent previously.
For contracts valued between £1million and £5million it will remain 10 per cent and for those below £1million it will not count at all. Ministers including the de facto deputy PM Louise Haigh last week made much of how the changes would see Net Zero rules and other requirements dropped from the scheme, while Mr Burnham has said that firms could boost their chances by offering more work experience to unemployed school-leavers.
Responses from trade unions and analysts
The GMB union welcomed the new plan, saying contracts had to provide "real benefits for working people and UK jobs, not just profits for suppliers." The pro-union and pro-worker measures were only in the small print when it was announced.
Joanna Marchong, senior analyst at think tank Onward, said ministers should make a "commitment to transparency" and release details of how much the changes would add to contracts' value before January. She added: "Doubling the social value weighting to 20 per cent on the largest contracts means a fifth of the decision on how £90billion of taxpayers' money is spent now turns on criteria that have nothing to do with delivering the service well or cheaply."
A Cabinet Office spokesman said: "These changes will cut red tape and ensure that every business is focused on delivering British jobs."
