The Great Tory NHS Pension Scam: read, share and fight!

I like patterns. They tell you a lot. And I’m generally good at spotting them – on psychometric tests various employers have put me through, one part I usually get maximum marks at is pattern-identification. Sometimes you look at a particular puzzle and it doesn’t seem to make any sense, and then all of a sudden one part will become meaningful and the rest falls into place.

I had a similar experience earlier this week when I saw a comment on Twitter by a friend of mine (@michaelh14 – I’d recommend following him). He was having a discussion with someone and mentioned that if NHS staff are transferred to a private provider their pension rights will be protected by TUPE but new employees taken on by the private employer would not be – and suddenly a lot of pieces started to fit. And they show that this government is making a deliberate and calculated move to decimate the pensions of our NHS workers and to rid the treasury of the cost of NHS (and almost certainly other public sector) pensions so that it can fulfil its small-state agenda and offer further tax-cuts to the rich.

TUPE is shorthand for the ‘transfer of undertakings (protection of employment)’ regulations 2006′. Its legislation that means that if an employer ‘inherits’ staff from one company via a takeover etc, the new employer has to honour the pay, terms and conditions of the inherited employees.

The aim of the legislation is to protect employees whose company (or division of a company) is sold to another party. Michael was quite correct that TUPE would apply to, for example, the employees of a hospital sold to or transferred to the ownership of a private health provider.

Can you hear the big ‘BUT’ coming?

There is some dispute whether TUPE provisions protect pensions at all (most seem to think not), but even if they do, the protection is so equivocal and conditional, in various ways, that the protection is no more than an illusion. Here are some of those ways:

Government ‘guidance’

The confusion about whether TUPE offers any protection to pension entitlements seems to arise from the fact that the government offered a ‘Good Practice Guide’ to private providers advising that pension rights of transferred staff should be protected. However, this is only advice, and not binding. Companies are free to do as they choose – and few are going to continue an expensive defined benefit (final salary) scheme if they’re allowed to get away with a ‘defined contribution’ scheme that will cost them less, even if it provides much, much worse pensions to the unfortunate staff. If this freedom to evade responsibility is not legally overturned, or better yet eliminated by statute, then the government has an easy way to eliminate the pensions that have always been an intrinsic part of the country’s contract and covenant with NHS and other public-sector workers.

So-called ‘ETO’ reasons

Even if TUPE protection is taken to apply to pension entitlements, there is a massive escape hatch for private employers: ETO.

ETO stands for ‘economic, technical or organisational’. An employer taking on TUPE-protected workers cannot fire those workers just or primarily because of the transfer. Any such dismissal will automatically be considered unfair. However, if the employer can come up with an economic, technical or organisational reason for doing so, he can change pay, terms and conditions or even fire staff.

Like me, I’m sure you can imagine – especially given the government’s constant, misleading rhetoric on the affordability of public-sector pensions (which I debunk in detail here) and salaries – just how easy it will be for a private employer to argue that it can’t afford the pay and defined-benefit pensions that were agreed by the government with the unions representing doctors, nurses and other health-workers. And that’s just one possible ‘ETO’ excuse. Once it can contrive a reason, the new pseudo-NHS employer is pretty much free to do as it wants.

If you’re in any doubt whether a private health employer would do this, consider this: a defined-benefits (otherwise known as a final-salary) pension scheme gives far better pensions than the alternative, ‘defined contribution’ schemes. In the former, what you get back for your pension contributions is set in advance as a percentage of your final salary; in the latter, what you put in is defined, but what you get out isn’t (and is usually a woeful return on the investment).

Defined benefits schemes cost profit-greedy employers a lot more to provide – and as a result such schemes have been all but eradicated in the private sector – so it’s beyond naive to think that private health employers aren’t going to exploit every conceivable loophole to get out of paying them. The ETO loophole means that it’s not only new staff who are going to lose hard-earned benefits if an NHS employer is transferred to private ownership.

This amounts to a massive, hidden, un-negotiated pay-cut imposed on all public-sector workers transferred to the private sector – and massive before even starting to worry about actual pay rates.

If you’re employed in the private sector (as I am!), and are thinking ‘tough, that’s the situation I’m in too’, then please remember that the correct remedy for your situation is for the government to force greedy employers to provide proper pensions and have slightly more realistic profit-expectations, not for those who haven’t been robbed yet to be robbed too!

No way out

Another effect of this situation is that even if a particular employer does honour pension commitments, the transferred workers then become effectively held to ransom by their pension entitlement. If they move to a different employer, they lose their TUPE protection and will be expected to accept far worse pension arrangements. Unscrupulous employers (and can anyone seriously doubt in the light of recent scandals that these private contractors will abandon any scruple they can get away with?) will be able to fatten profits by blackmailing staff into accepting worse conditions, lower pay, increased hours or anything else it wishes, because if they change jobs or are sacked they’ll lose their pension entitlement.

Collective agreements

Staff working in NHS organisations have their rates of pay and other benefits set according to nationally-applicable, collectively-agreed scales and frameworks. On various occasions recently, the government has tried to impose changes, in some cases successfully. Also, very recently the government has tried to gain support for the idea of regionally-variable pay, where staff in poorer areas will be paid less. For all kinds of reasons, that is a very stupid and self-defeating idea, and because even some Tory MPs are opposing it, the government has temporarily backed off the idea, although Conservative MP Jacob Rees-Mogg was on TV again last week praising the idea, so it’s almost certainly going to make a come-back. In the meantime, the Tories have sanctioned a pilot project in which 16 NHS trusts in South-West England have formed a cartel consortium with the specific aim of driving down pay, terms and conditions (it’s even in the name of the group, so they’re not being subtle about it!). By sanctioning these cartels, the government both achieves its aim without needing to get legislation through Parliament, and gives itself ‘distance’ and plausible deniability – Health Secretary Andrew Lansley has already said it’s none of his business (familiar, that!) and that it’s up to Trusts to make their own arrangements.

However, by privatising NHS services, the government is also attacking pay and conditions via a backdoor route. The TUPE regulations say that previous collectively agreed pay and terms have to be honoured (again with the ETO escape clause, which means the obligation isn’t really an obligation!), but that any new collective terms agreed by the NHS after the transfer are not binding on the private employer. So, if the government agrees a pay-rise for those remaining in the NHS, the poor employees now in private employment don’t get it. (Read here for more on this). In this devious manner, the government is robbing public-sector workers all over again, and entrenching even more deeply the inequality and economic apartheid it clearly holds so dear.

Hamstrung: no ‘solidarity’

For some years now in the UK, it’s been illegal for workers to come out on strike in support of a group working for someone else. This practice is known as ‘sympathy strike’ or ‘secondary action’. NHS workers can take industrial action across the country in support of other NHS workers. But once a group of workers is transferred to another employer, even though it might be a private provider badging itself as ‘NHS’, they’re effectively on their own. Anyone working for the NHS proper, or for a different private provider, will be classified as working for a different employer. Unions will find it almost impossible to take genuine collective action to defend workers’ rights and pay. It may be more subtle than Thatcher’s ‘stormtrooper’ tactics, but this fragmentation will be no less massive a blow to the ability of ordinary people to unite against the exploitation which is rapidly becoming the norm under this woeful government. And in no conceivable scenario is this merely incidental – it’s all part of the overarching plan to institutionalise disadvantage and inequality in the UK.

ETO again!

A further ‘remedy’ available to private providers against the ‘problem’ of decent pay and conditions is simply to fire everyone they hired and make them reapply for their jobs. While technically prohibited by TUPE 2006, all the employer has to do, yet again, is claim that it can’t afford to continue the current pay and pension levels, and it has a ‘get out of jail free’ card. Since the above-mentioned NHS pay cartel has already threatened to do exactly that if staff won’t submit agree to worsened pay and conditions, this isn’t merely a theoretical situation. It can and will happen again and again.

Now, take all of the above and set it in the context of the government’s Beecroft proposals to allow employers to fire staff simply because they want to, and to weaken TUPE protections, and you’ll see the pattern even more clearly.

This government has an agenda to gut the public sector by whatever means possible, and unlike George Osborne on the economy, it has plans B, C, D and so on, and it’s working them all as and when it can. If it can’t go the direct route to destroy our hard-won state provisions, it will do so via subtle, backdoor routes in the hope that people won’t realise the consequences of a particular step until it’s too late.

So this is a wake-up call. Whether you work in the public sector or the private, if you’re not in the 1% of very wealthy people this government is trying to deprive you, your loved ones and friends of things that matter, things that you either need now or one day will – and to pull the wool over your eyes so that you either don’t realise it at all, or else you’re fooled into approving because the target group on that occasion is one you think is better off than you are.

Refuse to be fooled, spread the word, and fight while there’s still something left to protect.