Scottish Trades Union Congress Response to the Scottish Executive Consultation Paper “A Shared Approach to Building a Better Scotland”
1 Introduction
1.1 The STUC welcomes the opportunity to contribute to the Scottish Executive’s consultation paper on “A Shared Approach to Building a Better Scotland – A Consultation Paper on a National Strategy for Shared Services”.
1.2 The STUC is Scotland’s Trade Union Centre. Its purpose is to co-ordinate, develop and articulate the views and policies of the Trade Union Movement in Scotland, reflecting the aspirations of trade unionists as workers and citizens.
1.3 The STUC represents around 630,000 working people and their families throughout Scotland. Our 43 affiliated trade unions have interests in all sectors of the economy and across a broad range of occupations. Unions affiliated to the STUC represent thousands of workers in all parts of Scotland’s public services, and are recognised for collective bargaining purposes throughout the public sector in Scotland. Through our affiliated unions, the STUC represents trade unionists, in and out of work, in the community and in the workplace. Trade union members not only work to provide public services they are also users and funders of these services.
1.4 The STUC is a democratic organisation. Our policy is determined by our Annual Congress, which is attended by delegates representing our affiliated unions and local Trades Union Councils. The STUC’s representative structures are constructed to take account of the specific views of women members, young members, black/minority ethnic members, LGBT members, and members with a disability, as well as retired and unemployed workers.
1.5 This submission is based on policy determined by our Annual Congress, and reflects the deliberations of our representative structures. It has been prepared following consultation with our affiliated organisations, particularly our public sector union affiliates.
2 The Reform of Public Services
2.1 As the consultation document makes clear, the proposed National Strategy for Shared Services has emerged from one of the five workstreams of the Executive’s Efficient Government initiative. Any approach to shared services must be considered in this context and in the context of the Executive’s discussion document on the future of public service reform “Transforming Public Services: The Next Phase of Reform”. The STUC comments on the consultation document are, therefore, set in the context of our views on Efficient Government, and reflect on the Executive’s approach to public service reform more generally. It, therefore, covers views already articulated to the Executive in our engagement on Efficient Government; Best Value; and in the preparation, by the Scottish Public Services Forum, of the joint Executive/STUC statement on Public Service Reform.
2.2 Quality public services are essential to secure sustained economic growth and social justice and should be provided efficiently and effectively, to the highest standard. This will be achieved when public services are directly provided and operate on ethical lines based on the principles of selflessness, integrity, objectivity, openness, accountability, competence and equality, and where all public service organisations are open, transparent, democratically accountable and apply fair employment practices.
2.3 Public services must respond to demographic change and public expectation if the highest quality services are to be provided. New technology and techniques, for example, present important opportunities to improve the provision of public services, and these opportunities are being grasped in many parts of Scotland’s public services.
2.4 The STUC is already on record in welcoming the considerable investment in public services made by the Scottish Executive in recent funding rounds and the distinctive approach it has taken thus far to public service reform with its emphasis on co-operation, collaboration and partnership. This approach contrasts sharply with that taken in England by the UK Government and in Northern Ireland by direct rule Ministers, where models characterised by competition, privatisation and job cuts prevail.
2.5 The STUC and the public service unions have responded to this approach by engaging constructively with the Executive and employers to achieve improvements in the quality and efficiency of public services in Scotland, participating in the creation and implementation of the Best Value Regime in local government, the Joint Futures initiative and initiatives taken through the partnership arrangements in NHS Scotland.
2.6 The STUC and public service unions have also engaged in dialogue with Scottish Executive Ministers and officials on Efficient Government since the initiative was launched in June 2004, through the Scottish Public Services Forum and representation on the Steering Group taking forward the workstream on absence management.
2.7 The STUC and public service unions have demonstrated a commitment to working with the Executive and employers to increase service standards and to achieve the more efficient use of resources. We recognise that a National Strategy for Shared Services has potential in both of these respects and we will be constructive contributors to its development and implementation, if its underpinning principles are consistent with our established policy.
3 Principles
3.1 At its 2005 Annual Congress, the STUC established a set of principles against which it would assess union support for initiatives to improve the efficiency and effectiveness of public services. These are that initiatives:
• be achieved without recourse to compulsory redundancies or compulsory redeployment;
• show an expansion in the range and quality of services provided;
• be achieved following the full participation and involvement of public service unions;
• guarantee that any savings are reinvested back in that part of the public services from which they derive;
• advance the application of fair employment practice within public services;
• respect the important role of all public servants avoiding the irrelevant distinction between ‘frontline’ and ‘backroom’ staff;
• be achieved without resorting to outsourcing.
3.2 These will, therefore, be the principles that will determine the STUC’s approach to the proposed National Strategy on Shared Services.
4 A Shared Services Strategy
4.1 Cooperation between Public Service Organisations to share the provisions of services has the potential to raise the quality of services to the public and achieve the more efficient use of resources. If this potential is to be realised a range of complex issues will require to be addressed. Unfortunately, examination of these issues in the consultation paper is not sufficiently robust to give confidence that the ambitious objectives the Executive has for its proposed National Strategy for Shared Services will be achieved. A National Strategy for Shared Services is undoubtedly a good idea in principle, but had to be developed and implemented with a greater degree of realism than is apparent in the consultation paper, particularly with regard to the possible negative consequences for effective service delivery and the cost and savings involved.
4.2 In developing and implementing the Strategy, greater consideration needs to be given to the possible negative impact on service delivery of the greater centralisation of services that shared service delivery might bring, particularly with regard to accessibility and accountability. A proper balance needs to be struck between efficiency and local delivery, and between the aims of the service providers and the desires of service users, who might not appreciate the rational for service reorganisation or the potential benefits to come from the reinvestment of savings in other services. Some of these problems can be overcome by involving communities and staff, through their unions, in the development of shared service initiatives.
4.3 Consideration needs to be given to how the tension between the Executive’s desire for more localised decision making, including a bottom-up approach to proposals for initiatives to reform service delivery, and the centralisation of service delivery itself, can be resolved. Similarly, there is a need to ensure a consistency of approach by PSO’s in their engagement with a shared services approach. If all PSO’s do not accept the responsibility to engage with this agenda, implementation of the Strategy will suffer by being dominated by some, likely larger, PSO’s or sectors, to the disadvantage of the workforce and the communities they serve, in the those less engaged.
4.4 While the commitment that savings achieved as a result of shared service provision will be reinvested in service delivery is welcome, this must been considered in the context of the 2008-2011 spending round, which it is widely expected will, at best, consolidate existing funding levels.
4.5 Similarly, the commitment to the retention of key skills and the presumption against compulsory redundancy, and supported retraining and redeployment, while welcome, will require the allocation of significant resources in what will be a tight financial environment.
4.6 As the paper makes clear, the implementation of a National Strategy on Shared Services will require significant investment by PSOs, whether it is in new technology, retraining, the relocation of staff or the inevitable management cost associated with any organisational change. The paper quotes a 2:1 investment ratio. It is questionable if PSOs will be willing or able to finance shared services initiates to the extent envisaged in the paper. This, of course, raises the prospect of the implementation of the strategy being dependant on private finance models, which are more costly in the long-term, less likely to meet acceptable quality standards, and will be opposed by the trade unions.
4.7 A more comprehensive and realistic assessment of the potential savings that might derive from a National Shared Services Strategy should be undertaken. The costs as well as the savings of centralising services, for example should be taken into account. These can derive from greater staff turnover, higher in contact centres than almost anywhere else in the service sector, staff relocation, the loss of key skills, the disruption than results from service reorganisation, etc.
4.8 It is wrong to make assumptions about potential savings by drawing on the Western Australia experience. The initiatives taken there are in their infancy and their impact has yet to be evaluated. Furthermore, there is little empirical evidence of the impact of shared service models elsewhere. What there is suggests that public and private sector experience is patchy and question marks exist over the extent to which wider costs, including those incurred indirectly, for example, in departments other than the primary one, are taken into account. The assertion in the paper that only 67% of anticipated savings will be realised is recognition of the caution with which saving assumption should be treated, and makes the case for more work by the Executive in this respect prior to the launch of the Strategy. It would be reasonable to assume that scrutiny of the savings assumptions related to the Strategy may well feature on the agenda of the Scottish Parliament’s Finance Committee.
4.9 More comprehensive attention to the staffing issues relating to a National Strategy for Shared Services than is evident from the consultation paper will be necessary for successful development and implementation. Yet again in an Executive paper on public service reform the false distinction between “front line” and “back office” functions appears. A National Strategy on Shared Services which is built on this false distinction is destined to fail. The roles of public service workers are continually evolving. An increasing number of public service workers interface directly with the public and often their various roles are integrated to such an extent that the distinction is meaningless in terms of the jobs they do and the experience of the service user.
4.10 The paper also underestimates the complexities in achieving effective working arrangements between staff from different PSOs, particularly where professional or cultural differences exist. Shared service delivery often requires significant investment in training in partnership working and time for relationships to develop before the benefits in cost savings and service improvements are realised.
4.11 In general, the paper fails to address the range of staffing and employment issues that will arise from a Shared Services Strategy. Given the nature of Scotland’s labour market at present and in the future, our economy, not just our public sector, will suffer if the measures are not introduced to minimise the loss of skilled staff that will be the inevitable consequences of shared service initiatives. Similarly, greater consideration needs to be given to the staffing and employment consequences of the different models for shared services suggested in the paper, of the greater centralisation of services that will arise, or where relocation is involved.
• What will such initiatives mean for staffing levels, for job satisfaction and staff moral?
• What will be the consequences for staff recruitment and retention, and the associated costs?
• What are the implications for training and retraining?
• What are the implications for pay and terms and conditions?
• What are the implications of integrating staff from different organisations into an effective service delivery unit?
4.12 The Executive is correct to assume that staffing reductions will be a consequence of shared service initiatives. The commitment to “best employment practice” in dealing with staffing reductions, with an important aim being the retention of key skills and a presumption against compulsory redundancies in favour of natural wastage, supported retraining and redeployment is to be welcomed.
4.13 In developing the Strategy, there is a need for the Executive, in partnership with the STUC and public service unions, to produce guidance for PSO that defines “best employment practice” and establishes a framework for dealing with the staffing and employment issues that will arise from its implementation. The need for workforce guidance in the context of Best Value and public service contracting generally has been a consistent demand of the STUC. Dealing effectively with the number and nature of the staffing and employment issues that shared service initiatives will throw up will be the key to their successful implementation. This will be assisted immeasurably by the production of guidance that ensures a consistent, comprehensive and best practice approach.
4.14 A number of papers on this issue have been prepared by the STUC for Ministers, officials and the Scottish Public Services Forum. These papers propose guidance that builds on the principles underpinning the PPP workforce protocol agreed between the Executive and the STUC; and the Section 52 guidance published by the Executive. We envisage guidance on the staffing and employment aspect of the National Shared Services Strategy establishing and defining a set of principles that cover:
• the mechanisms for union engagement in shared service initiatives;
• the scope of union engagement in shared service initiatives, (to cover full extent of shared service proposals, including the services to be provided, who the employer will be, staffing levels, skill mix, service levels and quality standards, pay and conditions matters);
• the arrangements for avoiding compulsory redundancies;
• the arrangements for ensuring that those displaced are found suitable alternative posts without detriment and without compulsion to relocate;
• the arrangements for relocation for those prepared to move;
• the arrangements for staff development, including entitlements to training and retraining, the resources to be invested, and the role of Union Learning Representatives;
• the arrangements for monitoring and reviewing the staffing and employment issues that arise from shared service initiatives.
4.15 The full involvement of the trade unions in the creation and implementation of the National Strategy will be essential if these and other issues are to be satisfactorily addressed. Open and transparent communications are necessary but not sufficient to engage staff and their unions. Many of the issues to be addressed will require consultation and negotiation with the unions, and the appropriate mechanisms for this should be identified at the outset.
4.16 The STUC should be invited to be represented in any strategic or crosscutting body established to oversee the development and implementation of the Strategy. The public service trade unions should be involved in determining the appropriate mechanism for union engagement at sectoral level, and for working with PSOs within the context of the staffing and employment guidance referred to above.
4.1 One key issue not adequately addressed in the paper is the implication of EU procurement regulations for the structure of shared service initiatives. Models for shared services must be developed that address the requirements of EU procurement regulations and which do not increase the prospect of service privatisation. It is essential that there is Scottish policy and guidance developed and issued on this matter, which doesn’t take as its starting point a presumption in favour of contestability and privatisation. The STUC expects to be fully involved with the Executive in considering this matter.
5 Conclusion
5.1 The STUC support in principle a National Strategy for Shared Services. However, we believe the strategy must have a greater degree of realism than is apparent in the consultation paper, particularly the possible negative consequences for effective service delivery and the cost and savings involved.
STUC July 2006