The Secret Cuts: Part Five, The Low-Pay Debate

Continuing their series on the Coalition's secret cuts, Alan White and Kate Belgrave explore how workers are being bludgeoned into accepting wages that are too low to live on.

There was a big story this week. It didn’t quite attract the level of coverage received by the royal baby, but it affected a lot more people. The Archbishop of York, John Sentamu (who is himself linked to a workfare scandal), described the low wages of millions of Britons as a "national scandal".

Salaries across the country are not only being cut - they’re being trashed, as the people we talked to for this article know all too well. They, like people all over the country, are locked in vicious disputes with their employers about proposals for wage cuts. Staff at One Housing Group, which is featured in this story, are striking today. They know that they’re being forced into a race to the bottom, but refuse to join it - or buy the line that employers can only compete if wages plunge.

This concerns everyone who needs a wage to live.

This video shows staff at a recent noisy picket outside the Southwark head office of Equinox Care. Equinox is a charity which provides support services for people with drug and alcohol problems and mental health conditions across the South East.

The staff are on strike today - as they have been several times this year - in protest at management plans to slash their wages. Their dispute with management is bitter and at an impasse. The wage cuts management insist on can’t be borne. Management say that they must be borne if the organisation is to survive. But staff and unions know that organisations won’t survive if services are reduced to rubble.

Earlier this year, Equinox workers and unions were presented with proposals for wage cuts which will leave huge holes in pay. Average annual pay cuts of £2,000 will be imposed on front line staff, with some people being told to accept reductions of £8,000. Staff say they’ll be downgraded and deskilled - but they’ll end up doing exactly the same jobs.

People are livid at management and particularly CEO Bill Puddicombe, who they say refuses to negotiate, or change his position. Outside HQ, they wave posters plastered with his picture - “Bill Puddicombe, the face of cuts in social care.”

Photograph: Charles Shearer at SnapsThoughts

The fury is tangible. Andy, an Equinox worker, tells us: “At one meeting about the cuts I saw a member of staff crying, because they were worried about losing their house. Then I saw a member of HR staff chuckling, and I had to ask him exactly why he was laughing.”

Ann says: “People don't know how they are going to be able to pay their rents and mortgages. It's just horrific.” John describes their work: “[We do] floating support and homeless prevention work - council tenants who are maybe on their final warning and get referred to us by caseworkers. It tends to be substance misuse, alcohol, addiction. We also work with ex offenders, [people with] mental health conditions, victims of domestic violence... and on the streets with street drinkers and rough sleepers to see what sort of accommodation they might be entitled to. They often use or drink in order to be able to survive on the streets.”

All say the work is rewarding, but like everyone else, they need to be paid for it. They’re also worried that if they don’t fight back now, the axe will be swung again. Ann says: “We haven't had a pay rise for the last three years, so in effect we've been taking pay cuts. We had our hours increased.”

The first strike took place at the end of May, but, says the union, the charity’s management did not respond. Things have now escalated. Unite’s regional officer said: “Rather than sitting down to negotiate with Unite, Equinox management appear to have spent their time striking off from their relief worker/locum list any worker who refused to cross the official picket lines, blacklisting them from all future employment with Equinox.” (When we speak to him, Puddicombe says Equinox is not blacklisting. We will stay in touch with workers to see how things go.)

In June, two more days of strike action followed. Protestors report that Puddicombe attempted to rush through the strikers without answering questions, but apparently found himself locked out of his own office. Perhaps the pressure was getting to him, because earlier this month, he snatched Unite placards that were being handed out at a care conference in Lewisham and tore them up. Around the same time, staff handed a no-confidence vote in him to Equinox’s board members. Then there were more strikes.

Puddicombe, when we catch up with him, does seem emotional. He demands to know how we found out about the protests and complains bitterly about Unite’s presentation of him. We put it to him that people are justified in their rage - who, after all, wouldn’t furiously oppose a cut in their wages? - and he accepts that, but he says people don’t understand the problems faced by smaller charities.

He says smaller charities like Equinox are being squeezed by much larger ones who have big marketing and tendering departments and can aggressively chase new business. He says that Equinox is committed to being a living wage employer. He also says, testily, that the environment is almost impossible: “Given that Equinox is principally reliant on public sector money for the charitable work we do - that money is decreasing. We can only pay the same level of wages that other organisations pay in our field. In 2011/2012, we lost a half a million pounds. We've just broken even in the last financial year.” (“We’ve got five years left at best” charities told the Guardian this week.)

But that’s not good enough for the staff who must lose thousands in pay. Nor can it be. People can’t take wage cuts. They can’t afford to. They can’t just leave the argument there. They’re not in a position to accept the line that lower wages will save an organisation - particularly when management isn’t sure that lower wages will ultimately do that. Puddicombe says he isn’t sure himself.

In this environment, people need a new tune. They want their employers to campaign against cuts and to pressure government and local government for funding and better contracts.

They wonder why they’re taking the hit in the public sector when others are not - MPs’ pay rises were a very big topic when we visited the pickets. Unite Housing Workers branch chair Paul Kershaw says that St Mungo’s - another care provider - “has a proposal that guarantees the pay of existing staff and limits the use of the new lower grade.” Unite wants to see sector agreements where competitive tendering processes do not compete on wage rates.

They want to go to the Advisory, Conciliation and Arbitration Service (ACAS), but Puddicombe won’t. “We haven't seen any sign that the union is willing to realistically engage with a conversation about change,” he says. The Unite people we spoke to were bemused by this. They say that’s the point of going to ACAS - to engage and have a conversation. Puddicombe says the Equinox board has “red flags” below which it won’t cut - but he also says that local authorities will probably look to cut budgets further in 2015. The future looks shaky and people know that. But they will not accept that they have to wear the worst of it. Why should they?

*

And what of the bigger charities that are squeezing the smaller ones? Oddly enough, at the larger and profitable One Housing Group (OHG), exactly the same situation is unfolding. OHG has massively expanded - it’s over eight times the size it was in 2004, and the main way it grows is by taking contracts from other providers. That means it takes their terms and conditions on staff pay.

So it planned to “standardise” pay across the board, with £22-23k for those in inner London and £22k in outer London (which laughably included Southwark, Tower Hamlets and Lambeth). The argument was that due to local government cuts, pay would have to be slashed to allow the company to make lower bids.

“What we didn’t realise,” says Peter , an employee, “Is that the support arm of OHG had made a surplus over £1m. It was the highest in the sector. Our major competitors made losses or just broke even: St Mungo’s made a tiny surplus and didn’t bring in cuts. And that’s just support. OHG on its own made £12m. So they were cutting some people’s pay by £8,000 in a bid to save a total of £490,000 - even if they made no cuts at all they were still hundreds of thousands in surplus.”

A week before Christmas, 245 letters were sent out. They instructed everyone to sign up to the pay cuts before 21 December. There was a very low union membership at the time, but 70 per cent of the staff didn’t sign - and soon became unionised. “This triggered endless one-to-one consultations,” says Peter. “You would see members of staff in tears, talking about how they’d lose their house - we’d already had our pay frozen for four years previously. It was just an admin exercise, but we got the cuts delayed for 22 months. Now they’ll come in February 2014.”

In a statement OHG says: “One Housing Group has a workforce of over 1,200 people. Following an exhaustive consultation process, over 95 per cent of the 230 affected care and support staff have signed up to the new salary arrangements.”

It sounds promising, until you hear Unison’s response: “OHG management say that 95 per cent of staff have signed up to the cuts. Indeed they have. They were told in no uncertain terms that if they sign the new contracts they will have their pay cut in February 2014 and if they refuse to do so, they will have their pay cut with immediate effect. This is the sole reason they have signed the new contracts.”

Peter says: “There’s anger because we’ve won huge contracts - £1m for homeless and floating support from the Greater London Authority and £1.3m for work in Essex - neither makes a loss, there’s years of guaranteed funding, and yet shortly after they’re awarded people are told cuts have to be made. But we’re making a profit.

“This is the best way for management to get pay protection when they pick up contracts from other providers. It’s a sort of reverse egalitarianism - you can argue against claims made on basis of protected pay agreements for example, because everyone’s earning the same.”

Things would only get worse. Strike action was threatened and as a result a severance package for staff was agreed. Workers claim that it was funded by taking away staff bonuses: “It was stunning,” says Peter. “A guy earning £18,000 was now losing his £550 bonus to subsidise the pay off of a guy on £28,000.” OHG insists to us that this is not the case.

At the same time Mick Sweeney, the group’s CEO, accepted a pay increase of just over £30,000, taking his salary to £176,000. OHG refuses to explain to us why it quoted a lower figure of £150,075 in Inside Housing’s 2012 salary survey.

Even local councillors in Islington were outraged. They wrote to OHG and pointed out that at the council since 2010 they had cut the CEO’s salary by £50,000 and increased pay for workers on less than £21,000, while still saving £400,000 of management costs. Suddenly managers and support assistants who weren’t facing cuts began to unionise, and strikes began in June. The local councillors even attended the picket lines.

Peter says: “It felt like they were targeting the frontline guys purely because there was no history of standing up to them. The job market has changed - people are just hanging in their jobs. As the association expands it’s become more corporate - it’s a bit like working for Barclays now, with lots of talk of “business plans” and the “market” - that’s fine, but when you’re making a surplus you can’t really criticise the market. You’re left with demoralised workers who lose the voluntary ethos for extra work.

“They refused to go to ACAS - which even the likes of Balfour Beatty do. First they said they wouldn’t go because there’d never be a strike, then there was one and they just refused to pick up their phones.” OHG tell us: “Our consultation process left no stone unturned and considered all available options in order to secure the best possible deal for staff within the challenging environment. We did not feel there was anything further to be gained by going to ACAS."

*

The voluntary sector is changing. Axemen like Puddicombe say that they’re trying to prepare their organisations for dark days ahead. But staff want to see something more constructive. As Andy tells us: “Puddicombe says he’s making these cuts so he can make tenders, but Equinox are primarily losing tenders because they don’t have a dedicated team.”

Puddicombe says that the organisation has “no hope” of achieving new business until salaries are cut to the “same level” as competitors and also because competing organisations have big tendering teams at their disposal. He does seem to concede that new business will not necessarily be on the cards even if salary cuts are made, though. “We can make the changes that we're making - after that, then we have to hope that we can find some dazzling opportunities to produce new business, that we can use the skills we have and make a bit of luck.” Doesn’t sound like much of a plan.

In the case of One Housing Group, the story is different. Here the money is rolling in, but as Peter tells us: “It used to be impossible to action the workforce across the supported housing sector, but now people are seeing that this is about building a war chest for when the local government cuts really bite.”

As Will , another Equinox worker tells us, it’s a strategy that might cost lives. “Coming off alcohol is one of the most dangerous things. It’s a potentially life-threatening thing. [Staff shortages] would pose in my mind a real risk.

“People don't want to see that service lost. People have put years into the job and a real commitment. What's being done is completely and utterly wrong. Lack of transparency, downright untruths, they're not negotiating with the unions, I think that is so wrong and it's good that people are standing up to it.”

All staff names have been changed.

You can read more articles from Alan White and Kate Belgrave's Secret Cuts series here

Getty.
Show Hide image

Hannan Fodder: This week, Daniel Hannan gets his excuses in early

I didn't do it. 

Since Daniel Hannan, a formerly obscure MEP, has emerged as the anointed intellectual of the Brexit elite, The Staggers is charting his ascendancy...

When I started this column, there were some nay-sayers talking Britain down by doubting that I was seriously going to write about Daniel Hannan every week. Surely no one could be that obsessed with the activities of one obscure MEP? And surely no politician could say enough ludicrous things to be worthy of such an obsession?

They were wrong, on both counts. Daniel and I are as one on this: Leave and Remain, working hand in glove to deliver on our shared national mission. There’s a lesson there for my fellow Remoaners, I’m sure.

Anyway. It’s week three, and just as I was worrying what I might write this week, Dan has ridden to the rescue by writing not one but two columns making the same argument – using, indeed, many of the exact same phrases (“not a club, but a protection racket”). Like all the most effective political campaigns, Dan has a message of the week.

First up, on Monday, there was this headline, in the conservative American journal, the Washington Examiner:

“Why Brexit should work out for everyone”

And yesterday, there was his column on Conservative Home:

“We will get a good deal – because rational self-interest will overcome the Eurocrats’ fury”

The message of the two columns is straightforward: cooler heads will prevail. Britain wants an amicable separation. The EU needs Britain’s military strength and budget contributions, and both sides want to keep the single market intact.

The Con Home piece makes the further argument that it’s only the Eurocrats who want to be hardline about this. National governments – who have to answer to actual electorates – will be more willing to negotiate.

And so, for all the bluster now, Theresa May and Donald Tusk will be skipping through a meadow, arm in arm, before the year is out.

Before we go any further, I have a confession: I found myself nodding along with some of this. Yes, of course it’s in nobody’s interests to create unnecessary enmity between Britain and the continent. Of course no one will want to crash the economy. Of course.

I’ve been told by friends on the centre-right that Hannan has a compelling, faintly hypnotic quality when he speaks and, in retrospect, this brief moment of finding myself half-agreeing with him scares the living shit out of me. So from this point on, I’d like everyone to keep an eye on me in case I start going weird, and to give me a sharp whack round the back of the head if you ever catch me starting a tweet with the word, “Friends-”.

Anyway. Shortly after reading things, reality began to dawn for me in a way it apparently hasn’t for Daniel Hannan, and I began cataloguing the ways in which his argument is stupid.

Problem number one: Remarkably for a man who’s been in the European Parliament for nearly two decades, he’s misunderstood the EU. He notes that “deeper integration can be more like a religious dogma than a political creed”, but entirely misses the reason for this. For many Europeans, especially those from countries which didn’t have as much fun in the Second World War as Britain did, the EU, for all its myriad flaws, is something to which they feel an emotional attachment: not their country, but not something entirely separate from it either.

Consequently, it’s neither a club, nor a “protection racket”: it’s more akin to a family. A rational and sensible Brexit will be difficult for the exact same reasons that so few divorcing couples rationally agree not to bother wasting money on lawyers: because the very act of leaving feels like a betrayal.

Or, to put it more concisely, courtesy of Buzzfeed’s Marie Le Conte:

Problem number two: even if everyone was to negotiate purely in terms of rational interest, our interests are not the same. The over-riding goal of German policy for decades has been to hold the EU together, even if that creates other problems. (Exhibit A: Greece.) So there’s at least a chance that the German leadership will genuinely see deterring more departures as more important than mutual prosperity or a good relationship with Britain.

And France, whose presidential candidates are lining up to give Britain a kicking, is mysteriously not mentioned anywhere in either of Daniel’s columns, presumably because doing so would undermine his argument.

So – the list of priorities Hannan describes may look rational from a British perspective. Unfortunately, though, the people on the other side of the negotiating table won’t have a British perspective.

Problem number three is this line from the Con Home piece:

“Might it truly be more interested in deterring states from leaving than in promoting the welfare of its peoples? If so, there surely can be no further doubt that we were right to opt out.”

If there any rhetorical technique more skin-crawlingly horrible, than, “Your response to my behaviour justifies my behaviour”?

I could go on, about how there’s no reason to think that Daniel’s relatively gentle vision of Brexit is shared by Nigel Farage, UKIP, or a significant number of those who voted Leave. Or about the polls which show that, far from the EU’s response to the referendum pushing more European nations towards the door, support for the union has actually spiked since the referendum – that Britain has become not a beacon of hope but a cautionary tale.

But I’m running out of words, and there’ll be other chances to explore such things. So instead I’m going to end on this:

Hannan’s argument – that only an irrational Europe would not deliver a good Brexit – is remarkably, parodically self-serving. It allows him to believe that, if Brexit goes horribly wrong, well, it must all be the fault of those inflexible Eurocrats, mustn’t it? It can’t possibly be because Brexit was a bad idea in the first place, or because liberal Leavers used nasty, populist ones to achieve their goals.

Read today, there are elements of Hannan’s columns that are compelling, even persuasive. From the perspective of 2020, I fear, they might simply read like one long explanation of why nothing that has happened since will have been his fault.

Jonn Elledge is the editor of the New Statesman's sister site CityMetric. He is on Twitter, far too much, as @JonnElledge.