Mesmer: Mapping European Social Market Dialogue

1. Mesmer: Mapping European Social Market Dialogue The Case of the UK Social dialogue and the role of trade unions 13th February 2014 Brussels

2. UNISON, Public Services and Community and Co-operatives • Work with co - operative trade union members in Public Services International (PSI) 20 million workers , 650 unions,148 countries • Regional PSI - European Public Services Union (EPSU) - 8 million workers 265 unions • UNISON 1.3 million members – as well as public workforce largest civil society ‘voluntary’ organisation in the UK • Equality sections: retired, young, black, disabled, women, LGBT members • 60,000 UNISON Community sector members– local government, housing, health services (few in Higher Education ,Police and Justice) • Schools Co-operative Society with 600 member schools • Co-operative Colleges initiative • Work with Co-operative MPs, Co-operatives UK • UNISON Co-operative Councils Network and Credit unions campaign

3. UK Open Public Services agenda • Public Service Reform 2006 - Privatisation and market competition • Austerity 2010 – 80% of deficit reduced by cutting public service funding: 20% cut of total spend (average £700bn a year).By 2018/19 = £240bn, 1.3mn jobs lost and public services back to pre 1948 size • Open Public Services White Paper July 2013 - Social, Voluntary and Community sector, remove red tape, increase SMEs in public procurement. New rights for communities and citizens = localism • Cabinet Office – driving mutual's, ‘public service spin offs’ Social Finance schemes e.g. Social Impact Bonds • Undermining of trade unions role in public services: facility time, collecting TU fees via employer payroll, creating barriers (fees) for workers to register grievances at employment tribunals and weakening employment protections such as TUPE and the two tier code and Fair Deal • EU Public Procurement Directive and UK Regulations 2014 to reserve contracts for mutual's (health and social care) without tendering or following EU procurement rules over £70,000 • Transatlantic Trade Investment Partnership (TTIP) to include Public services 2015

4. 2010 UK Cabinet Office drive to mutualise public services Problems • Low take up of ‘Right to Provide’ and ‘Right to Request’ to become social enterprise or employee mutual's in Health and Social Care • Patchy evidence of pathfinders: top down, low and problematic implementation, cuts imposed, future of uncertainty and funding sustainability Solutions • Commissioning Academy • Mutual funding and consultancy offered up to £80,000 • Stronger Public Procurement reinforcement

5. EU PP Directive Article 76a • The organisation referred to in paragraph 1 must fulfil the following cumulative conditions: • (a) Its objective is the pursuit of a public service mission linked to the delivery of the services referred to in Paragraph 1; • (b) profits are reinvested with a view to achieving the organisation‘s objective. Where profits are distributed or redistributed, this should be based on participatory considerations; • (c) the structures of management or ownership of the organisation performing the contract shall be based on employee ownership or participatory principles, or shall require the active participation of employees, users or stakeholders; • (d) the organisation shall not have been awarded a contract for the services concerned by the contracting authority concerned pursuant to this Article within the past three years.

6. EU Public Procurement Directive - article 76a • What organisations does it apply to? Legal structures and definitions? Rules on profit distribution? Rules on financial relationships with private sector family? • How will we evaluate/measure if Mutual's, Social Enterprise Co-operatives provide the best social outcomes in public services? - Do the public, service users, public sector workers and elected accountable officials understand both the risks and benefits of mutual's or social public service models? -Will they be sustainable without support and subsidy?

7. The eclipse of social enterprise by Social Finance in EU public services ? “Definitions of social enterprise have always been vague, with arguments over essential characteristics. But as boundaries between sectors blur, governments, funders and investors will move away from defining social enterprise according to legal structures and instead start to categorise organisations according to their ability to deliver a social return on their investments. The debate will no longer be about how to define social enterprise, but how to agree measure and compare social impact.” What will Social Enterprise look like in Europe by 2020 British Council 2013

8. Social Finance growth of public service models in the UK • Outright privatisation unpopular: dominated by 4 or 5 big private players (est. market to rise 64% between 2010 – 2016 from £80bn to £125bn) • Scandals: Financial equity collapse of private companies, Falsification of targets, Fraud, Parking difficult clients and cherry picking, procurement problems with long and expensive contract liabilities • 30 years still little evidence that the market (a more diverse and competitive landscape) has improved public service provision (Institute of Government July 2013) • Payment by Results – Only big players who could fund up front – doesn’t diversify smaller providers and limits the Social, voluntary and Community sector to being sub contractors in ‘prime contractor models’

9. Social Finance models in the UK – Social Impact Bond Social Impact Bonds, Pay for Success Bond or a Social Benefit Bond – UK,USA and Australia Significant growth since 2010 A Social Impact Bond is a contract between private or multiple financial investor and the public sector. A commitment is made to pay the investor for improved social outcomes, usually in public sector preventative work, using a voluntary/third sector/social enterprise provider that also results in significant public sector savings

10. Social Impact Bonds (SIBs) funding social enterprises, mutual's and co-operatives to deliver public services • SIBs separate the ‘risk’ capital from the provider delivering • Public finance pays the provider only service costs but the investment from the SIB is repaid as profit via a reward payment from the public commissioner when certain social outcomes are met – this profit is based on the original saving of using the SIB

11. UNISON concerns on using SIB models to fund public services • Social, Voluntaryand Community organisations lose their independence to design and run services and compete for Social Finance contracts • Investors could set delivery requirements based on short term returns rather than long term social benefits in complex services • What returns will social enterprise, co-operatives and mutual's have to make them grow , become sustainable and stronger? • Less democratic accountability through the procurement and commissioning process • Like mutual's they currently require public funding subsidies and incubation funds

12. Growth of Social Finance as the new Venture capital in public services? “Social impact investment is not an ‘outsourcing’ of public service delivery, but a way for private investors to share some of the risks of innovative programs and services” Building a stronger society. A Discussion paper on Social Investment Impact South Australian Government 2013

13. Centre for Social Impact Bonds – UK Cabinet Office • UK 18 SIBs projects/pilots – health, social care, education, justice and youth re-offending, child and families support • £420m capital to fund/top up/subsidise social finance projects • Tax relief for private investment in social enterprise • A trade association for social investors to belong to • Promote methods of exchanging stocks to make social ventures and social investors can be matched • Template contract for the legal aspects of SIBs between procurement commissioners and social investors • Set up social risk ratings to inform investors of financial and social risks and return • 2014 – SIBs promotion tour organised for all contracting authorities (LGA, Cabinet Office and Social Finance) - promoting joint /multiple/regional public service commissioning of SIBs

14. UNISON key response to opening public services • Increased public funding not austerity • Centralism v localism balance • Accountability and citizens core role • Collaboration, Co-operation and Co - production • Social partnership between trade unions and employers – stop race to the bottom, poor employment practices – Zero hours, TUPE, Fair deal • Procurement and commissioning: Social value and environmental criteria alongside cost and price criteria • Do we need diversity in provision and expensive procurement competition? Where is the evidence?

15. Wandsworth council drive to mutualise its public services by October 2014 • To save £20million by 2015 (departments must opt for mutual's/social enterprises, outsourcing, shared services or in-house if no market testing option) • Staff invited to propose becoming a staff mutual or social enterprise with outline plan of efficiency savings of 20% • Any one model of social enterprise/mutual allowed • Uncontested contract will be awarded – incubated as a council controlled “shadowmutual” for one year • Then given 3 yrs as a reserved contract and protected from competitive market until 2018/19 when retendering begins

16. Wandsworth Councils drive to mutualise public services by October 2014 • Council will have a new Social Enterprise Policy and Procurement framework to support staff led Social Enterprises and mutual's • For 1 yr shadow and first 3 yrs (incubation period) council will allow TUPE and meet redundancy liability costs • New staff however will be offered alternative arrangements from TUPE and LGPS • In event of non award staff would be TUPEd to new provider , stay with the mutual or be made redundant • In event of mutual failure during the incubation contract – it would only be an option for the council to re-acquire business not compulsory

17. UNISON: How to preserve the SVC ethic in public services? • Increase public funding of public services for SVC sector • Increased clarification and evaluation of benefits and limits in the use of social finance and the role of SVC sector • Joint trade union TUC campaign on UK Public Procurement Regulations 2014 to address: - increased complexity in procurement and commissioning - transparency, accountability, FOI on social and private bids, - use of social and environmental criteria not just price - promote the strengthened use of legal definition of Teckals (in-house provision) - Clarification and monitoring, scrutiny and evaluation of UK Regulations on the use of EU PPD article 76a

18. UNISON promoting Trade Unions and Co-operatives working together • Promote the TUC /UK Co-operatives best practice guidance joint agreement on public services • Build alliance/safeguards to preserve and distinguish the Co-operative principles and models in public services • Promoting the Schools Co-operative Society model with 600 member schools - national trade union Recognition agreement framework, Adopt Living wage campaign, School meals, Pay and terms and conditions, Teaching Assistants • UNISON policy and procurement tools – UNISON Ethical care charter, UNISON branch negotiating guidance • Joint work with Co – operative MEPs and MPs - TTIP • Co-operative Councils Network and Credit unions