Race to the bottom – the debate continues………

Sitra held our annual policy conference in February raising the question of whether or not the sector was ‘Coming off the ropes?’

There were a range of presentations and perspectives in the morning that focussed on how challenging the current environment is, and how some have managed to identify and carve out a new position in that context which has provided them with a direction and opportunity to flourish in this new world. Many others reflected on the ongoing challenges affecting the sector and most importantly the most vulnerable clients that we work with.

The final session of the day focussed on ‘The race to the bottom’, which was looking at the response of some providers to the current market – by feeling forced to  downgrade the terms and conditions of employees– and a question as to what we can collectively do about it. The challenge was also placed as to what Sitra can do about it – and in many ways it is to this that I turn my attention.

The perspective raised by Broadway and Unison focussed on the way in which competitive tendering practices have in some authorities brought about a shift in the balance of tender awards from quality to price – and how this has brought down the contract hour price – thereby putting providers in the position of reducing terms and conditions to meet the price on offer. Whilst this was not a universal experience – many providers in the room had gone through some change to either direct salaries or terms and conditions. I have spoken with many of our members who have talked about the very real shift in contract pricing – with one recent example talking about contracts which in 2003 paid £27 per hour, and are now offering the contract at £12 per hour. In this scenario, it seems unlikely that this kind of shift in price can be matched by anything other than a significant reduction in terms and conditions to bring the service costs in line with the commissioned price.

Whilst there were a number of good practice examples raised around commissioning practice – and speakers acknowledge that practice varied – the commissioner voice needed to be more clearly articulated.  In addition, the voice of the service user was not there –  who certainly have would have an opinion about how these changes were impacting on quality of service. It felt to me at the end of the debate that there was more potential for a collective solution than we had had the opportunity to explore. And  there were some comments from the floor which raised some possibility of ways forward, and I think that these are areas which Sitra could usefully explore with providers and commissioners over the coming months:-

  • What is the balance of contract between quality and price. Are we working on a shared understanding of a universal shift towards price based commissioning– or are there in fact some shining examples where commissioner focus on quality remains and what can we learn from them?
  • Do outcomes based contracts provide more flexibility for providers around how they control cost – or does a contract price squeeze have an inevitable impact on salaries and terms and conditions?
  • We need a more detailed debate about volunteering. Whilst both speakers felt that the use of volunteers in front line services was ill advised, there are an increasing number of organisations who are increasing their usage and the development of contracts which recognise volunteering within the procurement process. Does/should the sector have a position on this?
  • How can commissioners and providers together recognise the quality and professionalism of workers in the sector and agree
  • What are the impacts of saying ‘no’ to contract price. How can providers be supported in understanding their bottom line
  • Where reductions to terms and conditions are an outcome of negotiations on contract price – how can providers manage that transition in a way that is predicated around the notion of ‘fairness’
  • How are the reductions in wages impacting the kind of staff that providers attract. What other things can providers do to augment the experience of working within the sector – and how can we continue to attract high calibre staff? What role for training, apprenticeships, broader talent management approaches?
  • There has been an historic distinction between the salary levels of care and housing support staff – in organisations which operate both care and support services – has the pressure all be downwards?

I am interested in getting these debates aired and would be glad to hear from  those in the sector would like to get round the table to see if we can understand how Sitra and others can raise these issues and respond. Contact me directly if you would be interested in taking part.

This entry was posted in Uncategorized. Bookmark the permalink.

2 Responses to Race to the bottom – the debate continues………

  1. Pingback: Great quality, low prices and good pay…..it must be Aldi?! « John Wade's Blog

  2. Vic. I think you have summarised the problem really well. The way out of this spiral has to be a move to commissioning by outcomes or results. I’ve set out some of my thinking here http://johnbromfordsupport.wordpress.com/2012/02/21/great-quality-low-prices-and-good-pay-it-must-be-aldi/

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s