Barnet UNISON has published its Pay and Conditions Claim 2021 to The Barnet Group (TBG), the London Borough of Barnet’s arms-length company which delivers housing, physical and learning disability, residential and social care and other services. It had 300 employees in 2012 which increased to 1,150 by 2020.
The report details the employment policies of TBG and its five subsidiaries in the 2012-2020 period.
- Between three and six TBG executive directors received a total of £3,843,000 in salaries between 2012-2019, plus £259,000 in performance bonuses, £32,000 as honoraria, plus £465,000 paid into their pension scheme. The total salaries of Executive Directors increased 11.8% between 2019 and 2020.
- The average wage in YCB in 2013 was £28,935 but fell to £16,923 in 2020 – a reduction of £12,012 or 41.5% (YCB Annual Reports 2013-2020 – see Table 11 below). The average wage in TBG Flex was reduced by 9.8% between 2018-2020.
- Barnet Council is the primary funder of public services provided by TBG. In 2019-2020 Barnet Homes received £63,800,000 from LBB – 94% of revenue: YCB received £10,293,000 from LBB – 72.1% of revenue; TBG Flex 2020 received £9,874,000 in recharges from Barnet Homes and YCB – 86% is funded by LBB.
- The average pension cost of a TBG executive director was £20,400 in 2019- 2020 (page 64, TBG Annual Report 2019-2020). An ex-Fremantle care worker had gross pay of £17,684 (a 39-hour week on £8.72 per hour). Care workers on low pay rates cannot afford to contribute to an occupational pension scheme.
- TBG employees are barred from joining Barnet Council’s Local Government Pension Scheme despite the company being owned and financed by the Council. Instead they are offered a very inferior defined contribution scheme.
- There are major gaps between LBB and TBG Flex terms and conditions – 1.75 additional weekly hours, 4 months less sick pay on full pay, a grossly inferior pension scheme; and no wage increase at all for any of the YCB employees for eight years.
- TBG Flex is the Groups internal employment agency which charges other TBG companies a 4% annual fee for the employment of staff “…to ensure it contributes a viable surplus for TBG Flex” (TBG Flex Annual Report, 2020). It had accumulated profits of £372,000 (31 March 2020).
- Barnet taxpayers are paying for TWO chief executives to manage council services when most Councils have only one – an additional cost of about £190,000 inclusive of salary, social security and pension scheme contribution.
“Where is the justice in executive directors of The Barnet Group sharing £259,000 performance bonuses between 2012 and 2020 when frontline workers got nothing?” A Barnet Group worker
“I have rarely discovered such a deeply embedded scale of inequalities and exploitation in a local authority arms length company. This a damning indictment on the London Borough of Barnet who have colluded with this model for nearly a decade.” Dexter Whitfield, Director, European Services Strategy Unit
Three residential care homes privatised by Barnet Council in 2000, despite strong opposition, returned to Council ownership in 2019 but were located in the arms- length company.
TBG has announced that from 1st April the London Living wage will be paid to all the staff who were TUPE transferred to YCB from Fremantle care homes. This means the hourly rate will move from £8.72/ hr to £10.85/ hr. However, the workers will be part funding this themselves by having their enhancements for working weekends, bank holidays and night shifts removed. The other part of this will be funded by Barnet Council itself.
The arms-length company model, illustrated by Barnet, has several functions or negative impacts.
Firstly, to provide services that local authorities consider politically difficult to outsource and have a high risk of failure.
Secondly, they enable Elected Members to transfer services to an arms-length organisation with austerity driven budgets allowing them to distance themselves from responsibility for job losses, pay cuts and the rationalisation of services.
Thirdly, they allow directors and managers to adopt commercial practices in terms of their own pay and conditions and to adopt commercial corporate practices such as the Group model with subsidiary companies.
Finally, local authorities have a very chequered track record in monitoring outsourced contracts, which is also reflected in the governance and control of arms-length companies.
Barnet UNISON Press Release and continued information about the campaign