IMPACT ON THE DLO

At present the DLO that would be most directly affected by the transfer of housing stock is the Building Services Department of Glasgow City Council, which employs around 3500 staff. These include those employed on direct operational work and others in support functions (Glasgow City Council). Many commentators have commented on the benefits of direct labour organisations to the local community. For example the Association of Direct Labour Organisations notes (response to Green Paper) that DLOs provide the following:

Local employment
Apprenticeships
Excellent employment conditions
Training opportunities
Local accountability
Social responsibility
Equality of opportunity
Return of surpluses for reinvestment
Price regulator within the market
Local HQ and offices
Contribution to the local economy
Flexibility
Guaranteed provision of quality services
A standard setter

Obvious cases of where Glasgow City is exemplary in these regard are; in the number of people employed; the Building Services training school that employs around a 100 apprentices; and Blindcraft that employs approximately 170 people with a range of disabilities. Because of explicit Council policy decisions, many of the workforce and apprentices are residents of peripheral and other SIP areas, with a nationally important commitment to recruiting women into traditional male construction jobs.

Building Services also provides direct financial benefits to the Council with a surplus of £5.7 million per annum, (KPMG) which then goes to supplement other loss making departments, (Robertson, 1999). This is profit generated and retained within the City with associated multiplier and investment effects on the regional economy.

It is estimated that 80% of Building Services' work is connected with housing, with the remaining 20% non-housing activities. It is obvious that the proposed transfer of the housing stock therefore will have a significant effect on the Building Services Department of the Council.

From the discussion on the proposed stock transfer in the feasibility study, it is unclear that the DLO would transfer automatically to the trust on sell-off. However, that study does identify advantages to the trust and CBOs of such a move. Following this, the KPMG study on 'Options for the Building Services Department' starts from the position that all housing stock will be transferred to a Community Housing Trust with the Trust breaking into smaller community based organisations after the refurbishment work is over.

Having made this assumption the KPMG study then recommends the transfer of all resources comprising Building Services into an entity within the Community Housing Trust with a contract in place with the City Council for certain non-housing related work currently carried out by Building Services. The advantages of this option are claimed to be:
- economies of scale retained,

- the planned refurbishment programme means that the Community Housing Trust will need the services of Building Services which has expertise in this area,

- the location of service delivery in the local communities around Glasgow provided by Building Services exactly matches the profile of Housing Department stock,
- existing management structures and management information systems could be retained at no extra costs,

- the amount of purchasing power Building Services has because of its size would be retained and would be of use to the Housing Trust,


- the ability of Building Services to charge VAT on services to outside organisations will result in better recovery of VAT on the Housing Trust's and Building Service's overheads,

- profit from other work could be fed back into the housing stock,

- training and employment for the young, unemployed and disabled through Building Services and Blindcraft could be retained under Housing Trust ownership.

It can be argued that many of the effects of the option recommended by KPMG would allow the benefits of a DLO to the local community, as argued by the ADLO, to continue. This is due to the assumption that, with transfer to a single organisation, Building Services would continue to function much as it does at the present. Indeed, it should be stressed that these benefits would continue without transfer of the housing stock. These benefits would be affected by two factors, firstly if the housing stock was transferred to a number of different organisations rather than one community trust and secondly if Building Services was broken into a number of constituent parts.

If either of these events occurred then Building Services would lose its biggest asset, the fact that due to its size and variety of activities it has many economies of scale. Any restructuring would affect this. Having lost economies of scale and purchasing power associated with its size, the subsequent organisation(s) would find its costs rising. At the same time, if terms and conditions of employment were protected under TUPE regulations the organisation(s) then created would also have higher employment costs than many other private sector employers. Having cost rises in these areas would increase the charges asked of customers. In this case the Trust or the Council may well be required to tender the work to acquire a more competitive price. Obviously, this would undoubtedly lead to a loss of contracts, jobs and incomes for the residents of the City of Glasgow. Losing contracts to enterprises located outwith the city, with their itinerant workforces, would be in conflict with the best practices in recruitment, retention and training. Further, the social exclusion would not be enhanced by such leakages of economic activity from Glasgow.

It should be noted that such a scenario is based on the market and institutions adopting a simplistic and short term cost benefit appraisal and analysis and does not take into account the long term and less tangible benefits of well-paid local employees with good conditions of employment to the community. It is these factors that lead to many of the advantages quoted by ADLO. Their loss runs counter to the Government's objectives of social inclusion, and a competitive and learning community.

The scenario that Building Services might be broken into a number of smaller organisations then raises a number of issues.

Increased Costs
Increased operating costs for the new building services organisations

Increased Competition
There will be exposure to greater competition for these new organisations. If, as suggested by their continued adherence to good employment practices, they have higher costs than competitors, they would find it difficult to compete and hence they will lose contracts.

Job security for employees.
If contracts are lost and work dries up, then redundancies are possible. Cutler and Waine (1994) point out that part of the efficiency gain from greater competition in the public sector is the employment of fewer staff. This, in turn, leads to higher levels of unemployment. Hence, part of the saving to the CBOs is offset by an extra burden on the national social security budget and by lower disposable income locally, with consequential negative multiplier effects through the local community.

Health and Safety
The 1990 Workplace Industrial Relations Survey showed that non-unionised workplaces have higher accident rates than unionised workplaces. It would obviously be a concern to unions that, if their members were moved to private sector employers, monitoring of health and safety and active union involvement would be required whilst there will be costs to the Glasgow community of increased accidents.

Training
Greater commercialisation tends to enforce a more short-term perspective. Provision of training and apprenticeships may be affected and lead to an overall deterioration of skill levels within the local environment. This can be seen by looking at the drop in the number of apprentices during the last two decades. Training is often the first area of investment to suffer when companies face financial difficulties. The question then is how to ensure that training is guaranteed. The housing refurbishment programme, which is envisaged in the feasibility study, would be put in jeopardy in such circumstances. The evidence and experiences from the tenement rehabilitation boom of the 1970s is clear: the promised significant development programme can only be achieved at projected costs if the labour market is not disrupted by precipitate action. Undermining the foundations of the successful training and apprenticeship schemes, effectively encouraging the use of workers from outwith the city by the export of contracts through the marketisation of building services, will have both short and long term consequences. It is much easier to cause the destruction of training facilities and processes, and the degradation of human capital resources than to re-establish them. The lessons of the period from the 1960s to date are clear; demolition of communities before the establishment of comprehensive redevelopment programmes and the enforced redundancy of traditional skills and jobs before mechanisms for their direct or implicit replacement were in place led to the creation of the problems of many traditional industrial areas. The costs of the GEAR project and all the subsequent initiatives, partnerships and interventions across the region are testimony to the dangers of short-termism and the failure to appreciate the consequences of dislocating labour, property and capital markets.

Quality
It has been argued that private sector provision of housing refurbishment and maintenance would lead to a deterioration of quality due to the pressure of costs and the lack of independent evaluation as would have been previously carried out by the Clerk of Works. The SCORE initiative is one that may ensure adequate levels of quality and training. Ways of extending and enforcing the use of SCORE by private contractors should be considered. The issue of monitoring quality standards with regard to social housing is one that needs to be carefully examined.

Two further issues need to be noted with regard to the impact on Building Services:

1. The recommendations of KPMG are based firmly on the premise that housing stock is transferred to one organisation and the preference is that all of Building Services is transferred.

2. The feasibility report carried out for the Council does not support KPMG's recommendations: on grounds of cost, efficiency and the effect on funders. In addition, the report notes that, after transfer, staff would be employees of the housing trust but would be accountable to the community based organisations. This suggests small decentralised groups of staff. This may lead to further fragmentation of the workforce, pressure on costs, increased training costs, low flexibility and mobility. It may also complicate the management of such staff and generate the loss of other economies of scale.

SUMMARY
1. The DLO is already recognised as an exemplary employer, complementing social inclusion, training and quality delivery agendas.

2. The DLO must be retained within the same overall organisation if these advantages are to be maintained, and higher costs and VAT losses to the city and Scotland avoided.

3. A failure to protect the legal cohesion between the housing and DLO functions of the Council will increase operating costs for the new organisations, adversely effect job security, endanger health and safety, undermine training regimes, and lead to a deterioration in the quality of services.

4. Despite these points, the feasibility study proposes splitting the DLO from the housing trust/CBOs to benefit funders.
5. There have be no attempts in the feasibility study to capture the full costs and benefits of the proposed transfer.

6. Any other study, with less favourable and more realistic assumptions, would demonstrate higher costs and lower benefits of stock transfer.

Staff in Glasgow City Council Departments other than Housing and Building Services
The transfer of housing stock would affect a large number of departments and hence employees within Glasgow City Council. It is notable that the feasibility study carried out for Aberdeen Council by Deloitte and Touche looked at the effects of transfer on eight different council departments. Within Glasgow, as well as the Housing Department and Building Services, it is likely that there would some impact on the departments of Development and Regeneration, Land Services, Financial Services, Personnel and Administration and on any department providing centralised support functions to Housing and Building Services such as IT and legal services, (Robertson, 1999). However, it is unclear that any such evaluation has taken place or been commissioned.

The effects of transfer are twofold. First, with the removal of one and possibly two large departments from Council control, the activities of the other departments who provide services to them will be diminished. It could be argued that this would lead to a lower staffing requirement. This would be further exacerbated by the second issue which would be the removal of income from the other departments with the shift of Housing and Building Services. A decrease in work and income would seem to put a question mark over job security in other departments. This would be particularly true where a large part of a department's activities is involved with housing and the corresponding loss of economies of scale, as argued in the previous section. Aberdeen Council's Contracting Services Department warned of the potential of 500+ redundancies if transfer with the housing activities was not possible, or if they were not able to tender for work to make up the shortfall, of such activities (Deloitte and Touche).


JOB SECURITY FOR STAFF
Housing Department Staff
It has already been noted that, as the amount of housing stock in the public sector has decreased through transfer or demolition, the number of staff employed has also decreased (UNISON). With the transfer of stock to a housing trust, it is envisaged that staff from the housing department would be transferred primarily to the community-based organisations. It is likely that these would comprise of existing housing associations. The feasibility report commissioned by Glasgow City Council expresses concern regarding the stock transfer on a number of issues. One of their concerns was that "staffing levels to match those of existing Community Based Housing Associations working in the City could not be afforded in each Neighbourhood." It would appear that the consultants are suggesting that, after transfer, funding would not be sufficient to support the existing levels of staff required in each area. This has implications for the level of service afforded to tenants but also clearly implies that the number of staff employed will be directly related to funding within a particular area. It then poses the question of what happens after staff have been transferred? Loss of jobs and redundancies are obviously issues.

In addition, housing department staff are concerned about a narrowing of their functions after transfer. Their inability to deal with such issues as homelessness and housing benefit, which it is thought will remain within council control, is seen as a form of deskilling leading to reduced job satisfaction (UNISON).

Housing Association Staff
Staff working in housing associations may also become more vulnerable as a result of housing stock transfer. It has already been established that levels of funding will affect employment practices after transfer. It would then appear that a desire to minimise costs may lead to a deterioration of terms and conditions of employment as has already been noted elsewhere (ADLO, 1999). Temporary contracts are already a feature within housing associations and it may be that this practice becomes more common.

Overall it could be suggested that by moving out of the direct control of and employment by Glasgow City Council, groups of employees who transfer no longer strictly work for the public sector and therefore no longer have the advantages of being in the workforce of the 'model employer'. Research has shown that public sector, or model employers involve staff more in training and development, have more involvement in Investors in People, and are more likely to support equal opportunities. They are also more likely to support the concept of lifetime job security, to support permanence within the workforce and to determine pay and conditions of employment collectively to ensure uniformity (Boyne, Jenkins and Poole, 1999). One of the major conclusions of this study was that employees within the public sector had greater job security and that the management of such organisations were more committed to the idea of providing such security.

This is not to say, however, that local authorities guarantee total job security, as the recent dispute at Tower Hamlets shows.

As argued in the sections above on social inclusion and the structures of any housing trust and/or CBHAs, there are dangers to the government's wider strategies in a move away from the present arrangements for delivering social housing services in Glasgow. Many of the apprentices and other employees of the DLO and Building Services are residents of SIP (social inclusion partnership) areas in the city. Disrupting their training schedules, if not destroying the locus of their employment entirely, cannot be to the benefit of the programmes to create new skills and opportunities for disadvantaged communities.

The importance of role models and positive signals in the youth labour market cannot be denied. Any changes which led to a break up of the DLO and so to the established and inclusive apprenticeship system would undermine the significant benefits these departments bring to the behaviour and attitudes of school-leavers in disadvantaged areas. Replacing an established and known network with a set of local labour market and training initiatives is neither an efficient use of resources nor does it send the right signals to these young people.

At the very least, if there is a break up of the DLO some form of linked apprenticeship scheme must be put in its place, not only for incumbent trainees but also to ensure continuity and to continue to break down barriers between areas within the city. Left to the market such a system will not be established; it will require further intervention in the market at not insignificant cost compared with today's well tried and tested apprenticeship programme.

For the workforce of the DLO, housing trusts and associations, the potential for a CBO to go bankrupt will have additional implications. Apprenticeships will be disrupted, adversely affecting their mobility still further. The need to guard against unfulfilled ambitions again will be important for trainees. For the established staff, the loss of jobs, incomes and security will exacerbate the changes already ushered in by the stock transfer. Redundancy of skills, networks and local knowledge have been a major reason for the deterioration of the workforce of many communities in the last 30 years, and this has led subsequently to the decline of their neighbourhoods into poverty and deprivation. Actively promoting a new social housing system which does not guarantee success and so builds into the business environment the possibility of failure of the CBO can only be a negative development. Security and stability are essential to the effective and efficient operation of labour markets, especially where disadvantaged are competing in an unstructured and uncertain industry.

Overall, the proposals threaten to establish a fragmented training, employment and skills development housing labour market in Glasgow. Compared with the present system which works in unison with the social inclusion, positive discrimination and area regeneration agendas in the city, the moves to anything but an integrated and comprehensive organisational structure will be deleterious to the labour force. The leakage of jobs, incomes and skills out of the city will exaggerate these effects. There will be fewer apprenticeships being available and won by young people from SIP areas, women and ethnic minorities, while the workers from these areas will suffer a decline in their shares of the total employment. These are not developments which will be easy to reverse, because of hysteresis and other negative messages the costs to overcome them will be greater than leaving a city-wide workforce intact.

SUMMARY
1. Unit costs for remaining departments in the council would increase, with associated redundancies.

2. There would be poorer quality of housing services with a loss of economies of scale.

3. Staff satisfaction would be poorer with the separation of administrative responsibilities for the homeless and housing benefit from implementation.

4. There would be a deterioration in the terms and conditions of staff in the DLO, building services and other departments, with redundancies and loss of training opportunities. These would have wider and unfavourable impacts.


TUPE AND PENSIONS
The Transfer of Undertaking (Protection of Employment) Regulations are designed to protect terms and conditions of employment when employees are transferred from one undertaking to another. There are a number of issues that need to be considered with regard to stock transfer and the impact on employees.

First, TUPE is designed to protect staff who spend at least 50% of their time on the activity being transferred. While many in the Building Services Department will be transferred automatically, the question remains of how this then will affect staff from other departments who do not work exclusively with housing issues. Second, it must be noted that TUPE only applies at the point of transfer, there are many instances of employers subsequently changing conditions of employment after transfer has taken place (Adnett and Hardy, 1998 and UCATT). The transfer of staff within Building Services may be particularly vulnerable here given past experience within the construction industry.

Another issue is that new employees may be given different terms and conditions of employment from those staff who have transferred. This principle has already been established within many parts of the public sector. This raises problems of trying to instil a sense of solidarity within the workforce with regard to employment issues. Additionally staff who then change jobs, either due to promotion or relocation, may also be subject to different terms and conditions from those they originally had after transfer. Experience has shown that this tends to promote a lack of labour mobility, as staff are reluctant to move and face changes in their employment conditions.

TUPE in theory stops terms and conditions being worsened. At the point of transfer, "at least equal" parity must exist. Clearly, it may be that conditions can actually be improved. It would be possible that staff who are transferred to housing associations could have their conditions altered to reflect the agreement between the Employers in Voluntary Housing (EVH) and the Transport and General Workers' Union. However, it then follows that agreeing to alter terms and conditions subsequently creates a precedent for further change.

Trade unions have used the legislation very effectively to defend their members where TUPE has been violated. However, this is essentially a reactive approach and, although substantial costs have been awarded, people are often still left without jobs and others experience poorer terms and conditions. The key to stopping such abuses would be to attempt to take a more proactive approach and stop detrimental changes to contracts before they occur.

Occupational pensions are not presently covered by TUPE regulations. The Local Government Pension Scheme (Scotland) Amendment Regulations 1999 (draft) have been designed to "reassure (local authority staff) about the prospects for their pensions after transfer." Having said that, the final outcome is not yet clear, as the draft paper of the regulations states that "a review is underway to determine whether, and if so, how, to include pensions within the TUPE regulations." (emphasis added)

It would appear, therefore, that it is not yet guaranteed that pensions will be protected after transfer. Additionally, even if they are included with TUPE guidelines, how much reassurance is this, given the problems with TUPE that have already been discussed?

SUMMARY
1. It is probable that different staff would be treated differently after transfer.

2. Experience suggests that there would be further changes in the terms and conditions of staff after transfer, especially for construction trades.

3. There is some potential to improve the position for staff, but there would be no guarantees. Differentials between grades, and between staff transferring and new recruits to the CBOs would likely be introduced.

4. Despite the legislation, there are clear problems with TUPE in practice.