Richard Leonard: How public money is used to exploit Scottish workers

SNP must do something about low pay and poor conditions, writes Scottish Labour party leader Richard Leonard.

By The Newsroom Saturday, 17th March 2018, 7:00 am

People working for contractors employed on Scottish Government projects should not have to pay to receive their wages (Picture: PA)

THE idea that a worker should be asked to pay a fee if they want to get their wages should shock all of us. No-one should have to pay for the privilege of receiving their money after a hard week’s work.

Yet that has been, and still is, the reality for many in the construction industry, who find themselves working on multi-million-pound government contracts, but employed through agencies or umbrella companies, allowing the main contractor to shirk its responsibility around workers’ rights, dodge tax, and still reap the reward of big profits from public money.

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It is surely time to call a halt to this exploitation.

The Scottish Government could do this. For too long we have heard that the Holyrood Parliament doesn’t have the powers to intervene and drive up working standards for the people of Scotland.

I say that is wrong. The £11 billion of purchasing power the Scottish Government has through procurement should be managed in the best interests of workers as well as value for money. Public procurement is in the gift of the government and therefore so is the ability to affect how the workers employed through these contracts are treated. This is about political will, not political hand-washing.

Public sector contractors’ corporate responsibility statements need to be more than a box-ticking exercise. It is taxpayers’ money which is spent on the nation’s major infrastructure works, like the Queensferry Crossing and the Aberdeen Western Peripheral Route. The government should be ensuring that when these contracts are awarded to the likes of Carillion or Balfour Beatty, the contractors sign up to its business pledge which is supposed to guarantee workers are paid the living wage, that there is no use of zero-hour contracts, and commit to supporting young people towards and into employment.

But it doesn’t. Not one major company which received public money has signed the pledge. And, as a result, workers’ rights are diminished and undermined.

The collapse of firms like Carillion should act as a wake-up call. It was a construction firm which won £630 million worth of public contracts, yet employed staff on zero-hour contracts then made them pay up to £100 to an umbrella company to get their wages.

It is not good enough for the SNP to wring its hands and say nothing can be done. There needs to be a wholesale review of how public procurement is used in Scotland; of how the public sector purchases goods and services, and it funds infrastructure projects; of how public money should be being used to provide decent jobs and drive up standards.

Sadly, the SNP chose to vote with the Conservatives last week on this very issue – voting down Scottish Labour’s proposed review.

Last year Scottish Labour published a report by economists Jim and Margaret Cuthbert, which looked at the Scottish Futures Trust – the SNP equivalent of the private finance intitiative. It found that the SFT was not transparent, that its projects gave too much power to companies outwith Scotland and was not delivering value for money. There were, they said, “serious concerns”.

So the government also needs to get its own house in order. Its Hubco schemes – set up through the SFT to develop and deliver community facilities – need to adhere to government procurement guidance. The value of the Hubco programme is £2.7bn, yet there is no oversight or monitoring at all on the pay and conditions of workers employed through the schemes.

So again people could well be being exploited without the knowledge of the government – even though it holds the purse strings. In total 78 per cent of the value of those schemes is delivered by small to medium-sized enterprises, and these should be being supported by government to make the right choices when it comes to employment practices.

Scottish Labour has an industrial strategy which recommends we stop awarding billions of pounds of public procurement contracts to companies that don’t pay the living wage, that use zero-hour contracts or blacklist workers. You could call it “progressive procurement”.

I have already pledged that there will be no more private finance deals under a future Scottish Labour government. Instead we will deliver decent and well-paid jobs by making sure the companies which benefit from public money believe that workers deserve to be treated properly. We simply cannot go on using taxpayers’ money to line the pockets of shareholders while workers are being exploited.

A social conscience is needed at the heart of procurement; and I will challenge the SNP on this and expose their empty excuses when they say they cannot use procurement to drive up standards because of EU rules. Using procurement, the Scottish Government must seek to make work more secure, pay the living wage and address occupational segregation.

Leading by example is what the Scottish Government needs to do – other public sector bodies will then fall in behind. The private sector too will be shamed into cleaning up its act and giving workers the secure, well-paid jobs they desire and deserve.

Campaigning for better workers’ rights is something the Labour Party has always done – it’s what we were founded to do. But 11 years of Tory austerity have introduced a low-paid, highly insecure workforce. And SNP complacency has meant the Scottish economy is stagnating, as are people’s wages.