Introduction
The economic crisis has been identified as a turning point for public sector employment relations, and in Europe this is part and parcel of a larger onslaught on the European social model (European Commission, 2013; Reference Vaughan-Whitehead and Vaughan-WhiteheadVaughan-Whitehead, 2013). It is not, however, the first time that analysis of the public sector has focused on radical change, associated with policies of privatisation and the implementation of new public management from the 1980s as part of a shift from hierarchies to markets (Reference Ferlie, Ashburner and FitzgeraldFerlie et al., 1996; Organisation for Economic Cooperation and Development (OECD), 2008). Considerable doubts remain about the claims made for these reforms in terms of improvements in service quality and reductions in running costs of government (Reference Hood and DixonHood and Dixon, 2013; Reference SeddonSeddon, 2014). Misgivings have also been expressed by politicians, frustrated at their inability to ‘modernise’ public services. Former Prime Minister Tony Blair referred in 1999 to the ‘scars on his back’ from confronting ‘vested interests’ and argued that ‘we had inherited a public sector largely unreformed’ (Reference BlairBlair, 2010: 214). This reflected his belief that Conservative governments had made limited inroads into altering monopolistic public services and that choice and competition had to be extended under the rubric of modernisation (Reference BlairBlair, 2010). Similar sentiments were expressed by Prime Minister David Cameron when he stated that ‘I want one of the great achievements of this government to be the complete modernisation of our public services’ and argued that centrally directed target-based reform had to be replaced with more choice, localism and professional staff empowerment (Reference CameronCameron, 2011).
The impact of the financial crisis has reignited debate about the scope and scale of public sector restructuring and its consequences for the workforce. The economic crisis precipitated austerity measures concentrated on expenditure reductions with the intention of reducing the public deficit. Because the public sector pay bill comprises over half of current public spending, achieving deficit reduction has major consequences for the total pay bill and the workforce (Institute for Fiscal Studies (IFS), 2014). Reference BlythBlyth (2013) suggests that an ideological sleight of hand occurred in which policy makers converted an economic crisis into a sovereign debt crisis with accompanying austerity measures that transferred the burden of adjustment to the public sector and its workforce. In the immediate aftermath of the economic crisis, policy makers across Europe favoured economic stimulus, but this rapidly gave way to an analysis that laid the blame for public deficits at the feet of a bloated public sector. The Conservative-led Coalition government stated that ‘deficit reduction and continuing to ensure economic recovery, is the most urgent issue facing Britain’ (Cabinet Office, 2010: 15). This statement resonates strongly with the statement by the Thatcher Conservative government that ‘Public expenditure is at the heart of Britain’s present economic difficulties’ (HM Treasury, 1979: 1). This narrative of crisis has been deployed in previous circumstances notably during the public sector strikes of 1978–1979, labelled the ‘Winter of Discontent’, creating political opportunities for a radical break with past practice (Reference HayHay, 1996).
Reference McCannMcCann (2013) also recognises political opportunities that stem from moments of crisis and focuses on the importance of ideology in shaping ideas about limited government in the aftermath of the economic crisis. Political actors frame debate to narrate a particular version of the crisis, apportion blame and propose specific solutions. Policy makers use ‘mechanisms of hope’ to signal that a better future will follow and rhetoric is deployed to help frame and gain acceptance for specific austerity policies. Reference McCannMcCann (2013) distinguishes between pro-austerity and anti-austerity framing devices that stripped down signal different assumptions about the efficacy of market mechanisms versus state provision. The pro-austerity frame which has been dominant portrays cuts as rational in restoring economic growth and also sensible to reduce terms and conditions of public sector workers to limit cuts in employment. The anti-austerity frame portrays austerity as ideologically driven and designed to enhance privatisation, punish public sector workers and limit the role of government. Reference SkidelskySkidelsky (2015) similarly identifies pro-austerity frames in Britain and accuses the Chancellor of the Exchequer of constructing a misleading political narrative that invoked the Greek economic crisis and the role of the public sector within it as a salutary warning to be avoided.
This article assesses the restructuring of the public sector and public sector employment relations in Britain and identifies underlying continuities in public sector restructuring over recent decades. Drawing on and repositioning New Labour’s legacy, the 2010–2015 Coalition government used the economic crisis to establish a pro-austerity frame that has legitimated deep cuts in public sector employment and involved measures to refashion public sector employment relations. It considers the consequences of this agenda and responses by trade unions and indicates some of the limits and uncertain prospects for public sector restructuring under conditions of austerity.
Austerity in the context of public management reform
Austerity measures built on and intensified decades of public sector reform, centred on a sustained attempt to alter the basic organisational principles of the public sector in a shift towards the contract state (Reference Kirkpatrick and Martinez LucioKirkpatrick and Martinez Lucio, 1996). From the 1980s, priority was placed on private sector wealth creation, and the public sector was required to implement commercial principles and assist in enhancing competitiveness in a more global economy. Fragmentation and devolution of responsibility occurred by breaking up unified public services into constituent business units. This process started with the establishment of civil service agencies, and similar principles were applied to hospitals and schools that over time became individual employers. These changes provided local managers with enhanced operational discretion, including on rewards and working practices, but also increased central government scrutiny of performance. Performance management has been the dominant feature of centralised control. Targets elaborated at organisational, divisional and individual levels have proliferated and become the dominant component of staff management. Performance measures are overseen by powerful specialist central government agencies and legitimated by an emphasis on providing the public with league table information to inform choice (Reference Bach and KesslerBach and Kessler, 2012; Reference JordanJordan, 2010).
Forms of marketisation have delegated service provision from the state to private providers and aimed to increase competition by encouraging more diverse service providers. From the 1980s, outsourcing of services spread from ancillary services such as hospital cleaning to include administrative and technical functions, and have subsequently extended into core areas of public service such as social care (Reference Cunningham and JamesCunningham and James, 2009). These developments were accompanied by downward pressure on labour standards and an erosion of the public sector ethos (Reference Hebson and GrimshawHebson and Grimshaw, 2003). New providers were encouraged to enter public service markets and followed a similar pattern with initially private sector provision supplementing existing services – for example, to reduce waiting lists – but increasingly becoming more central to the provision of back-office and frontline services. The expansion has been underpinned by shifts in financial regimes with payment by results and the growth of personal budgets facilitating the growth of outside providers (Reference Leys and PlayerLeys and Player, 2011; Reference WhitfieldWhitfield, 2012).
These overall contours of state restructuring were refined by the specific policies and priorities of successive governments. New Labour developed a hybrid approach that embraced core components and assumptions of market governance while also developing a distinctive agenda of public sector modernisation associated with network governance (Reference BevirBevir, 2005). Marketisation remained prominent, but outsourcing was no longer the default position expected by government. In the National Health Service (NHS), hospitals were provided with opportunities to gain foundation status, while under-performing schools were encouraged to opt out of local government control to become academies. Despite the policy emphasis on managerial autonomy, a more direct line of accountability was established between central government and foundation hospitals and academies, reinforcing the emphasis on achieving central government targets.
Endorsement of marketisation and increased managerial autonomy did not preclude the adoption of policies associated with network governance that comprised an important element of New Labour’s approach. Network governance signalled an emphasis on collaboration between a wider range of actors within networks to produce more coherent ‘joined-up’ solutions (Reference BevirBevir, 2005). In shifting away from an over-reliance on market mechanisms and contractual incentives, Reference Osborne and OsborneOsborne (2010) contends that network governance responded to and overcame many of the limitations of managerialism and marketisation that fragmented public services, eroded co-ordination and portrayed users as passive consumers. This agenda included forms of co-production and institution building, especially in relation to workforce development and regulation, and fostered partnerships between organisations and with the workforce. Tensions between continuing managerialism and marketisation and forms of network governance were exemplified by the difficulties of reconciling hands-off steering with the political saliency of public services that fostered continual direct forms of political intervention (Reference Bach and KesslerBach and Kessler, 2012; Reference JordanJordan, 2010). The tensions demonstrated the shortcomings in practice of separating what Reference Osborne and GaeblerOsborne and Gaebler (1992) termed ‘steering’ from ‘rowing’, making it difficult to implement policy. This criticism has been forcibly expressed by the OECD (2015) that has recently distanced itself from its former enthusiasm for New Public Management reforms.
Coalition government: Public expenditure reductions
New Labour’s legacy was drawn on selectively by the incoming 2010 Conservative-led coalition government, with the Liberal Democrats constituting the junior partner in government. Coalition government was a major departure for the British parliamentary system, but the Liberal Democrats were committed to deficit reduction. Nonetheless, they tempered some aspects of the Conservative’s pro-austerity orientation and assault on collectivism as well as promoting forms of localism (Reference Scott and WilliamsScott and Williams, 2014). The government’s agenda extended beyond deficit reduction, and its ambition was to use the economic crisis as an opportunity to bring about a fundamental shift in the size and scope of the state (Reference Grimshaw and Vaughan-WhiteheadGrimshaw, 2013; Reference Taylor-GoobyTaylor-Gooby, 2012). Restructuring and shrinking of the public domain have occurred under the rubric of promoting civil society and localism, reinforcing the decentring of the state. The most visible development, however, has been an extension of contracting out into areas such as job placement, probation services, primary healthcare and back office services (human resources (HR), information technology (IT)). Government outsourcing contracts amount to approximately £90 billion per annum – a substantial increase since 2010 – but it has been accompanied by major service failure and parliamentary criticism of the lack of transparency and accountability of outsourced providers (Public Accounts Committee, 2014).
Outsourcing has formed part of an agenda to extend markets and diverse service provision. In health services, the 2012 Health and Social Care Act increased contestability for primary and hospital services by encouraging service provision by ‘any qualified provider’ (Reference Krachler and GreerKrachler and Greer, 2015). The schools landscape has been transformed by the expansion of academy schools from 203 in 2010 to 4344 by December 2014 (Education Committee, 2015: 5). Academies are funded and answerable directly to central government, distancing them from local authority control. In addition, a smaller number of free schools have been established by parents, teachers and academy chains and are intended to increase local choice and stimulate innovation. Academies and free schools are not bound by national terms and conditions of employment, can employ unqualified teachers and can set their own school hours, but few have used these freedoms. Of more concern is the lack of transparency and accountability of academies and the scope for misuse of public funds in an overly centralised and remote system of central government scrutiny (Education Committee, 2015).
In promoting more diversity of supply, the Coalition government was circumspect in championing the benefits of private sector provision, with more public emphasis placed on voluntary sector involvement and creating more scope for small and medium-sized enterprises (SMEs) to gain government contracts (Reference BachBach, 2012). The latter goal has proved elusive because the large private sector service firms have the capacity, networks and experience to win large government contracts. Public sector staff have also been encouraged to set up public service mutuals that may be structured as employee-owned enterprises, social enterprises or co-operatives (Cabinet Office, 2014). Mutuals remain small scale with 100 public service mutuals employing around 35,000 employees often spun off from local authorities in areas of social care, but there are widespread trade union concerns that mutuals represent a first stage towards privatisation (Reference MichieMichie, 2012).
A related component of the coalition’s agenda was to bolster service user voice and choice to strengthen the power of service users as a counterweight to professional influence, part of an international trend towards enhanced user involvement (OECD, 2014). From 2014, the revised OFSTED (school inspection) framework draws more systematically on parental and pupil views, and parents can trigger an OFSTED inspection, raising concerns among head teachers about vexatious complaints. In hospitals, an emphasis on ‘the patient experience’ is more prominent partly because of recent hospital scandals, allowing trusts to use patient feedback not only to improve services but also to identify staff who do not adhere to trust values centred on dignity and compassion.
The integrating element of this policy agenda is a reframing of the public domain that severely curtails state intervention in providing public services and reduces the size of the public sector as an employer, downgrading further its ambition to set an example in key policy domains such as gender equality and disability rights (Reference RuberyRubery, 2015). Scaling back state provision involves more rationing and conditionality of provision as well as service withdrawal, curtailing the ambition of the state as a safety net. In high-profile public services that are integral to national competitiveness – education and health – the public domain is increasingly defined in terms of public financing and regulation, rather than being equated with public sector provision. In other areas of formerly public provision, the Coalition government used pro-austerity frames to develop a narrative of personal responsibility and an emphasis on voluntary action (termed the Big Society) to replace and reconfigure services with more reliance on voluntary labour, often backed up by compulsion, because of benefit sanctions if work was declined (Reference BachBach, 2012). The Coalition government was ridiculed for its emphasis on the ‘Big Society’, but substituting voluntary for paid employment remained an integral theme in the Conservative Party (2015) manifesto and was part of a broader attempt to blur the boundaries between paid and unpaid work, exemplified by the growth of unpaid internships.
Deficit reduction and austerity measures
The Coalition government had an implicit model of public sector reform in which quantitative reductions in public expenditure were viewed as stimulating qualitative shifts in practice and fostering innovation. This approach was made more explicit after the Conservative party achieved a parliamentary majority in the 2015 general election with emphasis placed on developing a smarter state (Reference CameronCameron, 2015).
As Reference Streeck, Mertens, Schafer and StreeckStreeck and Mertens (2013) point out, Britain was one of very few major industrialised countries that witnessed significant growth in public expenditure in the decade prior to the crisis. Public expenditure increased from £333 billion in 1998–1999 to £582 billion in 2007–2008: an increase of 75%, especially in high-profile services such as health and education. Total public expenditure increased from 38% of gross domestic product (GDP) in 1997–1998 to 40% in 2008–2009 and then rose after the crisis to 45% by 2010–2011, with plans to reduce it to 36% by 2019–2020 (Office of Budget Responsibility (OBR), 2015; Reference Shaoul, Corby and SymonShaoul, 2011).
This investment made a substantial difference in remedying decades of under-investment and helped to curtail staff shortages but also gave rise to what Reference Dolton, Makepeace, Gregg and WadsworthDolton and Makepeace (2011) term ‘sector envy’, in which private sector employees believed that the grass was greener in terms of wages and conditions in the public sector. Pay comparisons are sensitive to the time period, gender and qualifications of the workforce, and in the UK the existence of a public sector wage premium mainly benefits women and reflects lower levels of discrimination against women in the public sector in comparison to the private sector (Reference RuberyRubery, 2015). Other studies point to variations in terms of a pay premium or pay penalty across the European Union (EU), with the UK neither exhibiting a significant pay penalty or pay premium (see Reference Muller and SchultenMuller and Schulten, 2015). Nonetheless, the supposed higher pay, better conditions and excessive top management pay have been used by the Coalition and subsequent Conservative government to advance the message of public sector excess and to cap public sector exit payments at £95,000 (Treasury, 2015).
Deficit reduction was therefore framed as essential to enhance competitiveness and economic growth. In the 2010 spending review, £81 billion of spending cuts were identified (total government expenditure in 2010–11 was £697 billion) with deficit reduction skewed towards expenditure reductions – around 80% – rather than tax increases. Public expenditure cuts have been distributed very unevenly between departments with pledges to increase real spending on the NHS, schools, international development and latterly defence accompanied by larger cuts for unprotected departments. An overall 9.5% real cut in departmental spending (2010–2015) was translated into in excess of a 20% cut for unprotected departments (IFS, 2015: 158).
Implications for employment relations
This agenda has occurred in a wider context of the economic crisis and low growth in the EU. Britain’s finance-led growth model with a disproportionately sized finance and banking sector led to a very sharp deterioration in Britain’s debt and deficit position after 2008 (IFS, 2015). Britain, however, is not a member of the Euro zone and therefore sheltered from the need to undertake internal devaluation while also benefitting from very low interest rates and long-dated debts, resulting in less frequent debt rescheduling. Britain’s austerity programme can therefore be characterised as being dominated by internal pressures for fiscal consolidation. This can be contrasted with external market pressure, especially among the most financially vulnerable EU countries (most obviously Greece), where the severity of the crisis has led to sustained pressure from the Troika to reduce public sector wages and employment (Reference Bach and BordognaBach and Bordogna, 2013).
Pay determination under the Coalition government
The traditional model of public sector employment relations has comprised industry-specific national negotiating machinery accompanied by local consultative arrangements. This model has been modified by the expansion of the system of independent pay review from the 1980s (Reference White and HatchettWhite and Hatchett, 2003). The pay review bodies make recommendations to government and cover all NHS staff, schoolteachers, the armed services, senior civil servants and the police. The Coalition government had no shortage of advice that public sector national pay bargaining should be abolished and pay should become more reflective of local labour market conditions and individual performance (Reference WolfWolf, 2010). Moreover, wage restraint has contributed to generating spending reductions and formed part of an agenda to downgrade pay and condition in the public sector that are considered by government overly generous. Changes in public sector pension provision have occurred that increased contributions and raised the pension age in a phased approach, further depleting the model employer tradition (see IFS, 2014).
There was no consultation with employers or trade unions prior to the 2010 announcement of a wage freeze, and there has been an increased trend towards unilateralism in pay determination with Coalition government pay policy announced in budget statements and not subject to meaningful dialogue. Public sector pay policy comprised 2 years of a pay freeze, followed by a 1% limit on public sector pay awards that will continue until 2019–2020. This policy is leading to real wages in the public sector being at their lowest level in comparison to the private sector since the late 1990s, a period of public sector recruitment and retention difficulties (IFS, 2014). Government pay policy has had major consequences for the system of independent pay review, always regarded with suspicion by many trade unions committed to ‘free’ collective bargaining. The government has limited the scope for manoeuvre of the pay review bodies through increasingly prescriptive remits on matters such as progression pay. This led the review bodies to raise concerns that their independence was being questioned and this unease was reinforced by the decision of the Secretary of State for Health to reject the 2014 recommendation of the NHS pay review body for a 1% pay award (Reference SharpSharp, 2015). Instead, the government implemented a 1% pay increase only for those staff who had no scope for progression within their pay range, provoking strike action and a partial government retreat. At the same time, the government used the pay review bodies to pursue reforms of terms and conditions in the NHS (in relation to unsocial hours payments) that are regarded as matters for the NHS staff council (comprising employers and trade unions). These developments not only raise questions about the independence and effectiveness of the pay review bodies – traditionally viewed as an arms-length form of collective bargaining – but more broadly indicate that the state remains a distinctive employer in terms of its capacity to downgrade joint regulation in times of national ‘crisis’ and impose wage restraint.
Aspirations to decentralise and individualise pay determination reflected long-standing Conservative party antipathy to national pay determination. One prominent target has been a commitment to reform pay progression viewed as ‘antiquated’ and ‘deeply unfair’ as the Chancellor of the Exchequer (June 2013) outlined:
The biggest reform we make on pay is to automatic progression pay. This is the practice where many employees not only get a pay rise every year, but also automatically move up a pay grade every single year – regardless of performance.
This caricature ignores rewarding competence gained by experience and ensuring career development, especially important in what remain internal labour market career structures. In the civil service, the Treasury and the Cabinet Office are able to exert direct control over pay policy, despite the delegation of pay determination to individual departments and agencies in the early 1990s, and is overseeing the removal of pay progression. These developments are linked to encouraging performance-related pay. The NHS negotiations between employers and trade unions led to a 2013 agreement that increased the number of performance reviews in the NHS pay structure. Cautious reforms were also evident in local government, ensuring that staff meet their objectives before progression occurs rather than it being ‘automatic’ (Reference Bach and StrolenyBach and Stroleny, 2014; Local Government Association (LGA), 2013).
Potentially more far-reaching changes have occurred in teachers’ pay with the School Teachers’ Review Body recommending the introduction of a system of performance-based pay that commenced in 2013–2014. A form of performance-based pay has existed since 2000 with teachers required to demonstrate effective performance to progress to a higher pay scale. The revamped system of performance-based pay removes seniority-based progression; instead, all teaching staff are required to achieve their appraisal objectives to be eligible for a performance-based increase. These increases do not need to be linked to existing pay points, because national pay fixing has become confined to the determination of minimum and maximum salaries for each scale. Consequently, much greater autonomy has been delegated to schools, and especially the head teacher, in shaping rewards (School Teachers’ Pay Review Body (STRB), 2012).
It could be argued that the system of appraisal-based pay signals considerable continuity as teacher appraisal is not new and a performance threshold for progression is long-standing. There is no system of forced distribution (school governors sign off aggregate appraisal outcomes), and a cost of living increase is retained. Nonetheless, appraisal-based pay enables tighter control over objective setting and performance, requires more senior staff to demonstrate a school wide contribution and bolsters further the power of head teachers. The concern among teachers is that budgetary constraints, subjective appraisals and increased dependence on head teacher judgements make pay outcomes more uncertain, points noted a decade ago (Reference Marsden and FrenchMarsden and French, 1998).
Austerity: Consequences
Employment reductions
In addition to bearing down on the public sector pay bill, the other main consequence of austerity measures has been employment reductions. Table 1 is organised by the main sub-divisions of the public sector in the national accounts. Central government includes all government departments and agencies controlled and financed by central government as well as the armed forces, the NHS and academy schools. Local government covers a specific geographical location and has some tax raising powers and includes social services, police, fire and local government-controlled schools. Finally, public corporations are companies or quasi-corporations controlled by government, but with substantial freedom to conduct their activities along commercial lines, such as London Underground. Employment in this category has fluctuated considerably because many banks were (temporarily) reclassified as public corporations after government bail-outs, while the privatisation of Royal Mail in 2013 removed over 200,000 employees from this category.
Table 1. UK public sector employment 1991–2015 by sector.
a Excluding Quarter 3 and Quarter 4.
Public sector employment increased during the 2000s, especially in health and to a lesser extent education, stabilised around the period of the financial crisis before declining from 2010 to 2011. However, there are considerable variations between sectors in terms of employment reductions with local government especially hard hit. Table 1 indicates that employment reductions between 2010 and 2015 have amounted to almost 22% of the local government workforce. In local government, many authorities are combining vacancy freezes, mainly voluntary redundancies and de-layering with more concerted efforts to share services, such as HR (National Audit Office (NAO), 2014), and to collaborate more closely with other public sector and voluntary sector providers in their locality. In addition, services are being withdrawn (e.g. closing libraries), more narrowly targeted (e.g. social care), provided less frequently (e.g. waste collection), subject to more charges and being provided on an online basis only or transferred into forms of community ownership (Reference Jones, Martin and WhittingtonJones et al., 2015).
There have also been sustained workforce reductions in the civil service of around 17% (2010–2015) with larger reductions expected. In the case of the civil service, the Coalition government, without prior consultation, announced the abolition or merger of 262 government organisations in its ‘bonfire of the quangos’ and implemented a recruitment freeze on permanent civil servants, fixed-term appointments and temporary staff, alongside a moratorium on employing consultants. The Public Accounts Committee (2012) examined civil service job reductions and expressed concerns that ‘Given the scale and pace of headcount reduction and the lack of business redesign in departments, there are significant risks to service delivery’ (p. 5).
In the NHS between 2010 and 2015, there was less emphasis on headcount reduction of frontline staff than in the civil service or local government. This partly reflected government policy to ‘protect’ the NHS budget, although the NHS is not immune from acute financial and service pressures (Public Accounts Committee, 2015). NHS employers are required to achieve high-profile waiting time and service targets that are highly dependent on adequate staffing levels, and hospitals are required to publish data on staffing levels, discouraging deep workforce cuts. The sustainability of investment in the workforce is uncertain and many NHS organisations are looking to alter the mix of staff and the roles that are undertaken in conjunction with changing patterns of service delivery. These changes include the development of more integrated health services that break down the barriers between primary care and secondary care and enhanced co-operation between social care and healthcare providers.
Strike action
There has been considerable opposition to austerity measures with many national and local campaigns, but no sustained surge in strike action. The main response of trade unions has been concession bargaining at sectoral and single employer levels. The preoccupation has been with opposing immediate threats to members’ terms and conditions with some set-piece industrial action that spiked around co-ordinated national action on pensions in 2011 (Figure 1). There has been a discernible increase in striker days (working days lost) between 2012 and 2014 (Office for National Statistics (ONS), 2015), and this trend has continued in 2015. Figure 1 indicates that strike action remains dominated by public sector strikes and that the number of striker days in the public sector more than quadrupled from around 200,000 per annum in 2012 to around 850,000 in the first 9 months of 2015. Trade union members remain wary of taking industrial action in a climate of staffing reductions, and higher thresholds are being introduced for lawful strike action as part of a drive to curb collectivism that is being pursued with vigour by the Conservative government elected in 2015.
Figure 1. UK strike action 1997 to October 2015.
The previous coalition government was relatively successful in portraying austerity measures as necessary for economic recovery and in developing pro-austerity frames (Reference McCannMcCann, 2013). These narratives invariably pointed to the Labour government legacy of workforce and capital investment as excessive and leading directly to the growth in the deficit as a means to sustain an argument for a period of fiscal consolidation. Benefit cuts have been targeted at the most vulnerable, workfare schemes have proliferated in which the unemployed and people with disabilities have to work in return for benefits and there has been strong growth in zero-hours contracts (Reference Pyper and DarPyper and Dar, 2015). Overall, these labour market and welfare reforms force people into poorly paid insecure employment that discourages workforce opposition. Public opinion indicates that satisfaction with public services has been maintained or improved with certain exceptions (road maintenance and social services), but the public still strongly support universal services and are concerned about the future funding of key services, especially the NHS (Reference HallHall, 2014). Campaigns against privatisation have gained some traction, but this does not necessarily equate with empathy and support for public sector workers.
There are considerable uncertainties among the public sector workforce that public sector trade unions can alter government policy. Public sector trade union membership fell by 79,000 to 3.76 million in 2014; overall, between 2010 and 2014, there has been a 339,000 fall in public sector membership. Public sector trade union density was 54.3% in 2014 with continuous decline since 2007 when public sector density was 59% (Department for Business, Innovation and Skills (BIS), 2015). The increased diversity of public sector provision and continuing outsourcing have made union organisation more resource-intensive and challenging. Facility time (paid time off for trade union representatives to carry out trade union duties) has been limited – the cost of facility time was reduced by 75% from £36 to £10 million during the 2010–2015 parliament (British Broadcasting Commission (BBC) News, 2015). More fundamentally, the Coalition government expressed a commitment to end check off (the payment of union subscriptions by deduction from pay that is then passed to the trade union) in the civil service and wider public sector. This measure, included in the 2015 Trade Union Bill, will require public sector workers to switch to direct debit to pay their union fees and continue their membership, presenting trade unions with major organisational challenges in maintaining trade union membership.
In some cases, trade union and employer attempts to mitigate the impact of wage cuts on the lowest paid may also have influenced trade union action at sectoral and local levels. Some local government employers have sought to achieve trade-offs between pay bill reductions and less severe employment cuts; in addition, there has been much support for paying a living wage (Reference Bach and StrolenyBach and Stroleny, 2014). The sustainability of this quiescent employment relations climate is uncertain. As private sector wage growth has recovered, the sustainability of a public sector pay squeeze becomes less certain and these difficulties may be exacerbated by staff shortages in key areas of the public sector.
Discussion and conclusion
There has been a continuing preoccupation with the transformation of public sector employment relations and despite Britain’s being viewed as in the vanguard of public sector restructuring, there have been differing interpretations about the extent and consequences of public sector employment relations reform over recent decades. There is an underlying thread from Thatcher to Cameron that has privileged market-oriented governance, but it has been combined with other reform strategies, including network governance that emphasises collaboration and partnership. The economic crisis has reignited this debate, with sustained austerity measures bringing about a more deep-seated shift towards increased outsourcing, more diverse provision and the withdrawal of key services, accompanied by deterioration in public sector terms and conditions of employment (Reference Bach and StrolenyBach and Stroleny, 2013; Reference Grimshaw and Vaughan-WhiteheadGrimshaw, 2013; Reference Scott and WilliamsScott and Williams, 2014).
The Coalition government built on and redirected previous governments’ legacies to bring about major changes in public sector organisation and management towards a more complete construction of the contract state. This involved a complex and chaotic reorganisation of the NHS, the majority of schools leaving local government control, local government retrenching to concentrate on the provision of statutory services and continuing civil service mergers and reorganisations. In a public sector in which there is no separate employment statute preventing employment reductions, the most prevalent employer response has been to reduce staffing using a variety of methods (hiring freezes, early retirements and voluntary redundancies), but employers have also made pay bill savings stemming from the government’s limits on public sector pay awards. In terms of the 2010–2015 parliament, the Coalition government achieved its main short-term objective of further ‘deprivileging’ public sector workforce conditions such as pay and pensions and loosening further the regulatory impact of national terms, but the overall prospects for continuing austerity and far-reaching shifts in public sector employment regulation are more uncertain.
The scale of austerity measures has not been as deep as originally planned by the Coalition government and timelines for deficit and debt reduction have been extended, reflecting the political and economic limits of austerity measures. Although pro-austerity frames have been used effectively to limit opposition and mobilisation against austerity, there are limits to public expenditure reductions. As Reference O’ConnorO’Connor (1973) noted more than 30 years ago, the state has to support capital accumulation while also pursuing a legitimate role through welfare spending. Although some of these dynamics have altered in the context of a more open international economy and associated arguments about reducing spending to promote competitiveness, political constraints remain. In Britain, recent governments have differentiated between protected and unprotected departments, implying that protected areas of spending (especially the NHS and schools) are the most important in legitimation and competitiveness terms, but in practice it is difficult to erect barriers between protected and non-protected areas of spending. The NHS has been affected by cuts in local government social care spending that has affected the ability of hospitals to discharge patients and led to increased waiting times (Reference Appleby, Baird and ThompsonAppleby et al., 2015).
The election of a majority Conservative government in 2015 and a divided opposition place fewer constraints on the government to pursue austerity measures and service withdrawal. The Conservative government is seeking to demobilise trade union opposition by returning to a more direct Thatcherite anti-collectivism agenda, exemplified by planned restrictions on strike action in essential services and further privatisation measures, but the public remain wary of further outsourcing. There is far less public support for private provision of public services than a decade ago, as the employers’ organisation the Confederation of British Industry has noted (Confederation of British Industry (CBI), 2014). This arises from a more questioning attitude towards commercial interests and recognition of high-profile failures of private sector delivery (Public Accounts Committee, 2014). Although the Conservative government remains committed to deepening marketisation in areas such as health and education as Reference Krachler and GreerKrachler and Greer (2015) point out (in relation to health), there are significant obstacles to increased private sector provision with limited scope for profitable activity. This was exemplified in 2015 by the withdrawal of a private sector firm that had been managing an NHS trust on a franchise basis. Circle blamed NHS commissioners for funding cuts and inability to control emergency admissions as the reason that the contract was unviable. The withdrawal and refinancing of hospital private finance initiative (PFI) schemes are further illustrations of a more cautious attitude towards private sector involvement, although some NHS contracts are being awarded to private providers. Relatedly, attempts to rationalise hospital services are focused on building closer partnerships and collaboration between healthcare organisations; consequently, the context and incentives are very different from earlier attempts to foster competition between hospitals in the 1990s.
The Coalition government’s ambition to move away from national pay determination and to make pay more subject to individual performance has only partially been achieved. Attempts by government to establish regional pay failed, and planned changes to terms and conditions by a group of more assertive NHS trusts were defeated, with limited reforms of national pay structures occurring by agreement at national level. Overall, increased central government intervention in pay policy and more forceful direction of the pay review bodies have not translated into a radical break with existing systems of pay determination and joint regulation of terms and conditions. There have been changes to pay progression, and a system of appraisal-related pay has been introduced in schools. The consequences of these policies are shaped by local employer practice, but when increased scope to depart from national terms and conditions has been offered to employers, there has been a cautious approach to change from academy schools, foundation trusts and local authorities.
The balance between national and local decision-making is continuing to evolve, and behind the facade of institutional continuity in terms of national pay determination, more variation is emerging as local employers seek to recruit, retain and engage their workforce by devising local solutions. Austerity measures, however, also have encouraged centralisation by increased government unilateralism not just on pay awards but also in terms of tight control of funding and ‘market’ management, limiting managerial discretion over key components of their HR agenda. Overall, the government’s strategy reinforced by the election of a Conservative government in May 2015 is to encourage employers to pursue more local variation and to undermine collectivism rather than to launch a direct assault on national structures of pay determination.
The most visible challenge confronting the government’s austerity measures relates to staff disengagement and increased recruitment and retention problems, especially in health and education with variations between occupations, locations and grades. In relation to teachers, the STRB (2015) referred to a ‘deteriorating position’ and ‘worrying trends’ (p. 43) because of falls in recruitment to initial teacher training, increases in official vacancy rates, a reduction in retention and an increase in hours taught by non-specialist teachers. Some of the reasons for these trends were revealed in the government’s own ‘workforce challenge’ survey of teachers with almost 44,000 responses pointing to high workloads, excessive detail required in terms of assessment and lesson planning and a more generalised sense that accountability and inspection were disproportionate (Department for Education (DfE), 2015). In health, an ageing workforce, increased workloads and concerns to maintain safe staffing levels have combined to generate recruitment and retention difficulties that have encouraged trust managers to pursue a variety of familiar strategies. These include international recruitment for nurses, doctors and paramedics from crisis-affected countries (Portugal, Spain, Ireland) and from central and Eastern Europe. There has also been an increased use of agency staff among occupations including nurses (Royal College of Nursing (RCN), 2015). The NHS spent £2.6 billion between 2012–2013 and 2013–2014 on temporary medical staff with particular shortages in accident and emergency departments (Public Accounts Committee, 2015).
These trends suggest that characterising public service professionals as privileged knaves and cutting pay and employment will generate staff shortages and also discourage staff from taking on leadership positions that will impact the pursuit of austerity measures. Previous periods of severe public sector staff shortages as occurred in the late 1990s contributed to the catastrophic 1997 electoral defeat of the Conservative government and subsequent reinvestment in public services. It is too early to judge whether history will repeat itself, but what is clear is that since 2010 a narrative of crisis and public sector excess has been used to diminish the size and protective role of the state, withdrawing service provision, encouraging provider diversity and engaging in concerted attempts to demobilise and deprivilege the public sector workforce.
Funding
The author(s) received no financial support for the research, authorship and/or publication of this article.
