The Labour Party is facing accusations of favoring trade unions with recent changes to the criteria used for awarding government contracts. Under an updated 'social value' model, private sector companies bidding for work valued at $5 million or more will receive additional points for granting union representatives access to their employees. This policy shift, detailed in documents released last week, is being criticized by opponents as a "pro-trade union stitch-up" that could stifle economic recovery.
The updated social value model, which was initially introduced in 2012 to prevent contracts from being awarded solely on the basis of the lowest bid, will now account for 20 percent of a firm's score for larger contracts, up from 10 percent. For contracts between $1 million and $5 million, the weighting remains at 10 percent, and it does not apply to contracts below $1 million.
Additional weight will also be given to bids from companies that offer flexible working arrangements, pay above the National Minimum Wage, and implement "progressive remuneration policies" to retain staff. Critics contend that these requirements will lead to higher costs and increased red tape for businesses. Shadow Chancellor of the Duchy of Lancaster, Alex Burghart, stated, "These rules are a trade union checklist that will drive up costs for businesses and raise prices (and future taxes) for taxpayers." He further commented that "it's the same old Labour Party, forcing the rest of us to dance to the union barons' tune."
These changes follow the Employment Rights Act, implemented in December, which permits union representatives to enter business premises for various organizing activities. Earlier this year, then Energy Secretary Ed Miliband faced criticism for similar demands on green energy firms seeking government subsidies.
While ministers, including de facto Deputy Prime Minister Louise Haigh, have emphasized that Net Zero rules and other requirements are being removed from the scheme, the pro-union measures were reportedly only included in the fine print of the announcement. Prime Minister Andy Burnham is set to begin a tour to solicit public ideas for government improvements.
The GMB union welcomed the new plan, asserting that contracts should offer "real benefits for working people and UK jobs, not just profits for suppliers." However, Joanna Marchong, senior analyst at think tank Onward, expressed concern over transparency, suggesting that details on the added cost of these changes should be released before January. She noted that "Doubling the social value weighting to 20 percent on the largest contracts means a fifth of the decision on how $90 billion of taxpayers' money is spent now turns on criteria that have nothing to do with delivering the service well or cheaply."
A Cabinet Office spokesperson stated that the changes aim to "cut red tape and ensure that every business is focused on delivering British jobs."