Unison has published a study looking at the use of Local Authority Trading Companies (LATCOs) which highlights a gap in terms and conditions of employment between LATCOs and local authorities. Unison criticises this gap and invites the Government to intervene.

The study found that there are over 850 LATCOs across the UK with 384 employing staff. 90% of staff (about 80,000 people) are in 105 large LATCOs across 82 local authorities in areas such as leisure, housing and social care but also waste and facilities management. 

Of the LATCOs that responded to requests for information over half do not offer the Local Government Pension Scheme for all staff (or at all) and do not follow the main collective bargaining agreement - the National Joint Council for Local Government Services.

Unison has commented that LATCOs have resulted in lower wages, fewer benefits, less security for workers and an erosion of the bargaining power of trade unions.  

Unison's recipe for addressing these issues are:

• alternative service delivery models
• better (union) organised workers within LATCOs
• building public support for ending outsourcing
• demanding better-funded public services

This call to end two-tier workforces and curtail outsourcing is consistent with the Government's stated policy with the Employment Rights Bill due to bring back and strengthen the two-tier workforce code of practice.  So it seems likely that Unison's call to intervene has already been answered.

What does this all mean for LATCOs?  If the two-tier code is resurrected, then any financial incentive to outsource (including to LATCOs) may well be much reduced or disappear entirely. LATCOs that want to survive would be well advised to focus on continuing service improvement to differentiate themselves from other service delivery options.

For advice on the future landscape for LATCOs contact Richard Brooks or Doug Mullen.