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Levelling up at work - fixing work to level up across the UK

Report type
Research and reports
Issue date
Government leading by example – public services, job creation and procurement

The government should lead by example in levelling up at work, both in its role as an employer and through its procurement practices. As an employer, the government should showcase good quality employment practices, pay decent wages to all staff and reverse the outsourcing of services. Requirements for decent jobs should underpin all government procurement, so that the power of government spending is used to drive up employment standards.

Good employment at the heart of strong and resilient public services

Good quality public services are essential to levelling up. If we want to reduce inequalities in health, educational outcomes and other impacts of disadvantage, we need to ensure that we have good quality public services that are free at the point of use, delivered according to need and accountable to the communities they serve. The public sector is best placed to provide public services that meet these criteria and should be the default model of delivery.

The Covid-19 crisis exposed how years of marketisation and outsourcing have weakened our public services, undermined accountability, and put workers and communities in harm’s way. We cannot level up while our public services are run for profit rather than public good.

The pandemic also exposed the damage that a decade of austerity inflicted on our public services, which went into the crisis weakened by years of cuts, pay restraint and privatisation. This created major shortages of equipment and staff, undermining our country’s response in key areas.

The experience of the pandemic has shown us how much we rely on and value these services, and the public servants who deliver them. Strong public services are a vital part of any effort to end inequality. They are the backbone of a robust economy, a source of good quality employment and key to building resilient communities able to grow and thrive.

To play their part, our public services now require a sustained period of investment that reverses a decade of cuts and enables a secure and decently paid workforce to deliver the services our communities need.

Communities that would benefit most from levelling up have lost the most through the deterioration of their public services

Demographic changes, and in particular an ageing society, and the changes brought about by the pandemic mean our public services are in more demand than ever before. But our public services are hamstrung from meeting rising need because of chronic underfunding.

If the government want to deliver on its levelling up promise, they need to deliver a real terms funding increase in future years that restores the funding lost since 2009/10. In doing so, they can begin to address the deterioration in services, capacity and quality that is affecting communities and the staff delivering them.

TUC analysis of where the deepest cuts to public services fell shows significant regional variations, with those local authorities that were most grant-dependent, less equipped with assets and revenue raising capacity, including business rates base and with less reserves, suffering disproportionately larger cuts.[1]

In areas such as the North East, central government grants to local authorities have been cut by 79 per cent since 2010.[2] These cuts have resulted in significant cuts to services and have had a detrimental impact on the day to day lives of residents.

Regions have seen a significant number of libraries either closed or operating on reduced hours, a reduction in school crossing patrols, the devastating closure of a substantial number of Sure Start centres and a decrease in non-statutory services. These are all services that play a fundamental role in delivering a levelling up agenda.

Despite the vital contribution of public services to the government’s stated aim of levelling up the country and giving all citizens an equal chance in life, the Chancellor’s budget in March 2021 reduced spending across public services by £16 billion a year compared to their pre-pandemic plans.[3] The cumulative erosion of public sector net investment means that spending on public services in 2024-25 will be one-quarter lower than in 2009-10,[4]  with unprotected departments such as transport and local government that provide vital services for communities across the UK suffering still higher cuts in their day-to-day spending.

To truly level up, the government must act to undo the damage inflicted on public services over the last decade. We need a long-term plan backed up by sustainable and substantial investment to maintain the world class public services our communities rely on.

·       Government must end the cuts to public services and invest to reverse them, bringing investment back to the levels we need to maintain quality and meet demand. We need significant funding to clear the backlog in the NHS, provide much needed reforms in social care and increase funding in ‘unprotected’ areas like local government, criminal justice and transport that have suffered among the worst impacts of austerity.

We cannot level up while holding down public sector pay

We cannot level up while holding down public sector pay. Over the last ten years, public sector workers have seen their pay fall in real terms – by up to £3,000 a year in some cases – as a result of cumulative below inflation pay increases.

Despite their heroic efforts during the pandemic, the decade of public sector pay restraint is continuing for most of the public sector. In November 2020, the Chancellor announced a public sector pause for 2021/22 that covers most of the major public sector workforces: police, prison officers, teachers, armed forces, civil servants and the judiciary.[5] The below-inflation pay rises awarded in local government and the NHS also represent a pay cut in real terms.

Pay restraint affects the living standards of public sector workers and worsens inequalities, with increasing numbers failing to keep pace with cost of living, accumulating debt, turning to foodbanks and seeking agency work or employment outside of the sector.

In the last decade, we learned the hard way that austerity and pay restraint slow down economic growth. Reducing the disposable income of public sector workers harms local economies and regional recovery, particularly in regions in the North, Midlands and South West that have a higher reliance on public sector employment.[6]  Public sector workers make up over one in seven jobs in every region of the UK, and over one in five in the North East, Wales, Scotland and Northern Ireland.[7]

A pay rise for public sector workers is an investment that is returned to the government in the form of direct taxes paid by public sector workers, reduced in-work benefits and indirect taxes through the growth stimulus in the wider economy.

·       The public sector pay freeze should be ended immediately. Public sector workers should be paid at least the real living wage and awarded pay rises that keep pace with the increased cost of living, while making up for lost earnings over the last decade.

The outsourcing of public services hurts workers and services

Ending the public sector pay freeze is essential not only out of fairness to public servants, whose wages have been held back for a decade, but also to address the growing recruitment and retention crisis across the public sector.

Spending on agency staff in the public sector has accelerated over recent years, costing the public purse millions. Evidence indicates a trend toward longer-term placements, as agency staff are increasingly deployed to address systemic staffing issues, rather than as a short-term contingency.[8] This situation has led to a two-tier workforce in the public sector, with agency workers subjected to lower pay and worse conditions than the directly employed staff they work alongside. 

The surge in reliance on agency staff has coincided with the widespread outsourcing of public sector services and jobs. Many key workers in the private sector are now engaged in delivering core public services, including social care workers and those providing cleaning, catering services in our NHS, schools and on our public transport.

The outsourcing of public services provision to private providers has a detrimental impact on the workforce and a knock-on effect on the quality of care. Workers employed by the private sector delivering public services are more likely to work longer hours, receive less pay and be on insecure or temporary contracts [9][10].

While cost savings may have been made on the face value of an outsourced contract, these costs are then managed by the contractor in ways that off-loads risk to others – through the suppression of wages, terms and conditions of the outsourced workforce, the use of insecure forms of employment in supply chains and the almost punitive treatment of sub-contractors.

Not only is this unfair to those workers, it is a false economy leading to poor productivity, high levels of staff turnover and absence, less money for workers to spend in their local economies and more demand on in-work benefits.

Black and ethnic minority workers and women are overrepresented in low-paid and insecure work. [11] Ending the outsourcing of public sector jobs - where both groups are more likely to work - and bringing jobs back in-house with decent pay and conditions will help deliver socio- and economic-equality for these groups.

Where public services remain outsourced, public sector employers should use their procurement powers to ensure that jobs generated benefit workers in the local community and throughout the supply chain. It must be a requirement that jobs created provide workers with trade union recognition, and that employers have fair recruitment, industrial relations and pay policies for all workers.

·       Public ownership and in-house provision must be the default setting for public services, unless there a strong public interest case for putting services out to tender.

·       During the process of bringing jobs back in-house, departments should be funded so that outsourced workers’ pay is increased to at least the Real Living Wage.

·       When services and jobs are outsourced, creating social value should be a core component of procurement strategy – including a stronger focus on promoting employment standards and good jobs.

·       All public service contractors should meet the ‘Seven Principles of Public Life’[12] and have the structures and arrangements in place to support this.

·       A new public body should be set up, that operates at arm’s length from central government, with statutory powers to require both commissioners and contractors from across the public sector to supply it with data. This body should maintain a ‘Domesday Book’ of all contracts including their performance on the outsourcing of services.

The role of government in creating and supporting good quality, green jobs

The pandemic and Brexit have created significant economic dislocation, with dampened demand affecting some sectors and significant disruption to supply chains. The transition to a net zero economy will require still more economic transformation, affecting industries and jobs. These challenges require a major response from government. This has two components: public investment into works such as infrastructure and industrial upgrades, and schemes and policies that support or incentivise employers to create good quality jobs.

International Labour Organisation research shows that countries that implemented infrastructure stimulus programmes that focused on shovel-ready investments following the 2008 financial crisis, were successful in limiting the impact of the crisis on livelihoods and stimulating economic activity.

TUC research comparing G7 countries’ investments in green infrastructure showed that the UK’s investments are lagging far behind its G7 peers’. Only Japan has invested less (per resident) into green infrastructure as part of Covid-19 economic recovery. Scaled by population, the UK green investment plans are only 26% of France’s, 21% of Canada’s, 13% of Italy’s and 6% of the USA’s.[13]

The design of recovery schemes matters for the job creation outcomes. The Green Homes Grant, a flagship recovery scheme worth £1.5 billion, has been widely criticised for under-delivering on its intended outcome of improving energy efficiency in 600,000 homes, caused by delays on the part of the administration contractor[14] and the complexity of navigating the scheme for individual home owners. The problems of the scheme’s fragmented model are also reflected in the jobs outcomes. Evidence from individual companies indicates that where additional workers were hired after the Green Homes Grants programme was announced, significant numbers were then furloughed or laid off when the limitations and delays of the programme became clear.[15] The limited scale and duration of the Green Homes Grants also deterred energy efficiency installers from investing in skills.[16] Job creation schemes must be designed to support job security and job quality.

A plan for job creation

Analysis by Transition Economics for the TUC in 2020 identified twenty shovel-ready infrastructure programmes where £85 billion in public investment could create 1.24 million jobs for the following two years.[17] Allocating £85 billion for emergency green infrastructure would move the UK up into 3rd position in the G7 league table.[18]

Scaling up green recovery spending in line with our G7 peers creates opportunities for the UK to go further than its current plans in areas including nature restoration, energy efficiency retrofit, electric vehicle charging infrastructure, zero carbon home construction, and sustainable agriculture. Each has high employment multipliers and can be mobilised very quickly by, for example, building on existing schemes such as the Local Authority Delivery Scheme within the Green Homes Grant programme.

This investment to build back greener could be spread evenly across the UK, mirroring the widespread nature of the impact of the Covid-19 pandemic - or be targeted at regions experiencing persistently high unemployment or disproportionality impacted by the de-industrialisation, in support of the levelling up agenda.

·       The government should expand the infrastructure recovery programme, investing to create 1.24 million good quality green jobs.

Procurement and investment standards to support decent work

Decisions on infrastructure spending, including through the National Infrastructure Strategy and National Infrastructure Bank, should be subject to a job creation and quality test that evaluates both the quantity of jobs created by a proposed development and their quality, according to an agreed set of measures.

‘Fair work’ charters in Scotland[19] and individual cities in England[20] have helped to build job quality commitments into procurement and business support programmes.

All government support for infrastructure and industrial change (government loans, grants, licencing, pricing guarantees, investment approved by regulators, as well as direct procurement) should stipulate decent job quality and ‘Fair Work’ standards, including a clear right to voice in the workplace and union access, amongst primary employers and contractors.

Companies should meet accredited standards such as Living Wage to qualify for support. Direct public sector participation (for example, local authority programmes to retrofit homes and public buildings) will also help bring up job quality standards.

Every large infrastructure investment should come with an Olympics style plan for decent jobs attached. When the Olympics were planned, government and the Olympics Delivery Authority worked with trade unions on a framework agreement that ensured that the project would deliver good quality local jobs and skills programmes.[21] We now need similar framework agreements for every large infrastructure project backed by government investment, setting out how contractors will work with trade unions to deliver local jobs and apprenticeships.

The government should:

·       Build job creation and job quality tests into public investment decision-making and procurement standards

·       Use Olympics style agreements to guarantee decent jobs in big infrastructure projects.


[8] NIESR (2017) Use of agency workers in the public sector NIESR_agency_working_report_final.pdf

[11] TUC (2020) Black women and work BME women and work | TUC

[12] Committee on Standards in Public Life (1995) The Seven Principles of Public Life - GOV.UK (www.gov.uk)

[13] Trades Union Congress (2021) ‘Ranking G7 Green Recovery Plans and Jobs' https://www.tuc.org.uk/research-analysis/reports/ranking-g7-green-recov…

[14] PBC Today (2020), Confusion and delays hamper Green Homes Grant scheme, https://www.pbctoday.co.uk/news/energy-news/green-homes-grant/86474/

[15] Anna Tims (2020), ‘We are all seeing red over the government's Green Homes Grant‘, The Guardian, https://www.theguardian.com/money/2020/dec/03/we-are-all-seeing-red-ove…

[16] Jess Ralston (2021), ’What to look for in the Government’s buildings decarbonisation plan’, ECIU, https://eciu.net/blog/2021/what-to-look-for-in-the-governments-building…

[17] Transition Economics (2020) Can an infrastructure stimulus replace UK jobs wiped out by COVID19 crisis? https://www.tuc.org.uk/sites/default/file/TUC%20Jobs%20Recovery%20Plan_…

[18] Trades Union Congress (2021) ‘Ranking G7 Green Recovery Plans and Jobs' https://www.tuc.org.uk/research-analysis/reports/ranking-g7-green-recov…

[19] Scottish Government (2021), Fair Work: Action Plan. https://www.gov.scot/publications/fair-work-action-plan/

[20] Liverpool City Region, Fair Employment Charter: Consultation https://www.liverpoolcityregion-ca.gov.uk/fair/

Oldham Council, Oldham’s Fair Employment Charter https://www.oldham.gov.uk/info/200146/strategies_plans_and_policies/130…

[21] TUC (2008) Principles of Cooperation between London 2012 and the TUC  https://www.tuc.org.uk/research-analysis/reports/principles-cooperation…

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