Renationalisation: what does it entail for HR?

The probation service is to return to public ownership under government plans.
Image: Jeff Moore/Jeff Moore/PA Images

Renationalisation is an increasing part of the political lexicon. As most of the probation service prepares to be returned to public ownership and scrutiny of contractors’ performance across several sectors increases, Ashleigh Webber looks at what nationalisation could mean for HR.

Any change of business ownership or transfer of contracts can be a headache for HR teams, but bringing a private sector organisation into public ownership is an even larger undertaking, fraught with potential issues for employees.

But this is exactly what the government plans to do with probation services in England and Wales, with the justice secretary David Gauke announcing on 16 May that the supervision of all offenders will be monitored by the publicly owned National Probation Service (NPS) from spring 2021. This amounts to 80% of the work currently carried out by privately run community rehabilitation centres (CRCs).

Several companies, including Sodexo, MTCnovo, Working Links and Interserve were controversially given contracts to run CRCs in 2014, under then-justice secretary Chris Grayling.

Janine McDowell of Sodexo Justice Services, told the BBC that renationalising such a fragmented, part-privatised system would increase both cost and risk, as well as confusion.

But probation officers and unions representing them believe that returning the service to public ownership will result in a better deal for workers, offenders and the public.

One probation officer tells Personnel Today: “Most staff at the CRCs are really happy about the prospect. People didn’t go into this work to make profits; they’re here to rehabilitate and prevent reoffending. It wasn’t perfect before, not by any means, but most say the quality of supervision and organisation was better.” And chief probation inspector Dame Glenys Stacey said she was delighted by the decision and that the model of part-privatisation was “irredeemably flawed” .

Pay harmonisation

An area that those in the currently privatised arm of the probation service are keen to see resolved is the differing pay scales that have emerged.

Dean Rogers, assistant general secretary at Napo – the trade union and professional association for probation and family court staff – says that, as every CRC operates its own pay scale, some probation officers earn several thousands of pounds less than their public sector colleagues or somebody doing the same role at another CRC.

“We expect, and are calling for, the government to match National Probation Service pay rates,” he says.

Although it is possible to have a multi-tier workforce on different sets of terms, this would be politically more difficult for a public sector employer to maintain” – Blair Adams, Wedlake Bell

According to George Georgiou, national probation lead for the GMB union, staff at the 23 CRCs have not been involved in national pay bargaining or received a pay rise since the privatisation.

“We need to return to a single pay spine so that people doing the same job across the country are on the same pay and terms and conditions,” he says. But, to do this, jobs will need to be evaluated. The skills and qualities at each level need to be clearly defined so staff are paid equally.

Terms and conditions

In addition to pay scales, there are also 23 different sets of terms and conditions that the unions hope will be matched with those at the NPS. Rogers says all CRC staff were allowed to stay on local government pension schemes when the service was privatised, but new starters were offered “significantly worse” pensions.

“In 2015 and 2016, thousands of people have had problems with their pay and pensions,” he claims.

“There are so many sets of terms and conditions, which we seek to harmonise. The government should start doing that now.

“It’s going to be massively challenging and very difficult from an HR perspective, both in terms of transformation and transfer.”

Plans to bring private services back into public ownership do not stop with the probation service. The Labour Party would like to see other major services – including the railways, water companies, Royal Mail and the National Grid – returned to the public sector if it gains power.

According to Labour leader Jeremy Corbyn, nationalising the National Grid by forming a National Energy Agency will create “more rewarding well-paid jobs” and bring new industries to parts of the UK that have been “held back for far too long”.

HR teams need to be aware of the implications. In the short term, renationalised organisations will need to maintain the terms and conditions staff were employed on, Blair Adams, a partner at Wedlake Bell tells Personnel Today. “It is highly likely that the TUPE regulations will apply, giving employees additional protection from dismissal and against adverse changes to terms and conditions.

“Although it is possible to have a multi-tier workforce on different sets of terms, this would be politically more difficult for a public sector employer to maintain and there is likely to be significant pressure from the workforce and trade unions to harmonise upwards.”

It’s going to be massively challenging and very difficult from an HR perspective, both in terms of transformation and transfer” – Dean Rogers, Napo

Job security

Adams says bringing an organisation back into the public sector could involve redundancies if similar functions ended up being centralised.

But, in many cases, where nationalisation has occurred, employees have benefited from increased job certainty. An example of this could be seen in 2013, when the Scottish government brought the loss-making Glasgow Prestwick airport back into public ownership to safeguard 300 jobs at the airport and 1,100 jobs indirectly linked to it.

The government-owned Network Rail was also set up to acquire Railtrack following its administration in 2001, saving jobs and ensuring continuity of railway infrastructure maintenance.

Julie Taylor, a lawyer at Gardner Leader, says: “Generally, the change will represent enhanced job security in the short-term, but depending on the issues that have led to the nationalisation in the first place, there could be a risk of redundancies in the future.”

Underlining the need to safeguard jobs, this week Labour urged the government to nationalise British Steel in order to protect jobs and the steel industry’s existence as questions mounted about the ailing company’s financial model applied under owner Greybull.

Staff morale

It is important for HR  to reassure staff about the effect a change of ownership will have on their jobs – especially in the case of the probation service, where staff have felt disengaged since the privatisation.

“There is trepidation that the NPS is not all milk and honey… the probation service has survived because of their dedication, but the news has been tinged with the knowledge that some of their colleagues might not be transferred to the public sector with them,” Rogers explains.

“Operationally, you need to keep the service going, but there will be a need to improve the service delivery [targets] in the contracts.

“At the moment, people don’t know where they stand or where they’re going.”

Wales will be the litmus test for the new model; the bulk of its probation services will be returned to public ownership by November this year. Many staff at CRCs in England won’t see public ownership until April 2021 when contracts, shortened by the government in January as services were seen to be failing, come to their end.

Paul Holcroft, associate director at HR consultancy Croner, says that any employer transferring staff to a new organisation or contract should be aware that staff will likely feel worried about their future. HR has a key role to play in addressing their concerns.

“Nationalisation is often associated with saving costs or turning failing businesses around, therefore, there may be increased talk about job losses or job security among employees. HR is well placed to communicate with employees and notify them of what the process means for them,” he explains.

“Having an open communication stance, rather than a ‘need to know’ policy, could place the business in a better position after nationalisation as employees feel confident and secure about their continued employment.”

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Nationalisation is also likely to affect an organisation’s culture, particularly as benefits like flexible working are quite commonplace.

Vanessa James, a partner at law firm Ashfords, says: “There are many nuances in the workforce dynamic for employees being employed by a ‘public body’ as opposed to a private company but, subject to the proposed corporate structure it is likely that it will take a transitional period before that change in culture becomes evident.

“The period of nationalisation for most of the relevant organisations was a while ago and so their cultures have, over time, transitioned into a more ‘private’ company ethos and this would, over time reverse post re-nationalisation.”

The government now has less than two years to bring the probation service into public ownership – a significant undertaking, especially when its attention might be on Brexit. Careful thought and clear communication with staff will help the process go smoothly – and avoid seeing the problems from 2014 repeated.

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