Progress with spreading the benefits of the Scottish Living Wage depends on a robust approach to public sector procurement.
The Procurement Reform Bill reaches its final stage in the Scottish Parliament next week and one of the most contentious issues has been the exclusion of the Scottish Living Wage. Labour's James Kelly MSP, who also led a separate debate on this issue, makes the case well in his recent Scotland on Sunday article. He is supported by a large civil society coalition who campaigned on this and other procurement issues.
In fairness to the Scottish Government, no one doubts their commitment to the Scottish Living Wage. Scotland leads the way in the UK with the implementation of the living wage across almost all the public sector. They have also funded an accreditation project that aims to encourage more private sector employers to adopt the living wage. The gap is procurement and this is largely due to the muddle and confusion over EU law.
The muddle is largely of their own making because they sent a very unwise letter seeking clarification from the EU Commission in 2012 that formed the basis for the current guidance. Daft letters tend to elicit daft answers and that is what they got. We had a perfectly straightforward statement from the Commission in 2009 setting out the way the living wage could be applied in procurement. That approach is supported by the counsel opinion we provided to the Committee considering the Bill. Only last week the EU Commission repeated their position, when they corrected another unwise speech from the First Minister blaming the EU for the problem.
Despite all this, I am pleased to say that we are now making some very real progress. The Deputy First Minister has tabled amendments to the Bill that does introduce the living wage for the first time. This approach gives public bodies legal clarity and a way of introducing the living wage into procurement. They will now be able to include the living wage in their procurement strategies in a way that will make it clear to contractors that, for relevant procurements, they will evaluate bids taking their employment policies including the living wage into account. That will then be included in the contract and can be enforced through contract performance.
This will be set out in more detail in the statutory guidance that public bodies 'must' take into account in relevant procurements. We have been given a very clear assurance from the DFM that the guidance will be robust, actively enforced and we will be involved in its drafting.
This is important because past experience has not always been positive in this regard. In particular, we already have the Local Government in Scotland Act s52 guidance that was supposed to end the two tier workforce. However, that has been poorly followed by many authorities. The irony is that if authorities properly applied s52 then the living wage would already be mandatory in public procurement. That's because the guidance covers not only new outsourcing, but also to a change of provider. As councils pay the living wage that should be specified in the contract now to avoid a two tier workforce.
Of course we still believe that the Scottish Government could go further and make the Scottish Living Wage mandatory. The legal basis is clear and the grounds for legal challenge minimal, not to mention unlikely for the reasons I set out to the Committee. But governments are cautious beasts when it comes to legislation and the DFM has promised to pursue the issue further with the EU Commission. Verbally this time!
The absence of a mandatory provision means that public bodies might not make the necessary changes to their procurement policies. The main issue here is cost and the key area is social care contracts. This is being addressed in other forums and progress on this issue is the next big step forward. We believe the costs are not massive and in any case the current arrangements are indefensible, as UNISON Scotland's 'Time to Care' report shows.
So not everything we would want, but very real progress and potential light at the end of this very long tunnel. The Scottish Living Wage makes a big contribution towards tackling in-work poverty and promoting sustained economic growth. Using Scotland's substantial public procurement spend will be a big step forward.