Pensions liabilities deter bids, CBI says

Published on Saturday 13 June 2009 14:50

THE CBI will this week demand a level playing field for private companies taking on the cost of public sector pensions when they win outsourcing contracts.

The employers' organisation will claim that the issue has become a make-or-break consideration for companies bidding for such work.

It will recommend that the Department of Health and other departments grant membership of their schemes to providers by creating a Public Sector Participating Employer (PSPE) scheme to share risk and responsibility between provider and public body.

Speakers from the public service, pension and legal experts as well as government and opposition spokesmen will address a meeting in London on Friday.

The issue came to prominence in Glasgow when Connaught, a facilities provider, pulled out of a maintenance contract with Glasgow Housing Association over the size of the pension liability it was expected to take on. There were further developments yesterday when The Scotsman revealed that the board of GHA is on the verge of standing down following criticism from the Scottish Housing Regulator.

CBI Scotland's assistant director David Lonsdale said the organisation supported the switch of work to the private sector to ease pressure on the public purse and seek value for money. But the CBI is concerned the pensions issue will deter bidders.

"We are concerned that the policy framework to support competitive neutrality in 'public markets' is not fit for purpose," he said.

"The dearth of transparency and accuracy in costing public sector pension arrangements is a concern, particularly when it sustains an uneven playing field between private firms having to compete with existing public sector providers."