While Covid-19 has highlighted structural inequalities in Britain, the government’s pandemic response has ironically reinforced these inequalities by allowing companies to perpetuate temporary, low-paid, insecure, unsafe and unhealthy working conditions.
Take the test-and-trace system, a crucial part of preventing the spread of Covid-19. Decades of funding cuts have eviscerated services for infectious disease control, including NHS laboratories and contact tracing. As a result, public health teams were left struggling to cope at the start of the pandemic. There were shortages of tests, while contact tracing and community testing were halted on 12 March 2020 and didn’t resume for some months.
But instead of rebuilding public health capacity in NHS laboratories and local authorities, the government hastily constructed a parallel privatised test-and-trace system costing an estimated £37bn to date, outsourcing these crucial services to private Lighthouse laboratories and companies with little experience in public health. Serco was awarded £350m for managing testing centres. A surge in profits means the firm will soon pay its first dividend in seven years, with a £17m distribution for shareholders – and a £4.9m pay package for its chief executive.
While those at the top have profited, it seems that workers at the bottom of this supply chain have been squeezed. Some staff working as call handlers on contact tracing, in testing sites and in the Lighthouse laboratory in Milton Keynes have noticed anomalies on their payslips. They say these state they are being paid by companies they have never heard of, fronted by unknown directors based in the Philippines.
Every few months, or even weeks, they are shunted on to a new company’s payroll. After comparing notes, some have found no more than one other worker on their team being paid by these companies. What the payslips do not show is the name of the recruitment agency they believed they were working for. Although the Guardian hasn’t seen evidence that the companies named by test-and-trace workers claimed employment allowances, the use of these companies raises concerns about the due diligence that has been carried out on outsourcing firms and recruitment agencies receiving public money.
These payroll companies, sometimes called mini umbrella companies, are often – although not always – used to exploit a tax break known as “employment allowance”, which is supposed to give startup businesses and small traders a discount on the national insurance contributions they make for each staff member (the allowance is worth up to £3,000 per company a year until April 2020, rising to £4,000 during the pandemic). In practice, what can happen is that staff are moved to a new mini umbrella company as soon as the allowance is used up – which could mean employers avoid ever having to pay their share of national insurance.
HMRC has previously warned businesses that employ temporary workers about the dangers of this practice. Labour supply chains can be long, and the recruitment agencies that supply workers may not even know the names of the companies that employ these workers. Companies that have been contracted by the government to deliver services should check the full length of their supply chains. But many companies know that breaking the law is not a barrier to winning new contracts.
Although mini umbrella companies can be a bonanza for businesses, they are bad news for the staff employed by them. Workers may find that as they are moved from one company to another, they face difficulties accruing holiday pay. As a result of being shifted between companies, workers may remain on an emergency tax code, meaning tax is overpaid and has to be reclaimed.
Such temporary employment arrangements frequently result in a lack of training for workers and few promotion prospects. In turn, job insecurity, which is an endemic feature of employment in the UK, is associated with stress and mental and physical ill health. As we’ve seen during the pandemic, people on insecure contracts are more likely to work when they’re sick, including with Covid-19 symptoms, putting other workers and their families at risk. It seems likely this was a factor in the spread of Covid-19 and deaths in nursing homes. Indeed, almost a quarter of the 1.5 million care staff employed in England are on zero-hours contracts, a quarter were paid a living wage of £7.83 or less, according to 2018 figures, and many are agency staff. It’s no surprise that some of those workers, many of whom don’t even have sick pay, felt they had no other option than to keep coming into work.
The pandemic has shone a spotlight on low pay and job insecurity. If ever there was a moment to rebuild and train a secure work force in the health and social care sectors, it’s now. Yet privatisation and subcontracting are instead becoming normal employment practices throughout the NHS. Many foundation trusts and commercial providers of GP surgeries are already setting up companies and subcontracting out services ranging from catering and cleaning to physiotherapy, laboratories, surgery and diagnostics services. The normalisation of these temporary, insecure forms of employment is likely to reproduce the same risks that led to outbreaks of Covid-19 cases during the pandemic.