Pension funds urged to act over low pay for care staff

US giant Calpers asked to put pressure on private equity owner of Care UK

Unison is seeking to enlist one of the world’s biggest pension funds to put pressure on Care UK into paying a living wage to disability support workers in Doncaster.

Unison has held talks with Calpers – the California Public Employees Retirement System – and local authority pension funds in the hope that they will push Care UK’s private equity owners to do a deal with the employees who are seeking a living wage of £7.65 an hour.

Pension funds are significant investors in funds set up by Care UK’s owner, Bridgepoint Capital, including those with Care UK in their portfolios. In addition to Calpers, Unison has talked to other unions sponsoring trustees of large US pension funds with allocations in Bridgepoint. Local authority pension funds in the UK have also engaged directly with Bridgepoint following a request from the union.

Bridgepoint prides itself on being a “responsible” investor, holding to “the highest standards in both our professional and ethical conduct”. It is a signatory to the UN Principles for Responsible Investment.

Last month about 70 workers went on strike for three weeks. Further action is planned, the latest in a series of disputes going back to last October.

Workers providing services such as supporting people with learning disabilities living in their own homes earn £7 an hour.

Some of Britain’s biggest companies have signed up to pay the £7.65 living wage promoted by the Living Wage Foundation, or its higher London equivalent, £8.80. They include Barclays and the accountancy firm KPMG, who have argued that employees paid it do better work, stay in post longer and take less time off sick.

Unison says Care UK has failed to negotiate with it, so it has turned to the pension funds to try to force Care UK to the table. Colin Meech, Unison national officer, said: “Members of public-sector pension funds do not gain any benefit from destroying public-sector jobs and cutting the living standards of other public-sector workers by investing in privatisation. Unison calls on all public-sector pension funds who are invested in Bridgepoint to request a negotiated settlement of the Care UK dispute with us. We believe it is in the best interests of the scheme members to do so.”

Unions are increasingly trying to influence employers either as investors or through pension funds. Last year, Unison, Unite and the TUC launched Trade Union Share Owners with the aim of putting union values at the heart of the world of corporate governance.

Care UK was acquired by Bridgepoint in 2010 in a €480m (£380m) deal. It reported a 5 per cent increase in adjusted earnings before tax, interest and one-offs to £38.3m on revenue for the nine months ending 30 June of £545.6m, up 13.4 per cent.

In a letter to the union confirming no pay rise for employees transferred over from a previous NHS contract, and a 2 per cent pay offer to other staff, the company’s human resources director, Malcolm Chew, said: “Your claim for an increase to £7.65, an increase of nearly 10 per cent, would not be affordable given the rates we are paid by Doncaster Council.”

A spokesman for the company said Care UK had “taken a responsible approach to the very real and substantial reduction in local authority funding for this service faced by all potential providers.

“We remain disappointed that Unison has not given a response to the pay proposals and has not agreed to meet, or undertake binding arbitration, with Acas as a way of resolving a dispute which is supported by only around 15 per cent of employees.”

A spokesman for Bridgepoint said: “Bridgepoint aims to ensure that a fair wage is paid to all employees across the businesses it invests in that is competitive within each company’s sector.

“In particular we fully support higher wages for care workers as part of an industry-wide initiative requiring more government funding to the sector. However the service in this dispute is outsourced by Doncaster Council who set its terms and a reduced budget for the service.”