Thousands of workers employed by council-owned trading companies are paid less and receive inferior pensions than town hall staff, says UNISON today (Monday).
Exclusive research by the union reveals that over three-fifths (62%) of councils now own at least one local authority trading company (LATC). These are arms-length firms delivering local services or generating income.
The Trading Places study reveals UK councils have established over 850 companies, many of which provide housing, social care, and waste services, alongside investment projects like commercial property rentals.
Around one in 20 (5%) of the local government workforce are now employed by council-owned trading companies.
Staff transferred or recruited directly by these firms are not guaranteed pay deals in line with nationally negotiated agreements. More than half of large local authority trading companies that responded to freedom of information requests do not follow standard council pay scales, says UNISON.
For example, in 2024, Independence Matters – owned by Norfolk County Council – refused to pass on the full local government pay rise, leaving staff around £500 short.
Research also shows that these firms often offer poorer pension packages, opting for cheaper and less secure schemes than the standard Local Government Pension Scheme (LGPS).
Fewer than half (48%) of the large firms that responded to UNISON’s survey said they provided full access to the LGPS for all staff.
UNISON head of local government Mike Short said: “During the austerity era, it was no surprise to see councils establishing trading companies to provide vital local services or generate income.
“But with central government now placing greater emphasis on social value in procurement and making work pay, councils shouldn’t be using trading companies to slash staffing costs.
“The government should review the scale and usage of local authority trading companies so the benefits to councils are not at the expense of workers and their communities.”
Notes to editors:
– The Trading Places report can be found here. It is based on freedom of information requests sent to councils and LATCs in 2024, as well as research commissioned by UNISON and undertaken by the Labour Research Department.
– UNISON is the UK’s largest union, with more than 1.3 million members providing public services in education, local government, the NHS, police service and energy. They are employed in the public, voluntary and private sectors.
Media contacts:
Mark Conrad M: 07809 623703 E: m.conrad@unison.co.uk
Dan Ashley M: 07789 518992 E: d.ashley@unison.co.uk
The article Council-owned firms creating a two-tier workforce, says UNISON first appeared on the UNISON National site.
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