Acas needs reform

Acas, (the Advisory, Conciliation and Arbitration Service) was originally tipped for abolition by the Coalition. It now appears that it has been spared the flames of the bonfire of Quangos.

If it is to live on it needs some reforms.

Acas (originally ACAS – I wonder how much that “rebranding” cost?) has earlier roots, but essentially emerged in a decade – the 1970s – when corporatist/tripartite policies were common and the ideal was the pursuit of a consensus which managed Britain’s economic decline but did precious little to reverse it.

Times have changed. Many of the practices of those years have disappeared, from beer and sandwiches at Number 10, to Neddy (the National Economic Development Council), and the Closed Shop (where 5 million employees were required to be trade union members, an arrangement which, bizarrely to modern eyes, was in many cases quite happily supported by employers). But Acas still retains this period flavour.

Its recently-reappointed Chair is moderate ex-Amicus staffer Ed Sweeney. Its Council, which is charged with providing strategic direction, is dominated by trade unionists, “soft” HR specialists from large old-established businesses or the public sector, and academics. There is little representation from new types of employers and small businesses but Derek Simpson, a “live” TU leader who has been actively concerned in a major recent dispute where Acas was involved, is a member.

Originally Acas was mainly concerned with conciliating collective disputes. There are I guess some “externality” arguments for this function to be publicly funded, as we can all suffer when management and unions can’t agree (the current tube strikes for example). There is some interesting research from NIESR that suggests there are high returns to collective conciliation.

But such collective conciliation now only accounts for a small part of its activities. The bulk of work concerns its statutory duty to conciliate individual employment tribunal claims. While this can benefit both parties in principle, they aren’t charged. Perhaps they should be, rather than the taxpayer whose interest in most of these cases is minimal. A modest charge of £25 to individuals and £50 to employers would defray about half the expense.

And perhaps Acas shouldn’t have a monopoly on this type of activity. Some greater competition from other suppliers of conciliation/mediation/arbitration services might be a good idea.

Incidentally, “successful” conciliation, which Acas makes much of,  is often not perceived as such by those involved. Many employers agree compensation at the conciliation stage to avoid further costs, not because they are satisfied by the outcome.

Acas also provides training and other paid-for services, which could be done by the private sector.

Its continuing importance derives from the need to cope with the sheer volume of Employment Tribunal claims, now at 240,000 a year, and the need to screen and mitigate these before they get to the tribunals proper. ET claims in turn result from the explosion of frequently ill-drafted and ambiguous employment regulation, together with the fact that claimants face virtually no financial cost or penalties. In the long run significant employment deregulation, and better and clearer regulation where absolutely necessary, is the thing to aim for.

Acas is not particularly helpful in promoting this goal: it aims naturally to expand its influence by devising codes of practice and employer guidance. Such guidance has an odd legal position. Though it is never approved by Parliament, Employment Tribunals use adherence or non-adherence to it as a basis for setting compensation.

There’s nothing magic about Acas’s approach. Its current code on disciplinary and grievance issues, on which the jury is still out, was introduced in 2009 to replace an earlier Acas-inspired Statutory Dispute Resolution Process version which, contrary to intentions, led to a large increase in grievances and disciplinary cases and an additional cost to employers of more than £180 million. 

I would certainly like to see Acas cut back and reconfigured for the 21st century as part of a general rebalancing of employer-employee relations.

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