Public Services Management: Industrial relations revolution gathers steam: Will unions accept local deals - and will that mean better services? Liza Donaldson investigates

As the Trades Union Congress gathers for its annual jamboree next week it may be a sign of the times that the revolutionaries are not in Blackpool, but stalking government corridors of power - if William Waldegrave, the Citizen's Charter minister, is to be believed.

As he told the Institute of Directors in July: 'There has been a genuine, though somewhat unnoticed, revolution in Whitehall.' He gave clear signals that central planning was out and competitive tendering or 'market testing' and management improvements in public services were in.

Behind the rhetoric lies a radical attempt to change the management of industrial relations, including the pay and conditions of public servants. The general consensus is that the most innovatory changes - aside from those following competition - are at the fringes, in devolved units like health trusts and local councils rather than at the centre, where more measured, evolutionary change is under way.

If the 'revolution' works, John Major has promised higher quality services to the public, delivered by men and women who take a 'new pride in them'. If it fails, will we see a backlash with 1979-style 'winter of discontent' strikes, from the public service unions? After all, they represent between 60-70 per cent of all government, local government and health workers, around one in three of the TUC's dwindling 7.7 million members, in a sector where the proportion of unionised staff is higher than in the economy as a whole.

Trade union leaders of what will be the country's biggest and Europe's largest public service union do not think so. Unison, to be created next year from the merger of town hall, health, water and electricity unions Nalgo, Nupe and Cohse, has among its key aims the pledge to 'work with all other interested parties to maintain and improve the quality of services to the public'.

But as Rodney Bickerstaffe, Nupe's general secretary and Unison's leader- in-waiting, points out: 'If you want to deliver high quality services of the Citizen's Charter, you have to put in the resources. Where is the education, where is the training?'

Mr Bickerstaffe predicts a public backlash if the charter's paper promises remain unfulfilled. His union and Cohse have already shown past mastery at mobilising public sympathy in the 1990 ambulance dispute. Similarly, last month angry nurses took to the streets in their off-duty time to protest, without striking, about cuts to London's health service.

Pam Charwood, director of the Institute of Health Services Management, believes the revolution is under way and unstoppable. But she too is concerned about resources. Managers have been left to sink or swim without resources to train them in local negotiating skills.

However, some 15 trusts have taken the plunge out of 156, breaking away from central bargaining. Homewood Trust, Surrey, which provides services for people with learning and mental health difficulties, is among them. Management came up with what amounts to a no-strike deal, including pendulum arbitration - a system under which independent arbitrators listen to both parties, but give a binding decision in favour of one. It closely resembles agreements pioneered in the electronics industry between Japanese companies and the EETPU electricians during the early 1980s.

Unlike them, however, it is not a single union deal. Management recognises eight unions and negotiates with four. It has introduced a single pay spine and abolished the time-serving incremental pay system. Instead, employees earn more pay according to how they perform on the job.

Chris Wilson, director of human resources at the trust, said: 'We are trying to get rid of the old 'them and us' that has represented a lot of negative thinking in the past.' Since the deal in March only 450 of the 950 trust staff have agreed to transfer to it. But management has the upper hand long term, since under trusts they have powers to impose the new pay and conditions deal on staff joining the organisation.

In local government, which has a politically independent, voluntary, centralised bargaining system, around 30 mainly small South-eastern councils out of more than 500 have opted out, introducing local pay for white collar staff. Most did so at the height of the boom, facing recruitment retention difficulties as council pay fell behind national rates in the buoyant South.

Conservative Brentwood council was exceptional, bringing in what is local government's only example of a no-strike deal for its 350 staff. It includes pendulum arbitration similar to that at Homewood, and was imposed following the 1989 local government white collar pay strike. All local deals, however, mean staff will be excluded from any future national industrial action, since their participation would be illegal. It is an advantage not lost on employers or the Government when, despite the lowest number of strike days on record for 100 years, half of the 800,000 days lost in 1991 were in local or central government.

Buckinghamshire County Council this week became the first large authority to take both its white-collar and the bulk of its blue-collar workforce out of national bargaining. It took its 7,000 white collar workforce out in 1990 under a voluntary arrangement, imposing agreement on 1,200 blue collar staff from 1 September.

The county personnel officer, Bob Edwards, predicts: 'National pay bargaining will wither on the vine - if Mr Waldegrave gets his way.' He points to developments in other sectors, including the civil service's arm's-length Next Steps executive agencies, created as the follow up to the 1988 report by Sir Robin Ibbs.

Here, so far, only four of the 74 agencies have done local deals. They are Her Majesty's Stationery Office, the Agricultural Development and Advisory Service, the Queen Elizabeth II Conference Centre and the Royal Mint.

However, the Inland Revenue, which comprises 34 executive offices, aims to be the first department to do its own pay deal. In consultation with the Treasury its managers have worked out a single table deal. With all the civil service unions represented negotiating at one time, a single pay spine for its 67,000 staff has been agreed, operational from August 1993. Performance management, relating pay to performance, has been beefed up, ahead of a civil service-wide review.

At the Treasury, officials point out the progress that has been made since Norman Lamont's Rubicon statement in July last year, permitting devolved bargaining in the civil service, wider local discretion and emphasising the urgency for more performance related pay, as outlined in the Citizen's Charter. They have agreed a mould-breaking deal under the centralised system with the largest bargaining group, the 175,000 strong clerical and secretarial staff of the Civil and Public Services Association. Automatic increments or the moving staircase of pay has been jettisoned for a new ladder, one on which civil servants pay rises according to their assessed performance.

The union's former general secretary, John Ellis, secretary of the Council of Civil Service Unions, reckons the other five civil service bargaining groups, bar one, will follow. Mandarins have taken a tough stance with that one, the National Union of Civil and Public Servants. In an unprecedented move they withdrew the NUCPS pay offer, after the union voted to accept a pay rise but reject changes similar to those in the CPSA's agreement.

So, with the 'revolution' in full swing, what will be the outcome? Mr Ellis predicts that far from getting rid of unions, more localised deals will encourage more people to join up, seeing the relevance of unions and bargaining first hand.

But, he argues, the politicians will have to provide the resources and managers will have to motivate staff. Unless both carry staff along with them, cynicism will creep in and the higher quality promised in the Citizen's Charter and supported by the unions, will be seen as a 'con-trick' which it will be impossible to deliver.