Kirklees Council’s leader has denied that the council is privatising its building services department.

A plan to merge the building service with Kirklees Neighbourhood Housing (KNH) – a private limited company – was approved by the council’s cabinet.

But a union leader has said: “What happens if it goes belly up?”.

About 500 council staff will transfer to KNH, which manages the borough’s 23,000 council houses.

The move, aimed at mitigating a £24m reduction in the council’s housing rental income, has raised concerns from three unions.

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The huge cut has come after the government forced all councils to reduce rents by 1%, saving millions in housing benefit payments in the process.

Unison, Unite and the GMB all sent representatives to the cabinet meeting to air their members’ worries about the merger.

They include fears that pensions could be lost if KNH went bankrupt and worries that there will not be equal pay or terms and conditions.

KNH was formed by the council in 2002 as an Arms Length Management Organisation (ALMO).

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As a limited company it does not enjoy the same protections as the public sector but it is not completely independent like a housing association would be.

All of KNH’s 23,000 council houses are still owned by the council.

Paul Holmes, Kirklees Branch Secretary for Unison, said they supported a merger but were against moving 500 employees out of the public sector.

He said: “The council can’t go bankrupt; KNH can. It’s an absolute legal fact.”

He added: “If you’re not managing it, you can’t control it.”

Mr Holmes said Unison would prefer to see KNH re-absorbed into the council or the establishment secondment scheme for council workers at KNH.

Both were considered but dismissed by council officials.

Mr Holmes said union members were wary of a situation similar to Kirklees Active Leisure (KAL), which runs sports centres for the council.

Unison member Paul Holmes
Unison member Paul Holmes

He claimed terms and conditions for staff that transferred to KAL were not the same as those within the council, despite assurances they would be prior to the move.

During the meeting Mr Holmes said KAL had refused to pay the living wage.

But leader Clr David Sheard said KAL and KNH were quite different.

“We are not privatising the (building) service,” he insisted. “We are merging it under total council control.”

Clr Sheard said pensions, wages and conditions were safe and said if anything was to go wrong at KNH the staff would transfer back to the council.

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And he revealed that the larger KNH was aiming to take on building work in the private housing sector.

Clr Cathy Scott, the cabinet member in charge of social housing, said the merger was designed to protect the council housing service.

She said: “There are challenges but I have every faith in everybody involved.

“I know the trade unions have raised concerns but let me re-assure you the organisation will remain wholly owned by the council.”