Prime Minister David Cameron’s Big Society plans have come under scrutiny following an employment tribunal’s ruling against a North-East homeless charity. Here, in an open letter to Mr Cameron, those behind the charity state their case.

Dear Prime Minister,

TWO days ago, an employment tribunal found that the 700 Club was liable for the redundancy costs of 18 Salvation Army staff in Darlington under TUPE legislation.

We respect that the tribunal’s decision was taken within a narrow definition of the law and that we have to find a means of meeting these costs which may exceed £250,000. We are, however, bewildered that the law has allowed this situation to arise and would ask you to consider changing TUPE regulations so that small charities such as ours are able to deliver your aim of creating a Big Society through localism.

The 700 Club is a local housing provider that has run services for homeless adults for the past 15 years. We take our name from the number of people in Darlington who each donated £50 for us to be able to buy our first property.

It was local action to address local need for people who have since come to rely on us. We have continued to run our services in partnership with others including our local authority.

This includes our 29 bedspaces in two hostels.

Last year, the local authority undertook a review of homelessness services in Darlington and decided that only 29 bedspaces were needed for this service, reducing it from 62.

After a long and tense competitive tendering process it was decided that the 700 Club’s existing provision was the best suited to current need so we were awarded the contract.

The Salvation Army’s tender did not meet the required quality standards and was rejected, leading to the closure of their facility, Tom Raine Court.

Since then, we have been engaged in an unsavoury and sometimes personal legal dispute with Salvation Army lawyers who instigated TUPE proceeding against us.

This case was always operating on two levels.

At one level it was about the former staff of the Salvation Army receiving their legitimate entitlement following the closure of their hostel.

They have now reached a resolution and, for their sakes, this outcome is pleasing.

However, at a second level, it was, from the 700 Club’s perspective, about a multi-national charitable organisation using a piece of poorly-drafted legislation to protect its bottom line, without any consideration of morality.

This judgment is the last act in a long saga of muscle flexing which is about money, not justice.

We hope anyone reflecting on this outcome will, given the Christian provenance of the Salvation Army, take due note as they seek funding for their good works.

The implications of this judgment are substantial for small charities such as ours.

It allows the large organisations who can risk larger amounts of their funds to have a stranglehold on any work they are undertaking.

This is because smaller organisations engaged in similar activities will not bid against them, even though, as in this case, it was the inferior quality of their work which led to their failure to secure future funding.

This means that the poorest and most vulnerable people in our society are worse off in terms of the quality of service provision. Where does this fit with the aim of a Big Society working together for the most needy and vulnerable in our communities? Or what of localism where the local authority is empowered to take decisions based on its understanding of local need and existing service providers?

THIS, from our perspective, is not what TUPE legislation was meant to achieve.

It undermines the principles of the Big Society, of localism, of the ability of small organisations to contribute, even when the standard of work they offer exceeds that of national providers.

At a time when the Government is urging a greater dependence on voluntary organisations, this judgement must stand as a warning, because any smaller organisation that submits a tender may quickly realise, as we did, that the cost of winning is potential bankruptcy.

During the tribunal we were accused of gambling with the future of the 700 Club as we had been warned in the tendering process that TUPE may apply. Our legal advice was that it was a confused situation and we received no consistent guidance. Lawyers and council officials, therefore, were also unclear about the existing legislation.

We were also faced with the stark reality that if we had not tendered for the work, the 700 Club would have ceased to exist.

We are asking for the law to be changed.

We lost the legal argument and the tribunal found there had been a “change in service provision”

from the Salvation Army to the 700 Club despite the following facts: 􀁥 The 700 Club did not take over the Salvation Army premises to deliver our services as we have our own hostel accommodation which has been located in Darlington for many years; 􀁥 The 700 Club is still running the same level of service as we were before the new contracts were issued. We had 29 bedspaces in our hostels before and have 29 bedspaces now; 􀁥 All 29 clients of the Salvation Army did not move to be housed by the 700 Club. We accept that eight of them were allocated to the 700 Club by the independent Key Point of Access, but the other 21 were found accommodation with other housing providers and care homes; 􀁥 As the 700 Club was already delivering the level of service required under the new contract we had a full staff team and did not require to go out to advertise new positions – we did not, therefore, take on new staff at the expense of existing Salvation Army staff; 􀁥 Under the new contract the 700 Club receives less money from the local authority than under previous contracts for the same work.

It seems bizarre that we are now being made liable for the “change in service provision” from the Salvation Army to the 700 Club when we are still delivering what we already did, for clients the majority of whom we already housed, by staff already employed by us. We are forced to accept that this may be correct in TUPE law and will attempt to honour the obligations forced upon us with help from our friends in our local community. We ask, however, that you address the anomalies in TUPE legislation as a matter of urgency so that other charities are not forced to undergo the dark days we have faced.

I look forward to discussing the issues with you in the future and also to creating a Big and Fair Society.

Yours sincerely, Rev Dr John Elliston MBE, Chairman of Trustees, The 700 Club.

Steve Rose, CEO 700 Club

* Tomorrow: What future for the 700 Club?