Transfer of Undertakings (Protection of Employment) regulations, or TUPE, was introduced by the last government to protect workers rights when they are transferred to another organisation (the law is the UK's implementation of a European directive). TUPE is on many people's lips now because the current government wants to divest itself of as much of its public service responsibilities as it can by shifting services into the so-called "voluntary sector" (social enterprises - not-for-profit private companies) or the private sector. To a large extent, the government does not care whether the public service is moved to the private sector or becomes a social enterprise, their only criteria is that the service should no longer be provided by the public sector.
When a service moves out of the public sector employees are rightly worried. After all, such employees signed a contract when they started the job and employment contracts are two way - the employer must keep to their contractual terms. TUPE attempts to ensure that the employee's terms and conditions are preserved even though the employer has changed. However, it is not all rosy. TUPE does not mean that an employee will still be able to contribute to the NHS pension scheme, the regulations merely says that the new employer must provide an equivalent scheme. And TUPE only affects existing employees, so new employees will be employed on different T&Cs (a two-tier system) and TUPEd staff changing roles within the new organisation will lose their TUPEd rights when they sign a new employment contract.
In the Autumn Statement, the government indicated that they wanted to change TUPE. The Chancellor said that this was to "help employers to hire people". There is some logic to this: making a profit from the NHS tariff is difficult enough, but it is made more difficult when an employer has to give their staff decent terms and conditions. Remove the requirement to pay staff a liveable income and it starts to get more attractive for the private sector to take over NHS services. If TUPE is abolished or watered down, it will mean worse conditions for staff: lower pay, loss of rights to training and loss of rights to a proper pension scheme.
However, TUPE is not just about transfers from the public to the private sector, it is about all transfers: within the private sector and within the public sector. So if a Foundation Trust (part of the NHS) takes over the Community Health Services from the local Primary Care Trust (part of the NHS), the employees are TUPEd. The transfer is within the NHS, but the regulations still apply. This is important because, nominally, FTs can employ staff on local terms and pay. At the moment only Southend Foundation Trust has used these "freedoms" to opt out of Agenda For Change and recently chose not to award annual increments that have resulted elsewhere under A4C.
TUPE effectively keeps T&Cs constant across the NHS. If TUPE were to be abolished this would quite rapidly result in local T&Cs and the first casualty will be Agenda For Change. Why not have local pay bargaining, after all, it costs far more to live in London than it does to live in Middlesbrough, so why not pay London workers more to reflect this? This happens already, NHS pay has a London-weighting. The problem with local pay is inherent in the name. It is not so much the difference between trusts in different parts of the country, it is the difference between trusts in the same part of the country. If there are two trusts in a city they can use local pay to compete for staff. If one trust pays more to attract more skilled staff, the effect will be that the trust that cannot pay the higher rates will not get the skilled staff. The result will be self-fulfilling: pay escalation for some staff and trusts that cannot afford the rates will have declining quality, declining patient numbers, declining income and then, ultimately, bankruptcy.
The real reason for wanting to abolish TUPE is that the government wants to move away from national pay bargaining and move to local T&Cs. The NHS works because it is one organisation. Fragmentation through different T&Cs and local pay bargaining will mark the end of the NHS since it will be the death of collaboration between NHS organisations.