Council spending with recruitment agencies topped £1.5bn in 2015-16, a 41% increase on four years ago. However, while this £440m rise is significant, it pales in comparison to the £3.7bn reduction in council workforce spending over the same period.
In this article in our Following the Money series we explore what council spending with recruitment agencies tells us about the changing shape of the local government workforce.
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In 2012-13 councils were spending just over £1bn with recruitment agencies, according to data from Porge Research’s Illuminator tool which compiles data published by councils on invoices over £500. Spending with recruitment agencies saw double-digit percentage increases in each of the following two years followed by a more modest increase of just under 8% last year.
Sue Evans, president of the Public Services People Mangers Association, told LGC the increasing reliance of councils on agency social workers was one factor behind the increase in spend but the scale of the transformation programmes councils were running was also likely to be a major factor.
Exclusive research: Recruitment spending shows changing shape of workforce
Ms Evans, who is head of human resources and organisational development at Warwickshire CC, said: “It means that sometimes you just need somebody to come in to run a transformation project… In the old days we’d have put a project team together from within our own resources but our resources internally are so stretched that you look around and you haven’t got anybody.”
In the old days we’d have put a project team together from within our own resources but out resources internally are so stretched that you look around and you haven’t got anybody
As LGC reported recently, the number of full-time equivalent staff working in local government has fallen by 24% since 2010. (By comparison, central government’s workforce grew by 2% over this period. Data from Porge suggests spending on temporary staff increased by 51% to more than £4bn between 2012-13 and 2015-16).
Figures from the Department for Communities & Local Government show councils’ spending on employees has fallen by £12bn since 2010, also a 24% reduction. Since 2012-13, the first year councils were required to publish spending data, DCLG figures show spending on employees has fallen by just over 8% to £40.3bn last year.
Ms Evans said although using temporary staff could be cheaper in the short term and allowed councils access to “very skilled people with a specific skills set”, it meant council staff were missing out on development opportunities which could have potential long-term implications for the talent pool.
She added: “It’s not helping us to develop capacity so we are quite reliant on a more flexible workforce.”
The Porge data shows the biggest player in the market is Comensura which works with around 70 councils in England and Wales. However, it does not supply staff directly and instead acts as a broker, managing the procurement of agency staff on behalf of councils.
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Jon Milton, Comensura’s business development director, told LGC his firm had also witnessed this shift in councils making more use of temporary staff.
“What we have seen [since 2012-13] in some areas is situations whereby with each round of austerity there has been a removal of permanent headcount. As the headcounts have gone down some councils have switched to flexible resourcing.”
Mr Milton said the other factor at play could be the increase in demand for skilled labour such as social workers, as well as planners, engineers and drivers.
“In some cases like qualified social care we’re seeing situations where permanent workers have gone to contingent roles because their heavily in demand, they can get more on a day rate and also it gives them a flexible lifestyle.”
Some councils are in a very difficult position in terms of recruiting and retaining experienced social workers. That’s pushed the agency spend up
Ms Evans said some social workers were using this flexibility to work three months then take a month off, or six months and take two months off to “recharge”.
She said: “Some councils are in a very difficult position in terms of recruiting and retaining experienced social workers. That’s pushed the agency [spend] up.”
However, she said a lot of work had been done across the country to fix rates paid for social workers. The West Midlands, East of England and London all have protocols in place which commit councils not to paying above a certain rate in a bid to drive down costs.
Ms James said: “This means we’ve got together as a group of authorities and said ’this is ridiculous; we’re getting ripped off by agencies’ let’s hold this’. That’s working.”
The slowing of the increase in 2015-16 compared with the two previous years could be an early sign this is having an effect.