THE PRICE YOU PAY

If you haven’t seen today’s Daily Telegraph (1 June) I would encourage you to track one down and read the front page article on the use of agency staff in the NHS. The article descends into some slightly cheap journalism describing the nice houses that the bosses of the companies providing agency staff live in (I know one of the people named, and the NHS most certainly didn’t pay for his house), but if you strip this away, the facts themselves are frightening.

The NHS spends some £3.3billion per annum on hiring temporary staff through agencies. Individual Trusts can spend up to £80m per annum and the numbers are only going in one direction. These are quite staggering sums and can’t, by a long distance, be simply explained away as the ‘float’ to manage peaks of demand, for which it would be uneconomic to retain permanent staff. It represents a fundamental acceptance that core staffing levels can only be maintained by extensive use of temporary agency staff.

Whilst the numbers are not quite so extreme, Local Government has the same challenges. Some Authorities we are working with are spending up to £20m pa on temporary staff, with the biggest chunk, not surprisingly, being in social care. One friend of mine, who is a Director of Resources in a large authority, has told me he spends £2m pa on temporary finance staff alone. Again, some of this is very sensible use of temporary staff, to meet the peak demands of the implementation of Universal Credit, for example, but much of it reflects an inability to recruit permanent employees.

Much of this growth reflects an increasing number of key workers, particularly in health and social care, making the lifestyle choice of working flexibly. Especially in urban areas, there is never a shortage of work, and when it is possible to commute easily to a number of different employers it is a seller’s market, with individual clients competing with each other to get the staff. This is, of course, great news for those setting the price, irrespective of how good the clients are at negotiating.

The situation is crying out not only for the public sector to look at the attractiveness of its proposition in terms of permanent employment (not just in pay terms, but in flexibility as well), but to act in a joined up way to manage the market effectively, rather than going it alone.

We are also looking, with some of our local authority clients, at an option of setting up an in-house recruitment agency for temporary staff. At these kind of numbers, rather than seeing the margin taken by an external agency go out of the authority, it can be retained internally and deliver a net profit which can either be passed on to the service buying the staff or held centrally and re-invested in Council services. This isn’t to say that authorities haven’t necessarily negotiated good deals with their agencies – in the context of the ‘going rate’ many of them have negotiated well – it is just the sheer quantum of business that makes this worth looking at. Of course there are risks which need to be managed and the numbers won’t work for everyone, but it can work without the need to rely on selling significant amounts of business outside of the authority. If authorities were to consider looking at an agency on a joint basis then it can be viable for even more.

If it can work for local authorities then there has to be huge scope to do something similar in the NHS. If things carry on as they are then most of the £8 billion extra that the service has been promised will be passed straight through to recruitment agencies.

AM

P.S.  If you would like an indication of whether the numbers might work for your authority, do get in touch with me at andy.mahon@bdo.co.uk

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