In September last year I wrote about the problem of what have been described as “revolving door managers” in the NHS. Settlement payments have amounted to a shocking £1.6 billion, often paid to employees who were re-employed in virtually the same or similar jobs with weeks or months. Faced with a problem on such a massive scale the Government proposed arrangements for clawbacks in the event of re-engagement. However, I and others pointed out that a direct intervention to alter contractual rights would be fraught with difficulties and no doubt susceptible to frequent legal challenges. The problem remains unresolved.
In the meantime it seems that the contagion has spread to local authorities, but on a scale perhaps even greater than in the NHS. According to research carried out by The Times (£) local authorities have spent an eye-watering £5 billion in rehiring staff they recently made redundant in a “scandalous…spending spree on agency and consultancy workers”.
The spending is all the more surprising since it comes at a time when councils have seen their budgets cut by £20 billion. It seems that the response to losing 400,000 permanent or other salaried staff has been to replace them with agency workers and consultants. In some sectors, for example social workers, the same person who used to work for the council secures higher paid work in the private sector, perhaps as a self-employed consultant, and then sells those services to the council, in effect to do the same work as before.
The newspaper conducted its research by making a series of freedom of information requests to local authorities. The results revealed that the worst offenders were Birmingham (£155 million in the last five years), Essex (£133 million), Kent (£127 million) and the London Boroughs of Lambeth (£125 million) and Camden (£125 million). Locally, Lancashire was the biggest spender (£51.2m), followed by Manchester (£48.3m), Liverpool (£29.7m), Cheshire East (£29.4m), Wirral (£18.9m) and St Helens (£16.2m).
However, what is the alternative? If councils are required to make savings then, as with any business, by far the biggest expense is the wage bill. The problem is that, as any accountant will tell you, moving an expense item from one column to another (e.g. permanent staff to consultants or agency staff) delivers no saving at all. The situation can get even worse if, for example, the only available service providers (e.g. for social care) cost a good deal more than direct employees. No-one can blame the agencies for charging as much as they can get away with.