Liverpool_council_chamberIn 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.

The results also dispel the myth that it is more expensive to engage direct permanent employees. So, has the process been worthwhile? Almost certainly not. A bar on the use of former council employees serves only to deplete further the available local resource while, at the same time, almost certainly operating as an unlawful restriction on public sector procurement requirements. Of course, another option is simply to stop providing services and it seems that this is an increasingly popular option. As for redundancy clawbacks there has been nothing from the Government since its initial announcement last October so it is reasonable to assume that the issue will not be addressed until after the election.

In the meantime even the worst local cases would have to go some to beat Katherine Kerswell who in 2012 after accepting a severance payment of £589,000 from Kent County Council (after working for 16 months with them) and took up a job with Whitehall on a salary of £142,000 with a brief to cut down on Government waste!