Agreements to cap pay for agency social workers are saving councils millions of pounds, regional lead officers have told Community Care.
Pay caps are estimated to be reducing agency spend by £10 million annually in the West Midlands, while in the East of England the projected figure is £6.4 million. The memorandums of co-operation between councils of which caps form one element may also, according to some local authority representatives, be contributing to a “less volatile” social work recruitment marketplace.
But other factors, most notably tax changes that will bring agency and permanent workers’ earnings closer into line, are also playing their part in this picture – and agencies say there’s “no data” as yet to suggest an overall drop in demand for locums. Meanwhile localised pressures mean some councils are better equipped than others to stay within the agreements – and are in some cases having to be granted temporary exemptions from the caps in order to keep the memorandums functioning for the long-term.
Taming the marketplace
Memorandums of co-operation have been introduced gradually across England since 2014. They were brought in to tame competition for agency staff that in some areas, such as the West Midlands, had seen pay rates rise 30% over 18 months, and to reduce employee ‘churn’.
“From our analysis, across the 14 authorities in the West Midlands agreement we’ve saved £10 million annually [since it was introduced in January 2015],” says Jo Davidson, Herefordshire council’s director for children’s wellbeing and regional memorandum lead.
“What’s united councils is the knowledge that rises were unsustainable – and also inequitable against a backdrop where permanent staff saw a 1% increase year-on-year. It had to stop, and even if we achieve nothing else, over four years we’ll have saved £40 million.”
A memorandum has also been in place for more than two years in the East, where a £6.4 million forecasted spend reduction across the 11 member authorities has coincided with a drop in agency staff during 2016.
“Across the region as of December 2016 we have 161 fewer agency social workers than a year before,” says Joanna Ruffle, head of people and policy at Southend council and both regional and national Public Sector People Managers Association (PPMA) lead for the memorandum project.
More co-operation
In London, where 30 out of 32 boroughs have signed a memorandum, no data relating to financial savings is yet available. The local lead Nick Hollier, Bexley council’s deputy director for corporate support, says the arrangement’s main tangible benefit so far has been in improving authorities’ behaviour towards one another.
“Councils now have half an eye on the impact – and perception by other boroughs – of what they do,” he says. “Pre-memorandum, they would just decide to leapfrog one another in salary; now there is different mindset.”
With councils in all regions still in competition with one another for staff, keeping a more altruistic mindset intact means giving careful consideration towards how pay rates are pegged to roles such as social worker, consultant social worker or team leader. Creative use of job descriptions could otherwise enable needy councils to circumvent the caps. In the South West, where the local memorandum has only been in place six months, the regional lead Karen Reeve, Swindon council’s director of children’s services, says getting this understanding sorted has been crucial.
“It is possible [to fiddle the rates] and there was one incident that caused suspicion – we’re building from a position of authorities not being used to working together,” she says. “We spoke to the council concerned, and it turned out they were legitimately asking for – and getting more experienced social workers, and therefore paying a higher rate.”
Bending the rules
Reeve says that the South West agency rates have so far been strictly adhered to. She acknowledges though that one of the memorandum signatories experiencing an ‘inadequate’ Ofsted report or other event triggering a retention crisis would be likely to test this.
Where this has happened elsewhere, flexibilities have had to be adopted. In the West Midlands, two instances of members being unable to source good enough locums have been dealt with by allowing accommodation and mileage costs to be added to the base rate, for a limited period of time and restricted to workers new to the region.
In the East and in London, where circumstances have demanded it, councils have been able to opt temporarily out of the pay caps altogether – though usually only for certain hard-pressed teams or tricky localities such as rural areas.
“It’s about, how do we support them to get agency numbers down and stick to the memorandum [in the long term],” says Ruffle. “It’s not about slavishly following the cap if it means putting children at risk.” She adds that authorities in her region bordering London, where rates are higher, and Northamptonshire, which has yet to sign up to the East Midlands memorandum because of its own staffing problems, face particular challenges.
Teething troubles
As well as allowing the memorandums to bend by different degrees, different regions have so far diverged in whether they allow workers to leave a permanent role in one authority and start an agency one with another.
The East of England has taken a hardline approach, banning social workers from taking up agency work elsewhere in the region for 12 months after they leave a permanent job.
“We’re reviewing it at the moment,” says Ruffle. “It might seem draconian – and we are considering reducing that period – but we’ve been sticking to it and have examples of authorities carrying vacancies yet still turning workers away.”
Other areas such as the West Midlands and South West are still to thrash out how this will work within their memorandums, without disadvantaging workers who may have legitimate reasons for moving.
Matthew Egan, assistant national officer at union Unison, says it’s a difficult balance to strike. “Councils have had cuts and we support a settled workforce, but our main concern is that a punitive approach doesn’t necessarily address the root causes of why people might prefer to [move and] be employed via an agency,” he says.
Another function that’s still being worked on in most regions has been standardising reference systems and putting in place procedures to track agency workers, to avoid instances where individuals get roles they are poorly equipped to fulfil, costing councils more money and causing disruption for children and families. Most people we speak to report constructive dialogue with agencies on this issue, but several regions have yet to implement any settled system.
A stabilising picture?
While the mechanics of the memorandums continue to be refined, other factors may be starting to have a greater bearing on overall workforce stability. Changes to so-called ‘IR35’ tax rules, due to come into force in April, will see more agency staff paying full PAYE and National Insurance, the same as permanent employees, reducing the appeal of going locum.
Debbie Smith, CEO of the agency Caritas and social work sector chair at recruitment agency body APSCo, says it’s still too early to predict what will happen.
“At this point there is no data to suggest a decrease in the demand for locum social workers,” she says “In fact, our statistics suggest demand has risen UK-wide in the last quarter, largely as a consequence of the increasingly high permanent vacancy rates across children’s and adult’s services.”
But several regional memorandum leads we speak to say they are receiving more applications for permanent roles from agency workers than ever before.
“Some local authorities have done really well at converting temporary staff to permanent, and/or stopping moves to agency,” says Davidson. “It’s probably a combination of employers becoming more on ball that this isn’t a gravy train, and the incoming IR35 changes, but people are being much more circumspect.”
The levelling playing field is prompting at least one area – the South West – to amend its memorandum so as to impose a pay cut on agency staff who have been in post since before the agreement came in, bringing them into line with new locums. This will happen in March.
“That will be a true test of the memorandum,” says Reeve. “I’m not sure how many people we have left in that position, but there’s unlikely to be an exodus because they won’t have anywhere to go – our rates are benchmarked against neighbouring regions.”
Not everyone is being so bold – clearly many councils still have dire need for locums, especially experienced ones, and geography, demographics and Ofsted reports will all continue to have destabilising effects. But Ruffle says that the stage is set for councils to continue “eating away” at the agency market while making their memorandums more effective.
“We’ll take advantage of the IR35 changes, and continue to push the benefits of permanency,” she says. “This isn’t about screwing agencies over but having a more even relationship with them, reducing costs while raising standards and increasing stability.”
Bournemouth, Christchurch and Poole 
Hampshire County Council 
Lincolnshire County Council 
Norfolk County Council 
Northamptonshire Children’s Trust 
South Gloucestershire Council 
Wiltshire Council 
Wokingham Borough Council 
Children and young people with SEND are ‘valued and prioritised’ in Wiltshire, find inspectors 
How specialist refugee teams benefit young people and social workers 
Podcast: returning to social work after becoming a first-time parent 
Podcast: would you work for an inadequate-rated service? 
Family help: one local authority’s experience of the model 
‘We are all one big family’: how one council has built a culture of support 
Workforce Insights – showcasing a selection of the sector’s top recruiters 
Facebook
X
LinkedIn
Instagram
I have no concerns in any review regarding tax, however, there is a myth that being independent is a quick money making fix…it’s not, I pay personal tax, no contributions, corporation tax, fund my own personal pension plan, do not get paid when I take any holidays or if I am not in contract, only get paid for the days I actually work, pay vat back to the government… the truth why the government is giving this so much attention is due to the shambles of the changes in NHS from trusts to NHS England, significant numbers of senior managers being made redundant getting huge payoffs and then being reemployed by the same organisations. I have also seen this happen in LA’s where ex dcs have retired in a gold plated pension and then come out as specialists and earn huge sums of money…it’s not the social workers who actually do the day job that homecoming need to challenge.
Also, the fact that as a Temporary staff, contracts are not always guaranteed and can fluctuate for temps, as you are not allowed to claim any benefit, in the period you are trying to get a new role.
We do not get Car user allowance and the permanent staff get this included in their wages.
I have had months were i couldn’t secure another contract and have had to sell my jewelries, to pay my bills and feed.
It’s already very tough for temporary stffs and what the government is proposing, will make life more difficult for temps.
The other issue to consider, is that in some establishments, temps are not able to gain access to trainings to enable them have any chance of promotion.
I have been a Social Worker for over 25 years and only recently, have managed to gain a role as a senior practitioner.
Whereas, most permanent staffs, get promoted, just after 5 years of qualification, to a management position.
I was being supervised, by people that i have much more knowledge and experience than and i find that very demoraliing.
I don’t see any government establishment, working or looking out for the needs of temporary staffs.
We are constantly overlooked, underrepresented and face years of stagnation.
So tell me, how can this be fair?
I couldn’t have said it better myself love. So true… Where NHS staff will charge over £60 per hour as nurses sw doesn’t go anywhere near and we’re constantly in court, being criticised from all angles. Also doing the donkeys workload as somehow being locum means you’ve grown horns and are expected to deal with anything!
I found this article a difficult read.
The cards are now stacked against those of us who prefer to ply our trade as locum Social Workers. The “Memorandum of Understanding” is just another way of imposing cuts through stealth.
We have a right to seek to work where we want and expect the market to work fairly for us all and don’t expect organisations to gang up together to beat down the agency workers. Whilst I take the point that this isn’t about “screwing” agencies it’s the locum social workers ultimately who are being shafted with this “understanding” between the employers, and the new IR35 rules.
We make a judgement when working as a locum. We exchange our expertise for a decent hourly rate, and lose out on training, holiday pay, sick pay, security of tenure, pension and career progression. The balance has already swung far too far back in favour of the employers and their perspctive. I’m currently faced with considering selling my house in response to the cuts that the memorandum of understanding and IR35 rules has imposed.
I do feel that your headline should be balanced and something more along the lines of:
“Caps on agency social worker pay ‘saving millions’, councils say and making lives of agency social workers miserable, say workers”
I wonder if Locums have been involved in the consultation? It is amazing also that recruitment agencies have been able to fire ahead with this without any reference or discussions with social workers . It is always interesting to see how employers speak about the level playing field between Locums and permanent staff. What they fail to share is the expenses which locums have to bear themselves which if you are a limited company include corporation tax, Vat, and PAYE if you take a salary. In addition to this yiu cover your own pension and holiday pay and don’t get paid for sickness. The costs are necessary to include and narrow ghe margin in terms of level playing field. Once again social workers being treated as passive recipients. It would be wonderful to set up an agency cooperative for social workers run by social workers run on an ethical basis. The current landscape of recruitment agencies is problematic particularly as you can have people who are not as specialised as social workers and they get larger salaries and commission. It seems that it’s all right for everyone else to get paid properly with incentives and commission but God forbid a social worker daring to have a position!
In summary its all about control. Councils like having the upper hand with their employees and to keep piling on the work. If we complain they turn it into a performance issue. Locums have the flexibility of being able to walk away far more easily and have more control over their employment.
“It would be wonderful to set up an agency cooperative for social workers run by social workers run on an ethical basis.”
Is it ethical not to pay your full tax requirements?
The sooner the whole ridiculous mess falls apart the better. How social workers are expected to do a decent job in this climate beats me. And I’m not even going to try any more, my health and sanity are my first concern. I loved the job once upon a time…now I’m going to find a way of actually helping people and still have a life. How many social workers’ health is at risk because of their jobs? I’d really love to know and do something about that.
I am an agency social worker and I am sick of being portrayed as a money grabber with no loyalties.
Out of my fees I cover my sick pay, holiday pay, pay into my pension as an employee and employer, pay corporation tax and don’t get any other employee benefits such as training CPD support.
For my fee the local authority gets someone to cover the gaps in their service at short notice, someone who will travel long distances or relocate, both at my own expense and someone who is experienced enough to pick up a full case load and run with it.
If the government, and permanent social workers, want to keep punishing and vilifying us they will chase us away, then I would really like to see how they would be able to provide their statutory duties and manage their case loads.
I agree with the above posts. There is a massive misunderstanding about how independents operate, and the benefits that they can bring. Flexibility for employers to flex their workforce and capacity and capability without committing to long term employment contracts and the associated costs of those.
Experienced independents bring a wealth of skills and knowledge that can add value to an organisation. I have lost count of the times when discussing day rates with employesrs I have shown them the cost of an equivalent employee, which is base salary, plus on costs pension NI etc and car allowance, and the calculated that to an equivalent day rate – it’s often more- but with an independent they don’t carry the employment risks or associated costs.
IR35 will mean many talented people will leave the field why would you be independent, take all the risks, not get paid holiday or sick or pension, but get paid in accordance with the PAYE system and also have to declare and pay VAT and Corp Tax.??????? Brainless.
I personally don’t want to return to sw unless on agency salary as it’s just not paid enough for the responsibility
On the 12th Jan 2017 , Social Work Locum posts advertised at £14 an hour for a North West agency. To date not one single reply. Next job advertised for a Fork-Lift Truck driver (Nights) £14 per hour. Over 100 replies.
quite!
Oh, this is funny. Let’s see what happens a year or two down the line. Why would we as agency workers want to work with no holiday pay, sick pay etc and be paid the same as an permanent worker who benefits from conditions of service ? I’m glad I’m near retiral but George Osborne and his crew brought in the IR35 changes to screw agency workers without a thought for the consequences. Good luck with your changes when you find you can’t even fill posts with agency workers because we’ve moved on……
Bring Perm wages up and make a shorter notice period, everyone would soon go perm! Locum workers will always be needed and always be working, this will just mean people work for the higher paying places, and some boroughs will always have to pay more because of case loads!
Now time to crack down on rip off independent Fostering Agencies …. fat cats at the public purse expense
If Local Authorities are such fabulous and attractive employers .Why are there so many Locums?
LA have cut wages in real terms to Social Workers for 7/8/ years.
Cut out or significantly reduced mileage allowances and expenses.
Over loaded Social Workers with excessive case loads for years.
” Bullied” Social Workers for years re performance management, whilst increasing form filling and then criticise Social Workers for not having the time to do direct work with children
Reduced pension rights ( well Central Government !)
Senior managers live in a ” A fantasy Social Work Land”
Gets even worse when HR departments get involved!
We will always need Locums.. And they should be appropriately paid for the lack of sick /holiday pay/ pensions, etc.
I’ve been permanent for 7 years with no chance of getting onto any training e.g. AMHP, Practice Educator as the LA was cutting trainings to save money. I left due to lack of opportunities and went for a temporary job for nearly to years. Then I decided to go ‘ltd’ for the freedom and as a way to learn more and to have new experiences; for example, I’ve 18 months in Adults Learning Disabilities Team and now in Adults Safeguarding. I left a contract after a few months due to the chambollic management. All this to say, this is not about the money! I pay my car park permit, don’t get support to have a good chair, don’t go on training etc. Some LA have decided to pay 23 p per mile but the permanent worker who get a leased car get this and the others get something around 45 p. However, I need to have my own car to do the job. Locum also pay professional liability insurance and public liability.
LAs prefer to damn someone or something instead of looking at the problem from the roots. Why are social worker not interested in permanent jobs? Why do they leave? They don’t seem to appreciate how much difference locums are making in a team.
I enjoy being a locum and if it’s not worth it, I’m also a Swimming Assistant. I can easily become a swimming instructor and get £20 x hour (apparently).
What happened to freedom of movement, the free market and freedom of choice where one wishes to work?
This article suggests we will be chained to an authority with no freedom to move on – just another name for modern slavery.
I choose to be an agency worker because of the freedom it offers me and the flexibility of weekly pay.
I can walk away from obnoxious bullying managers and take my holidays (without pay) when I choose.
If the next town pays more I have the freedom to move, however this article suggests I would be banned from working in the next authority within a time period. So what do I do? go on the dole until I am allowed to work again.
Come on get real, this smacks of state control and Stalinism rather than democracy, I’d like to see it happen in the business sector where competition is profitable.
Rather than moan about agency staff, permanent staff should focus their energies on bringing about change in their own terms and conditions.
Don’t forget Agency workers can pick up and run with allsorts of cases where others can’t or won’t.
I absolutely agree and you’ve said it brilliantly.
”Rather than moan about agency staff, permanent staff should focus their energies on bringing about change in their own terms and conditions”
Miss Taylor- that’s not quite so easy when you have lots of agency staff who are less likely to join a union and less likely to take action- hence undermining the collective efforts of permanent staff.
I don’t understand how anyone can say the tax changes will bring temp and perm pay into ‘closer in to line’ – as noted by all of above temps don’t get pension contribs from LA/ no paid sick leave, child care leave, holiday, bank hols/etc etc and even to the point of getting stuck in traffic – perm workers paid when held up on the way to work for two hours – temp gets paid from when they arrive. Changes in tax simply mean temps will be paid less is real terms, so its just an attempt to control as someone says above, and force temps to go permanent.
Report in December 2015 (?) recorded majority of workers requesting HCPC to de-register them were in their 50s
The employers talk smugly of how much their rate caps have saved but no mention of what they are trying to do to address the underlying problem of recruiting and retaining good quality permanent staff – as highlighted in so many Ofsted reports. Are they actually doing anything about pay, conditions, caseloads and how staff are treated? I think I know the answer. They seem to think rate caps and the changes in IR35 will drive agency workers back to permanent jobs – wishfull thinking I would suggest. I have been a locum for 4 years and wouldn’t consider going back to a permanent role – previousy worked for one authority for over 20 years. As others have said the what the latest changes will probably do is drive more people out of the profession altogther. I will be looking at my retirement options very seriously.
apart from the things like not getting sick pay, a pension etc, agency workers are far more vulnerable than perm workers. We can be given a weeks notice, we have no leg to stand on as we are not in a role long enough to take a LA to a tribunal if we are treated unfairly. If we raise concerns we get bad references which Unions will not help us with. When we start a new post we are often over loaded with work from day one. Its not as simple as “we earn more” .
Social services across the country will soon be drained off good and hard working social workers then. Being locum workers is the only way some of us can continue working in the profession we love without being at the mercy of wicked and bullying managers.
Social work teaches anti-oppresive practice but it’s the most oppressive profession I have ever come across.
You need to read between the lines to understand why you are not able to retain permanent workers, rather blaming locum workers.
YOU MAY SAVE MILLIONS WHEN YOU GET RID OF LOCUM WORKERS BUT DO NOT FORGET THAT THE MILLIONS WILL GO IN TO PAY FOR LONG TERM SICK LEAVES AND TRIBUNAL CONVERSATIONS.
It would be interesting to see how positive LAs are about this when IR35 has had time to bed in. Us locums actually represent very good value for money. If you use a rough average of 25% add-on costs for employed staff then locums are roughly equivalent and that is without taking into account sickness costs which at my last placement were running up to 30% in some teams. if I had been employed by my agency for that one then I reckon my annual deficit would have been around £11,000. I don’t want to go back to permanent employment and like the freedom to work where and when I choose. I have lost count of the number of times LAs have banned Locums only for that ban to be rescinded when the service starts to fall apart a few months later. However the IR35 changes will stop that.Forcing experienced, professional and dedicated workers out of the business is is going to hit LAs hard at a time when they need us more than ever.
I haven’t paid myself since July!! When I do pay myself it is only £600 per month. I was getting twice as much from 3 days work in a permanent job. I am a Form F Assessor so work is very sporadic but I just could not face going back into LA office. Regarding training, LAs can buy it in but independents have to go to where the training is which then means fuel or public transport costs and costs of accommodation. Not only do we have to pay for our own training but also accountants’ fees, £60 or more per month, if you decide to go as sole trader, you have to use an umbrella company which costs again. It’s a veritable minefield!
A lot of social workers chooses to go locum because of the flexibility not the money. For the past 8 years I have been an agency worker, and I can honestly tell you that as soon as you step into a Local Authority as a locum your having to work hard for your money as you end up working 10 times as harder than the permanent staff who tends to go off on long term sick leave and annual leave. What employers fail to forget is that Locum workers do not get the same perks I. E. holiday,sick pay nor do we get the advantages of being able to access various trainings towards our CPD, which we have to pay towards.
I feel that the IR35 will yes leave locum workers at a disadvantaged. However, more so the Local Authorities in question as no amount of money in social worker will ever get me to ever become a permanent member of staff, as I also do agree with some of the above comments regarding the bullying and oppressive culture that has taken over social work.
Furthermore, it appears that most of the good managers in social has left the profession or have now retired. Whereby were left with the bullies and the ones who are very oppressive.
Social workers are underpaid as it is and less and less are entering the profession each year. There has to be a better way for the councils to save money!
Social Work Colleagues – Locum or permanent – Aren’t we missing the point? This is being made out to be Locum’s v Permanent – what it really is is divide and rule by central and local government – this is about privatisation of ALL public Services so that big business can make profits – when we are all Locum’s/agency/Temps the hourly rate paid to workers will be slashed – the dividends paid to shareholders will be maintained or increased as the profits roll in.
One constructive criticism of the above posts is that there are an awful lot of generalisations about permanent workers and their ‘benefit’s’ – it is no more or less than individual SW’s CHOOSING how they want to work (or their circumstances being such that they choose Locum/Perm to suit their particular situation)
PS . . . . . just as there are generalisations about Locum’s as well
As a recruiter of locum staff, i’ve seen many changes within the industry over the years. I sympathise with Social Workers, both Locum and Permanent as you are often fed inaccurate information from your LA employers, “greedy” agencies and colleagues alike. The article above mentions the LA’s desire to reduce cost’s yet what isn’t mentioned is the full story.
I am and agency owner, yes I make earn my living placing Social Workers into LA’s. I have worked in Recruitment for 16 years, and if i’m honest…I don’t enjoy my job. Don’t get me wrong, I used to enjoy it…I still get the odd glimmer of hope when you do get new registrations and they have genuine reasons to take on a locum role, and it’s not just about the money.
The article started off about the MOC’s & MOU’s and how they are saving money. What is not mentioned just once, is how the vast majority of LA’s contract large organisations to “manage” their recruitment strategies. Millions of pounds are spend each year paying these companies for their recruitment services. We agencies often get mistaken as the individuals costing the LA’s vast sums of money, and don’t get me wrong – we can do very well…Just look at the accounts for Debbie Smith’s company Caritas and the press attention they have received for doubling their annual profits year on year. The real cost in our experience is the Master & Neutral vendor companies. One particular company that manage a number of London boroughs affords us between £2.25 – £2.50 per hour as commission on the workers. I will use a “limited” rate as an example, so we place a Social Worker in London on £32 ph Ltd. Our charge is £34.25 – The local authority will pay the vendor in the region of £45ph!! Yes there are claw back clauses, but come on, over £10 per hour!! This is where the system is broken.
Now for our £2.25 ph, I am not allowed to Speak to the hiring manager, I am not allowed to send my cv’s direct, I am not allowed to arrange interviews direct, I am not allowed to request feedback from the hirer, I am not even allowed to contact directly to obtain a timesheet!! If i do I face reprimands or suspension & exclusion from the contracts – I can even face financial penalty!
I then have to face the constant threat of being withdrawn from the contract or not receiving vacancies because of “special” relationships that these “Neutral” & “master” vendors develop with the huge agencies that dominate the market.
Quite simply – the whole Social Care Recruitment sector is broken, and I for one do not know what it will take to fix it, but what I do know is that targeting hard working social workers is not the way you start!
If you are a Locum or Permanent worker, I wish you luck in the coming weeks/months/years…with the way we (Small Recruitment Businesses) get treated, we may not be around much longer to see how it pans out!
As a recruiter I read terms such as “eating in to the agency market” and “not screwing agencies, but having a more even relationship with them, whilst reducing costs and improving quality”
Firstly the agency perspective on this is that the temporary Social Care market is no longer an Agency Market, but a Vendor Market! The commercial intermediaries (neutral/master vendors) the authorities outsource their recruitment and procurement to can in some instance charge between 400% to 500% more than the recruitment agencies the Social Workers are registered with.
Now not for a second do I see this forum as a platform for agencies to voice their concerns, as this would be in bad taste. The focus should solely be on the plight of Social Workers and their working conditions. I only offer this insight as reducing agency spend is now having a negative knock on effect agency workers.
Breaking down the above statement, “reducing cost” and “in some cases saving between 6-10 million pounds”, agency markups are currently averaging between £2.45 to £3.00 an hour for Social workers, which is inline with the memorandum of co-operation. In some cases, particularly through London Boroughs the Vendors will additionally charge anything between £8-£10 an hour more. Whatever the national spend on locum staff is imagine cutting off 80% of it off from vendor fees! The reality is it may be closer on average to 40% or 50% across all vendor contracts and their varying charges, but still a saving far greater than £10 million.
Now “agency spend” as mention in the article may include agencies and vendors costs together, however from what agencies see there seems to be no suggestion that Vendors prices to the authorities are dropping, nor are they even mentioned in the article. The final point being that commercial business’ in the temporary social care market may make more off of social workers then is right or fair, thus leading local authorities to take measures to reduce pay and restrict movement of social worker, however recruitment agencies are not beneficiaries of the over inflated locum spend for which social worker are now being penalised.
Well it seems that some local authorities are really taking capping very seriously indeed:
from job ad…
….” …£25 a day
Looked After Children – Cheshire
An experienced social worker is required to help lead the Looked after Children team…”
I’m going to try and write this to give a more rounded view of where these MOC’s / MOU’s originate and the disjointed views of where these costs come from.
As both an internal and external recruiter, currently working in house for a LA, firstly – if any LA is paying £10 per hour fee to a neutral vendor, their procurement team need shooting, but quite frankly I see these as wild unfounded comments from those trying to support their own corner and look better the the locum workers. I know If I were still that side, I would be doing the same thing.
We pay circa. £0.20p per hour to our neutral vendor per QSW. Agency mark up is generally £2.25-£2.50 per hour. This neutral vendor has enabled just one person to manage all the recruitment of agency / locums into our CSC team – saving more than it would cost for several people to manually manage multiple agencies and associated compliance. Recruiters away from the neutral vendor system will try to charge 15-35% mark up, or agency profit rates of £50-£100 per day – so again, this system is work the £0.20p per hour paid to control vendor mark ups.
Unfortunately, over the years, agency pay rates have been artificially increased, by agency recruiters in the majority of cases, (I know, I’ve been there doing it first hand) by promising higher rates to entice agency workers to their ‘client’ over the role they are in. This is now an unsustainable tipping point, the Regional MOU my LA works under made it clear, it is not about devaluing agency workers, but ensuring a fair rate of pay, with stability (i.e not enticed away for £2 an hour more down the road (in most cases, it’s the agency promising the pay rate not the authority, as for years there have been framework rates in place anyway, generally at £26(ish) – so the new £30-£31 rate is higher but avoids the fluctuations of constant agency worker changes.
Equally however, as much as we do sincerely value the work agency / locum staff conduct for us, we have a responsibility to both service users (for stability) and tax payers (to offer value for money). Paying a locum SW with 2 years PQSW experience the same equivalent hourly rate as our highest management is unfathomable. Paying a premium for the right skill set for the right assignment is reasonable.
We had (in our region) a surge of workers leaving their perm posts, only to then be working the same post as an agency worker within a week or two of leaving. Does that show they leave for flexibility or to gain experience elsewhere, or because they were told they could earn 2-2.5x more as an agency worker (obviously without explaining the costs of running a Ltd Co or the fees umbrella companies will charge you to access your money).
I noted one comment above about on costs for perm staff, it is widely reported and calculated that the on cost of a perm staff member, and the on costs as an average for a ltd company in terms of percentage of their rate, is pretty much like for like at >25%.
A typical mid point social worker with approx 5 years experience would obtain an equivalent perm rate of about £16 per hour, plus 25% = £20 per hour. Not the £30, £40 or even £50 per hour some agencies have tried to (and have) charged because they could if they pushed hard enough. It should also be mentioned, upon scrutiny, it was also shown that some agencies were not actually paying the rate they said they were to the worker, skimming the extra to top up their own fees further.
Did you also know that most agencies have deals with specific umbrella companies, to push you towards them, but do not disclose this (despite legally being obligated to). So the ‘advice’ is not looking after your best interest, but the approx. £500 per person they get as a thank you payment on their non-declared to HMRC gift card?
– Are neutral vendors worth their small costs? Yes, without a doubt.
– Should agencies be paid a higher fee for their work on these vendor lists? My personal opinion is yes.
– Do we believe agency workers are just after the money? Absolutely not, this profession is a care profession after all, not a millionaires playground.
– Are agency workers essential? Absolutely, and the best are more than worth their rate. But a substantive stable employment base is needed by most LA.
– Do I agree with publishing the cost savings proudly? No, these MOU’s were never intended by the DCS’ to be about the savings, but about workforce profile stability. Be it permanent or agency usage. This has given the wrong message and tone. But equally, we are responsible to the tax payer, with reducing budgets and increasing demands.
– What impact will IR35 have? Heavens knows… I think we’ll all be watching that space for the next few months. But those doing the work for the flexibility shouldn’t fear signing up as a PAYE locum, it’s the agencies that are fighting this more than anyone as more legal obligation for compliance falls to them – at present with the Ltd Co set up, they pass on nearly all risk to you and your professional indemnity insurance and the umbrella company. The lower flexibility with Dividends and corp tax offset has been in place for a while, so there have been other things going on for longer with the HMRC to try and tax more money from Ltd Co’s and reduce the appeal of this type of PSC model across both public and private industry. IR35 is kind of a stage 2 of this clamp down.
I take on board your points view from what you have written above. Without going off topic too much I just wanted to lend just a couple of examples of what we see to substantiate the “wild unfounded comments” made in the previous post.
A number of months ago we had a locum start in a service manager post. The pay rate was £450 a day. The agency mark up on that via the vendor, £19.00 a day. Now as a smaller agency that is reliant on invoice borrowing and factoring cost, operating on less than 5% (!) margin we were unable to except the placement. We contacted the LA and hiring manager directly, despite contractually being forbidden to do so, because speaking to the vendor would have got us nowhere fast, and upon explaining the situation we were asked what charge would we be able to work on. When adding this to their existing cost the LA said they were unable to pay this as they could not add the extra cost to the £100 a day charge. A daily charge of £100 and the agency gets £19.00 a day, so natural we wonder, what happened to the remaining £81.00 an hour??? There is a particular vendor that is acquiring LA after LA within London, and openly show the gross hourly cost to the LA on their orders for agencies to see which again is £7.00-£8.00 in addition to the agencies £2.45 an hour. One particular authority has started openly engaging agencies outside of their agreement with this vendor as they recognise the saving it affords them.
In my 15 years in the industry I have seen all manor of skulduggery from agencies and all of what you have said above before has taken place in most if not all agencies. I can openly say this as I retain a certain anonymity on this feed. I can also say it because I can honestly say I have never been party to any of these practices. When it comes to paying locums less than the advertised rate the market is becoming more and more transparent, while locums typically register with more than one agency these days agencies need to remain consistent in what they are telling locums, and the MOC and how well it has been publicised is also given Locums a “look behind the curtain” regarding rates. For every locum that is losing £2-£3 on their hourly rate from the MOC introduction there is another that gains it from being aware of what the MOC rates are, or at least in theory.
You are also right to mention agencies “Thank you” fees for Umbrella company referrals, as umbrella providers are likely to have their biggest windfall ever in the coming weeks given the legislation change. Our advice has been to recommend that locums speak with the accountants/providers they are with and know well to see if they are able to migrate to umbrella with out necessarily change their providers. If not I would advise locums to shop around for a service that they feel comfortable. Our policy has always been that however well we all know the varying terms and functionalities of PSC’s, Umbrellas, Sole traders PAYE etc. we are not qualified accountants, and so should not issue or offer any real suggestions on what Locums should have to do when it comes to these matters.
On the point of the referral fees given to agencies from umbrella services, did you know that umbrella services are trying to cultivate the same incentive driven arrangements with vendors? Did you know that some vendors own agencies or are owned by the same purchasing groups and as such have “partner agencies” creating monopolies. Not that you obviously would know, but the vendor previously mention above have it written within their supply agreement that they are under no obligation to offer work to agencies on their agreement, despite actually being on the agreement, and that it is the individual account managers who determine which agencies get work,despite being on a supply agreement!! When we approach the vendor and asked what we could do to have jobs released to us, we were told we had to “build your relationship” with individual account managers to receive jobs from the LA. Now I can not substantiate this in writing, nor would want to, but we know for a fact the “relationship building” in a lot of cases means agencies financially rewarding contract managers for preferential treatment when dealing with their social workers. The people that screen social workers for their suitability for work on behalf of the LA’s in some instances do so not for the benefit of the LA, but for their own gain as they will receive a kick back on placing certain agencies workers.
I appreciate that this has now gone completely off topic and it is not my intention to be distasteful with what has been written, but with the Social Care market starting to resembling something more like a cartel this only compounds the “downturn in quality”.
Until all parties (Authorities, Neutral/Master Vendors, Agencies and Locum workers) collectively pull together in the same direction these issues will continue. Each treats the other with suspicion and distrust only out for themselves and their own interests. I’ve personally been to the majority of these MOA meetings across England and without exception no new ideas are taken on board and everyone is stifled with fear to suggest something that may be slightly ‘outside the box’. Ultimately the only thing that can be guaranteed with continued cuts in locum pay & agency rates is a downturn in quality.
One of the fundamental things in some MOC’s is the issue about preventing SW’s from being employed within a Local Authority via an agency within the region for 12 months. As has been said above this is discriminatory and has a disproportionate affect on those SW’s who live in rural counties. For example if you live in Norfolk and do not like the conditions or feel you are not receiving the support you should then the chances are you will have to commute miles to another LA or move home because the commuting is too much. In fact if you work in Norfolk and wish to undertake Agency work with another LA for whatever reason, the likelihood is that you would need to travel outside of the Eastern MOC which could amount to around 100 miles. Whereas the Greater London MOC does not have these restrictions. This does beg the question as to whether the MOC is really about managing costs.
If employers undertook the social work health check and addressed issues that are raised in it, then there possibly would not be the churn there is.
Whilst it is difficult to argue against keeping costs down, people should not be discriminated against.