Tax hike will hit agency social worker recruitment, warn experts

Recruiters say changes to IR35 rules could see 'inadequate'-rated authorities and rural councils struggle to recruit temporary staff

Tax changes coming into force next week risk triggering a shortage of agency social workers in parts of the country with councils in rural areas likely to struggle most, experts have told Community Care.

Changes to so-called ‘IR35’ rules from April 6 will bring most agency contractors’ tax affairs in line with permanent staff. Most will have income tax and National Insurance deducted at source as opposed to being able to claim lower tax rates by setting themselves up as limited companies, as many are now.

Agencies have claimed public sector contractors could see their take-home pay cut by up to 20% as a result of the reforms. The changes also mean agency staff will no longer be able to deduct expenses such as fuel and accommodation costs if they travel for work.

Councils hope the changes will encourage more agency staff to take up permanent roles by closing the gap between staff and agency earnings. But recruitment experts said councils in rural areas, or those seeking to draft in staff in the wake of a poor Ofsted judgment, could struggle to draft in temporary social workers from other areas.

“Many of our locums have weighed their options due to the IR35 reforms, but we haven’t seen a notable increase in those deciding to take up permanent positions,” said Debbie Smith, chief executive of Caritas Recruitment.

“Rural-based local authorities will also certainly find it more challenging to attract locums, now contractors’ net earnings are decreasing and they’ll be unable to offset travel and accommodation expenses.”

Sarah Kay, director of recruitment at the Taylor Davenport agency, said the situation could become comparable to the crisis in the domiciliary adult care sector, where companies have handed back contracts because council fees have been too low.

“We predominantly work with local authorities in remote areas and under improvement – lots of our staff work all over the country,” she said. “Without being able to claim expenses they have said they will look for work closer to home.”

Community Care interviewed 20 agency social workers about the tax reforms. Five said they would stop considering long-distance jobs due to additional costs.

Some of these social workers had previously been travelling dozens or hundreds of miles to work, often to councils suffering severe staff shortages or Ofsted-related crises. One senior manager said she paid £500 a week in hotel expenses in order to work at the other end of the country.

“I certainly wouldn’t work far away from home again,” said another manager in her fifties working in a learning disability team. “[The changes] will be a big loss to the sector, as local authorities will lose a lot of experience – people who can go in and hit the ground running.”

Jo Davidson, workforce lead for the West Midlands Association of Directors of Children’s Services (ADCS), acknowledged that agency workers in the region had raised concerns about their ability to work at longer distances from their homes.

“We anticipate some changes in the pattern of agency work – more people working closer to home for example,” said Davidson, also the director for children’s wellbeing at Herefordshire council, which reduced its agency quota from 30% to 14% between 2015 and 2016.

“This may have a short-term impact, but the longer-term plan is to continue building the resilience of the permanent workforce and reduce the need for the scale of agency workers seen in recent years.”

Read our special report: Will tax changes put social workers off agency work?

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7 Responses to Tax hike will hit agency social worker recruitment, warn experts

  1. Lynne March 30, 2017 at 11:44 pm #

    I am currently working through an agency as limited company. I prefer the flexibility and gain more knowledge and experience by moving round the country to work. I do not benefit financially by doing so but being able to claim expenses ( which have been genuine and kept to a minimum) has enabled me to do so. I will not be taking a perm post nearer to home. I will be leaving the profession to take a less stressful job in another profession for a decent wage. .

  2. Paul March 31, 2017 at 10:32 am #

    I am also quitting working many miles away in rural area. Not financially viable. Odd how MPs can claim for 5* hotels but I cannot claim for a b&b.
    Also…claiming I Am permanent when I cover mayernity leave or staff sickness / sabbaticals is nonsense. So the post just will not be filled.

  3. A Man Called Horse March 31, 2017 at 11:24 am #

    The Tories hate Social workers especially Agency workers trying to escape poor pay and rubbish terms and conditions offered by Local authorities.

    The IR35 changes have been presented as being fair to other tax payers, yet again pitting one group against another which has become a Tory speciality. The logic is this, they intend to force you back into LA contracts with appalling levels of poor pay.

    Social workers are under siege presently, poor pay, compulsory further training to stay in a job, cuts to pensions, no desks, no parking and continued joke 1% pay rises which more accurately are real term cuts to your pay. the policy is clear erode the pay of public sector workers over many years of Austerity.

    Time to get out if you are young enough find another career. The abuse Social Workers have to suffer from this sorry excuse for a government has been extreme, backed up by a Tory owned press who have attacked SW at every opportunity. The job commands zero respect from this Government.

  4. Stuart March 31, 2017 at 7:26 pm #

    If my (local autority) employer can’t fill posts with agency workers because there aren’t enough people in that line of business I’m not personally going to be too upset, they will find a different and cheaper solution – which might even include changes that result in there being less need for agency temps.

    I’m sure there are notable exceptions but my experience of agency temp social workers has been far from pleasing. I don’t think this is the place to elaborate when the people concerned aren’t here to debate with me but be sure of this, they know who they are!!

    • Paul April 4, 2017 at 2:04 pm #

      Stuart, there are many experienced agency workers; as an agency manager I have to let some locums go due to performance and even report to HCPC. The real issue is; agencies are not ensuring workers skills up-to-date; there is no central data-base to log positive/negatives; hcpc takes too long to hear anything. Last thing anyone wants is a bum on a seat.

    • Moveforward April 4, 2017 at 7:58 pm #


      I think you miss the point. There is no cheaper alternative. If there was, we would be there. Changing terms and conditions for SW staff will not happen and so permenant staff members will merely break under the strain (at a much faster and brutal rate than normal).

      Also please don’t tarnish all agency SW with the same brush; I have seen plenty of permenant staff members who are just as shocking and poor as some (not all) agency SW.

  5. Maria Chris March 31, 2017 at 8:28 pm #

    At the long run, most boroughs with 80% of permanent staff will be under performing due high level of poor attitude to work, sick and annual leaves