Purpose

This report recommends extending the value for the existing contract for the supply of temporary workers and enable the delivery of Council services.

Decision

For the reasons set out in the report, the Corporate Director of Resources (Section 151) in the absence of the Assistant Chief Executive AGREED:

An increase in the value of the existing contract with Adecco, called off from the ESPO Mstar3 Framework Collaboration Lot 1 Temporary workers Staffing, of £50m making the new contract value £150m.

Reasons for the decision

Temporary workers are used by the Council to provide short-term resources to fill absences, vacancies, add capacity and support transformation projects. The bulk of costs associated with this contract goes to the temporary workers as pay. A proportion of the cost consists of agency fees, management fees of the managed service provider (Adecco) and statutory costs such as pensions contributions and apprenticeship levy. Since the contract was let in November 2022 several unforeseen factors have impacted on the spend including: -

i)                 Roles within the Council are being covered by agency workers as there are reorganisations under way. This has reduced the need for staff redundancies and the associated costs arising.

ii)               A pause in recruitment over the course of the contract to meet the Council’s financial challenges has led to an increase in temporary resources.

iii)              The need to have sufficient resources to support critical, or high demand, areas of the Council’s business such as children with complex needs and support for families facing homelessness, or grant funded seasonal roles, such as for social care to address winter pressures.

iv)             The Council has the highest level of homelessness and temporary accommodation seekers in London, and the third highest level in the country. The demands for homelessness support have seen a marked increase over the last year and has created additional service pressures requiring additional staffing capacity, resulting in the need to appoint agency workers.

v)               The social care functions of the Council have been, or are about to be, subject to statutory inspections from Ofsted and the CQC. The need to have key statutory roles covered and demonstrate workforce capacity to the inspectorate is essential to the inspection process. 

vi)             The use of agency workers to deliver several transformational work streams as part of the planning to transform Council services and put it on a more stable long-term footing, outside of the scope of existing business as usual activities.

vii)            Additional costs arising from the impact of inflation and National Insurance increases has led to the increase in rates for candidates that has increased the cost of agency workers.

Due to transformation work undertaken in 2024 and the departure of key personnel responsible for managing the contract, it was not possible to foresee the impact of these spend pressures in time to review the contract earlier. New contract monitoring arrangements have been put in place. These include new contract managers, improved management information reporting from the supplier, enhanced mapping of agency worker roles against the council’s establishment, and more frequent client/contractor meetings. It is, therefore, proposed that for the remaining duration of the contract the value of the contract is increased to reflect the change in use of the contract.

Alongside the increase the following activities will be undertaken to heighten overall scrutiny of the use of agency workers and consultants.

i)                 The Council’s Stabilisation Plan, April 2025, identifies specific targets to reduce both numbers and cost of agency workers over 2025/26.

ii)               The Council has in place agency panel reviews which will seek a reduction of 25% of the agency workforce by 2026/27, focussing on converting workers to fixed-term contracts.

iii)              Use of early conversion of agency workers into employees on fixed-term contracts where there are potential savings to reduce any additional spend that is incurred with agency fees.

iv)             Continued review of agency worker rates with a reduction in fees charged for workers after 12 and 24 months. These will be negotiated on behalf of the Council through our managed service provider.

v)               Justification for the continued use of agency workers is subject to spend control panel scrutiny. Managers of agency workers for non-transformational or social care roles need to evidence attempts to recruit prior to spend control panel agreeing to any extension, including use of fixed-term contracts.

vi)             Managers of agency workers who have been in place for two years need to evidence the exit path for workers (such as moving to fixed-term contracts).

vii)            Agency workers and the positions they occupy will form part of the budget monitoring work managers will be expected to complete as part of the 2025/26 financial year.

viii)          In terms of demand management, work is being undertaken through the implementation of Oracle Recruitment Cloud, with linkage to ‘direct sourcing’ (methods for the Council’s recruitment team to headhunt skills scarce candidates via online platforms) to provide a realistic alternative to expensive agency workers, at source.

ix)             Development of a detailed specification for the future use of temporary workers as part any future requirement that will focus on tenure discounts (where agency workers have been in place more than 12 weeks) and a robust platform to manage workers and provide relevant metrics for timely decision-making.

Alternative options considered

Option 1 – Award a new contract under a new framework. The risks with this approach would be that it would require a mobilisation period and transition to new the rates to reflect the value of the contract. In addition, a new contract would commit the Council to a provider without a detailed requirement of its temporary resourcing needs moving forward, including: -

·       Supplying the Council with a robust set of quarterly performance metrics tracking how spend and agency usage has changed over time

·       Building key metrics such as agency FTE rate

·       Providing a solution to reconcile between agency and Oracle establishment data, including daily updates to reflect changes in positions within the organisation structure, ensuring that the MSP is aligned

·       Providing a platform that is fit for purpose for manager self-service and aligned to modern working expectations.

Not recommended.

Option 2 – Do nothing. The Council would not have a compliant contract and be in breach of the Council’s Tender and Contract regulations.

Not recommended.

Option 3 – Increase the value of the existing contract. This will allow the Council to be compliant with regulations, put in place additional controls over the future spend and use of temporary workers, and provide the time to review its future requirements, as part of the wider transformation programme and the need to provide resourcing for the Council into the future. It will be important for the Council to have identified its future requirements to ensure the future procurement can identify a provider who will be able to do so. Work will commence in summer 2025 to engage council business units to help scope this requirement, alongside working with the council’s data and HR teams to identify the best options for resourcing.