Agenda item

Report of the Director of Culture, Strategy and Engagement.  To be introduced by the Cabinet Member for Finance and Local Investment.

The report will seek an increasing the overall value of the contract , but not the duration, of the Matrix agency staff contract to enable agency staff to continue to be provided until the end of the contract term.

The Cabinet Member for Finance and Local Investment introduced the report which sought approval ofincrease of up to £20,000,000 for the duration of the contract for agency staff spend. This increase was to ensure that the Council could continue to provide short term agency / interim workers and support the permanent agency supply chain where required. As described in the report, the number of agency workers in Haringey had accelerated recently and the assumptions made at the beginning of this contract underestimated the cost required for the duration. This decision would extend the funding of the contract.

The Cabinet Member described that all directorates were working to ensure that there was a solid reason for every agency worker employed at the Council, and that there was an end date for their employment. Also, that no new workers would be recruited without prior consideration of all alternative options. The reduction in the numbers of agency workers would be monitored corporately once a month. The Cabinet Member for Finance and Local Investment would be meeting with officers every quarter to ensure that the reduction targets were being met. This focus would be supported by a new workforce strategy that would be coming to Cabinet shortly, which would revise Council policies around recruitment and retention. The Council valued the hard work of all current agency staff and hoped that where possible these employees would join on a permanent basis.

In response to questions from Cllr das Neves, Cllr Hakata and Cllr Connor, the following information was provided.

-      That the agency staff were needed to cover certain circumstances of employment need. This included: interim positions, completing a specific project, and to cover a specific trained skills set to meet a service or project need. It was acknowledged that the Council had a higher number of agency staff than benchmarked local authorities. The Council’s aim was to have a permanent workforce and for agency staff to be embedded in the Council workforce.

-      In relation to reducing spend on agency staff, directors were adding in end dates for discontinuation of agency staff contracts. The number of agency staff was monitored on a monthly basis, but it was difficult to leave vacancies as there was a shortage in certain areas of the Council which if not filled would be impacting on service delivery. It was noted that other boroughs were also facing similar issues.

-      The Director for Culture, Strategy and Engagement advised that the challenges of recruiting to sector specific roles was not unique to Haringey, and London Councils and other agencies were facilitating initiatives for different roles to mitigate Councils competing with each other to recruit to these roles. There were different initiatives to participate in for different sectors and the Council was exploring a number of them.

-      The figure in the contract increase was to cover the salaries of agency workers and enable the Council to continue to manage the agency workers until the end of the contract term.

-      With regards to competing with other boroughs’ pay scales and terms and conditions, there was a national pay structure for local government staff but there could be differences in job evaluations and we are also competing with the private sector where pay is often higher. The aim of the imminent report on workforce planning was to identify the jobs that would be needed in the future and how these would be effectively recruited to through a combination of recruitment activities and development roles. This would involve promoting the employer brand and setting out the advantages of working for a local authority.

RESOLVED

1.    In accordance with the Council’s Contract Standing Order (CSO) 10.02.1 (b) Cabinet to approve the variation to increase the value of the Matrix contract; and

2.    To approve an increase of up to £20,000,000 for the duration of the contract. This increase is to ensure that the Council can continue to provide short term agency / interim workers and support the permanent agency supply chain where required.

3.    Notwithstanding 3.2, the Chief Executive be required to submit a progress report to the Leader of the Council no later than 1st June 2024 detailing any variations from the targets set. At this point, the Leader of the Council may require further reductions in agency spending.

4.    The contract duration is four years, from 26 July 2021 to 18 July 2025.

Reasons for decision

The initial contract value of £108,000,000 agreed by Cabinet on 20 November 2020 and a 1^st variation for £1,495,090 for the provision of the permanent recruitment supply agreed in 2021 was estimated based on the previous three years.

This estimate could not have accounted for the unprecedented events of the past few years, including: Covid and the large number of additional agency workers as a result of the Covid testing programme, job market challenges, Brexit, and the higher-than-expected annual pay increases. We are anticipating a further potential increase in Housing to work on the improvement programme. None of these higher costs and additional spend were accounted for in the original contract estimate.

In 2022, the Council migrated several off-contract interim workers on the Local Government Recruitment Partnership (LGRP) framework to Matrix as well as other agency suppliers, which reduced overall costs. However, it increased the value of spend through the Matrix contract, contributing further to the increased rate at which the overall contract value was being used up.

The Chief Executive and the Corporate Leadership Team are taking quick and decisive action to control and reduce agency spend, as detailed in 5.3 below. The development of a new workforce strategy to replace the existing one, which has run from 2019-23 and delivered a number of improvements in our HR service, is paramount for solving this issue on a sustainable basis. As an organisation with a large and diverse workforce delivering services in a wide range of disciplines, the Council needs to develop a range of workforce planning approaches that address the different challenges that exist in different service areas. These need to sit under an overall strategy to attract people with the right skills, values and attributes to want to work for us on a permanent basis, demonstrating commitment to the borough and enabling the Council to invest in developing its staff and services for the long term.

The work to develop this strategy is under way and will be reported to Cabinet in due course. We are currently carrying out a staff survey and will be engaging with staff networks, managers and trade unions to inform the strategy.

However, whilst the Council will always seek to reduce the reliance on agency staff, there will remain a continuing requirement to plug skills gaps, address market and recruitment challenges which often pertain across the whole local government sector and ensure the continuation of essential services. The Council needs to therefore ensure that it can continue to acquire the right skills to serve our residents while securing the maximum value for money possible. Extending the value of the existing contract ensures the achievement of that objective.

The spend of the current contract value of £109,495,090, inclusive of the 1^st variation; if at last year’s run rate, is expected to be reached in early 2024. The contract runs until July 2025. Directorates will need to materially reduce spend in accordance with their forecasts as, even with the value increase recommended in this report and the expected reduction in run rate as per Directorate forecasts, Officers project that the contract value will be exceeded shortly before the contract end date.

Alternative options considered.

Not to extend the contract value. This would mean the Council could not continue to use agency workers without services procuring each worker individually on the open market. This would substantially increase costs and reduce corporate control and monitoring. This option was discounted on that basis.

Re-procure a different contract. This would result in unnecessary work and considerable disruption to Council services. A new contract for provision of temporary, interim and permanent recruitment will be procured in 2024/25 and will include consideration of an insourced solution. This option was discounted on this basis.