“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?

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”.

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.

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.

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!

”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.