URL: https://hackney.moderngov.co.uk/ieDecisionDetails.aspx?ID=7975

Decision Maker:

Outcome: Recommendations Approved

Is Key Decision?: No

Is Callable In?: No

Purpose:

Content: RESOLVED: Confirmed approval to create a Joint Venture Agency between Hackney Council and Commercial Services Kent Ltd (CSKL), with the agreement to provide recruitment agency services to all Hackney Departments and Services.   REASONS FOR DECISION   Hackney’s annual agency staffing spend is circa 48m per annum and as a result of increased budgetary constraints and pressures, the Council needs to be more efficient in its recruitment approach, whilst recognising the national recruitment challenges in fulfilling certain roles (e.g. Social Workers, Care Assistants, Children Services). A change in Hackney’s temporary agency recruitment arrangement would affect all services (existing and new temporary staffing contracts).   The agency Joint Venture proposal seeks to establish an innovative new public-to-public Joint Venture model that would help meet Hackney’s requirements for recruiting high quality agency staff in a way that maximises local employment opportunities, supports community wealth building and generates returned income to the council.   Hackney would leverage on the experience of CSKL and knowledge in setting up a Joint Venture providing access to its governance, support structures and existing supply chain. CSKL have, together with their Partners in 23/24, returned £3m back to local authorities and have partnerships with Kent, Hampshire, Luton, Dudley, Surrey, Dorset and Halton.   The Teckal Joint Venture would provide services to the council as a managed service (master vendor). As a Master Vendor agencies would come direct to The Joint Venture organisation and local resources would be engaged to undertake direct fulfilment. Fulfilment would be managed by a service level agreement and performance regularly monitored.   Joint Venture accesses supply chain via managed DPS framework and would release opportunities to all approved suppliers, in-line with Hackney’s requirements. Maximum pricing is set (to match existing supply chain margins). The Joint Venture would source candidates of suitable skills, experience and qualification levels to be placed in roles across the Council.   A key objective of the agreement would be to source skilled, quality staff to complement our permanent workforce, and to provide the Council with flexibility to meet gaps in our workforce demand. Where we have particular challenges with permanent recruitment, we may use Joint Venture resources to provide additional search and recruitment capabilities to the council.   Where it is appropriate for the business, the Joint Venture would also seek to convert good agency staff to permanent employment, according to the same terms and conditions we have with our current supplier.   A critical success factor in the Joint Venture model, is the direct fulfilment of temporary and interim staffing requirements. To facilitate this fulfilment, the Joint Venture would employ a number of experienced Fulfilment Consultants who would be based in Hackney, whose duties would be to proactively directly source candidates.   Through rental payment from the Joint Venture and dividend payment, the Joint Venture would capture some of the profit margin (agency fees) that is currently taken by our current private sector supplier as part of the fulfilment process. Dividends are returned to both Joint Venture parties each year from the retained surplus of the Joint Venture (on a 50/50 split basis).   Management of the Joint Venture would be governed under a shareholder agreement and joint accountability statement. The board of directors appointed by the shareholders (from both parties) would have oversight on the day to day operations and decision making process.   DETAILS OF ALTERNATIVE OPTIONS CONSIDERED AND REJECTED   Alternative arrangements have been considered for the fulfilment of the Council's agency recruitment needs however, it is envisioned that these will not bring about the same level of financial and non-financial benefits.   Competitive Open Tender Pros; ·  The competitive procurement process allows market innovation and competitiveness in a transparent environment. Under the new procurement rules we would be looking for the most advantageous tender and we can apply our own terms and conditions to the contract. ·  The council has an established and experienced procurement process to manage the risks associated with going to open tender.   Cons; ·  The current contract with Matrix was tendered in 2017 and since has  been extended and we have not gone to the market. Going back to the market could be a missed opportunity to learn from previous years and implement a new agreement that will produce a more cost effective solution and wider benefits to Hackney  ·  Hackney continuation to pay agency fees to a recruitment vendor. Agency average margins between 5% - 10% of total spend. Managed Service Provider (Neutral Provider) average fee 0.5% of total spend.   Hackney to deliver its Interim Staffing Recruitment Pros; ·  More control of our agency recruitment and better ability to tailor our recruitment to meet Hackney’s requirements. ·  Potential ability to capture the fees retained by the current Neutral Vendor.   Cons; ·  Hackney is in-experienced in the setting up and delivering a recruitment function that is able to deliver to the same demand of the current interim staffing numbers. ·  Risk that there will not be enough time to establish a new Hackney led recruitment framework. ·  Missed opportunity to learn through a partnership and a partner that has the experience in setting up a recruitment function.

Date of Decision: October 28, 2024