Consultants: reporting on their use by the Government of Jersey (P.59/2019) – report of the Chief Minister – December 2019

STATES OF JERSEY

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CONSULTANTS: REPORTING ON THEIR USE BY THE GOVERNMENT OF JERSEY (P.59/2019) – REPORT OF THE CHIEF MINISTER – DECEMBER 2019

Presented to the States on 9th December 2019 by the Chief Minister

STATES GREFFE

2019  R.149

REPORT

Introduction

In July the States Assembly approved a proposition (P.59/2019) requesting that the Chief Minister reports to the Assembly every 6 months on the cost of consultants, fixed- term employees and agency staff employed by the Government of Jersey.

The first report, covering the period from January to June 2019, is presented today (Monday 9th December 2019).

The data is presented in 5 tables (see Appendix to this report), which cover most of the information requested in the proposition. Where it has not been possible to gather specific data, this is explained in the notes accompanying the tables.

The data provided in the 5 tables cover –

• Consultancy services provided by a supplier (£7,155,140)

• Consultancy services provided by a specific individual (£ 4,087,681)

• Fixed-term employees, collated by department, for individuals paid at or below the Civil Service grade 15.4 salary (£7,048,029)

• Fixed-term employees, paid above the Civil Service grade 15.4 (£590,395)

• Local agency staff, collated by department (£3,392,856)

• UK Nursing agency cost (£2,484,101)

• Social worker agency cost (£823,501)

The use of contractors

Interims, contractors and agency staff are commonly used by governments, businesses and third-sector organisations for one or more of the following reasons –

• To provide short-term cover to fill vacancies or sudden capacity gaps, where speed of appointment is important to avoid the failure of services or care. This is commonly used in government to fill temporary capacity gaps in teaching, nursing and social care.

• To fill longer-term capacity gaps, where permanent recruitment will take time and the need to fill a role is urgent, but it is likely to take months to make permanent recruitments. In a government context, this can again involve frontline teachers, nurses and social workers, but also some more senior roles.

• To fill capability gaps, where skills are needed that the organisation does not currently have. This is typically where an organisation needs to access those skills urgently and only for a period of time, for a particular time- limited project or phase of activity, where it does not make economic sense to recruit permanently, and/or where the project's aim is to build sustainable internal skills and it needs support to do this.

All of the above are reasons why the Government of Jersey uses consultants, agency staff, interims and fixed-term employees.

For example, the One Government modernisation programme has involved the rapid audit and transformation of the previous public service structures and processes, which required external capability with experience in these areas to take an objective view and support the design and implementation of necessary initiatives.

In some cases, this involved specialist individuals, who were hired for specific periods and left once their tasks were completed. In others, this involved contracting for 2 or 3 years with external partners to provide both capability and capacity for major projects, such as in Finance and IT.

In nursing, teaching and social work, where vacancy rates have been historically high, the Government has, over many years, relied on a succession of agency staff. However, this Government has sought to break this dependency with campaigns to attract and retain permanent staff. For instance, the Let's be Honest' campaign launched earlier this year has so far recruited 22 permanent social workers to work in Jersey – many from the UK, but some agency staff applied to become permanent.

A review has taken place of these costs and a number of contracts are either ending or not being extended as they are time limited as shown in the Appendix. As a result, the total number of consultants is expected to significantly decrease. For instance, only 7 contracts in Table 1 are expected to be extended, while 42 are not. Similarly, in Table 2 only 15 contracts are expected to be extended, while 49 are not.

The cost of contractors

Contractors typically cost significantly more than the equivalent permanent employee of a similar grade and skill set. The higher costs are as a result of a number of factors –

• Agency fees are often charged on top of the contractor's own cost.

• The  contractor  (when  self-employed)  needs  to  factor  in  employer  social security, pension and tax costs, and a premium to cover work insecurity (they might be out of work between contracts and are unpaid for sickness absence or holidays).

• Competition with other organisations for scarce skills pushes up the market price for contractors.

• The additional cost of travel and accommodation for contractors working away from home.

On the other hand, these costs need to be compared with the opportunity cost of not doing the work they are brought in to do – whether care for patients and vulnerable people, educating our children, or delivering transformation that will improve services and reduce future costs. In addition, where contracts are of short duration, and the roles are not ongoing, and there is no-one in the organisation with the skills to do the work, there is no alternative.

It is also the case that the costs of contractors will generally be much higher in the earlier months and years of a major transformation than later on, when the ground work has been  done,  skills  have  been  transferred,  the  contracts  have  ended  or  fixed-term employees have been replaced by permanent staff.

As part of the transformation of the public service a number of contractors, interims and fixed-term appointments have concluded, and others are starting to wind down.

However, we will continue to need support in some major areas in coming years – most notably in IT.

To put the figures in the tables into context, the amount paid to contractors who have been employed through a supplier, in the first half of the year, is only 5.3% of the total annual spend on all commercial procurement from third-party providers.

Notes:

1. Through the collection of this data it has become clear that we do not maintain a central record of procurement information, which is one of the shortcomings that One Government modernisation is designed to resolve. We have therefore been unable to provide information as to whether consultants were procured through a tender or quotes selection process as requested in the Proposition. However, in 2020 we will be putting this in place, so that in the future we can provide details on whether suppliers have been procured through a tender or quotes selection process. This also highlights our need for an integrated payroll, procurement and accounts payable system to collate and verify this type of information, which is included in the proposed Government Plan. The target date for implementation is 2022
2. The Proposition asked us to indicate if a structural needs assessment (SNA) was carried out for each contract. While there is no common definition of a SNA across the organisation, a significant number of SNAs have been completed and this process will be improved as we introduce a new procurement framework. This will include increased due diligence on all of our commercial contracts.
3. Departments and accountable officers shown in the tables may have changed since the procurement took place, due to the One Government changes to departments.
4. The daily rate of consultants has not been shown, due to commercial concerns over releasing this information. Instead it was felt that showing the actual cost for H1 will provide  more accurate information for members.  In addition, consultants often work across a number of projects meaning separating the cost of each individual engagement is not possible at this point. With regard to the final cost of any engagement this will be completed when we can bring all of the systems together, see point 1 above.
5. It is noted that the role descriptions vary in detail. For the next report, we hope to provide a more consistent and detailed narrative to describe the work and why consultants were required.