Agenda item

[Michelle Rowe, Locum Solictor,to present report]

The Chair invited David Pattison, Chief Operating Officer, to present the report.

The Chief Operating Officer apologised for the late circulation of the report.

The Chief Operating Officer reassured the panel that a report will be presented for pre-decision scrutiny if any formal changes are proposed about the future of YOO Recruit.

The Chief Operating Officer advised the panel about the main findings from the Annual Governance Statement (AGS). A key conclusion was that the Monitoring Officer has confidence that there are good arrangements in place to oversee the performance of Council owned or involved bodies. This finding was supported by external auditors as detailed in the Annual Audit Review (January 2023) report. A copy the financial accounts for YOO Recruit is available online.

The Chief Operating Officer advised that it was agreed previously that following a ‘deep dive’ review of YOO Recruit an update report on the finding and recommendations would be presented to the panel for comment before being presented to Cabinet. 

A ‘deep dive’ review takes place every three years for all linked Council bodies to provide reassurance about the governance arrangements. The Chief Operating Officer commented on the importance of reviewing the governance arrangements of linked bodies or trading companies.

The Chief Operating Officer outlined the four objectives of the high-level review of YOO Recruit.

The Chief Operating Officer advised the panel that YOO Recruit is a wholly owned Council Company which provides most temporary staff and that is a cost-effective way of controlling the cost of recruiting employees.

The Chief Operating Officer outlined the reasons for recruiting temporary employees, for example, managing workload demands in a service area where an employee is away from work due long-term sickness or disability. The Chief Operating Officer highlighted the higher costs to the Council of using recruitment agencies to recruit a temporary worker when compared to using YOO Recruit.

The Chief Operating Officer commented on the governance structure and financial performance of YOO Recruit.

The Chief Operating Officer advised the panel that the current contract with Adecco UK Ltd, who act as management partner, will expire in August 2024 and this has provided the opportunity to consider different models of operation for the future of YOO Recruit. Adecco UK Ltd manages all temporary and contract recruitment for the Council, through YOO Recruit.

The panel were reassured that Council has the power to decide whether to continue operating YOO Recruit in the current way, to change to a different operating model or to change Directors. There is a regular assessment to check company is still fit for purpose and update reports are presented Cabinet Members and Leader of the Opposition.

The Chief Operating Officer commented that there were limited risks from the current operating model and the governance arrangements in place were satisfactory.

The Chief Operating Officer commented on the findings from the ‘deep dive’ review and future options proposed for YOO Recruit.

The Chief Operating Officer commented on changes to the national context in terms of the challenges facing both the private and public sectors in terms of recruitment, highlighting specific challenges in recruiting to roles procurement and planning services.

The Chief Operating Officer commented on the implications of the decision by West Midlands Board to approve the business case to offer the West Midlands Temporary Workforce Strategy and Regional Agency Provision for Local Authorities and the option in relation to temporary workforce strategy which some authorities are using to recruit employees. This may be an option the Council may wish to consider in the future.

The Chief Operating Officer reassured the panel that in terms of governance YOO Recruit is legally compliant. The Chief Operating Officer commented the future model could include a combination of the different options outlined in the presentation. A further report on the preferred options could provisionally be presented to the panel in June or July 2023 for pre-decision scrutiny.

The panel were invited to comment on the report.

The panel thanked the presenter for the report.

The panel discussed the reasons at the time YOO Recruit behind the decision to set it up, highlighting the high cost to the Council of recruiting agency staff. The panel welcomed the decision to review the operating model and the opportunity to consider possible alternatives.

The Chief Operating Officer advised the panel about the idea of removing the Director of Finance from the YOO Recruit Ltd Board and replacing her with the Chief Accountant as a change that is being considered following the review.

The panel expressed concern about the lateness of the report and the importance of publishing all the meeting papers on the agreed deadline to give members time to properly consider the information and to be able to scrutinise presenters.

The panel asked for details of the membership YOO Recruit Ltd Board and whether any Councillors were represented and the name of the Chair of the Board.

The panel also queried if other local authorities have a similar arrangement to manage all temporary and contract recruitments and if other alternative options have been considered and the scale of the recruitment challenge.

The panel queried the rationale for the Council’s role in the recruitment process and suggested the option of Adecco UK Ltd having direct day to day responsibility, with no Council involvement. The panel suggested that alternative could be to appoint a Wolverhampton based recruitment agency which would also support the recommendation in the report Select Committee: The Wolverhampton Pound - Procurement, Contract Management, and Commissioning.

The panel asked for details of the number of temporary and contract workers recruited by YOO recruit annually and the roles.

The Chief Operating Officer advised the panel that as regards the recruitment challenge the issue is where there is a need for a specific role requiring a certain level of experience and or expertise.

The Chief Operating Officer advised the panel that a report was presented to Governance and Ethics Committee in June 2022 which detailed the membership of the YOO Recruit Board.

The Chief Operating Officer advised the panel that the advice from external auditors and nationally is that Councillors should not be on the board of a Limited Company and accepted that if the current operating model continues consideration may be given to having non-Council representatives on the Board, particularly people from a business background.

The Chief Operating Officer advised the panel that the S151 Officer role on YOO Recruit Board is to give independent advice and this approach is supported by him and the external auditors when reviewing the governance arrangements.

The Chief Operating Officer commented in response to the suggestion of direct contracting the service to a recruitment agency or using a local agency is an option that is being considered as part of the options review.

The panel expressed concerns about the potential conflict of interest where Council employees are also members of YOO Recruit Board and level of accountability and challenge for decisions made and suggested a separate company would avoid this issue.

The Chief Operating Officer advised the panel that Darren Herries is Chair of the YOO Recruit Ltd Board in response to an earlier question.

The Chief Operating Officer reassured the panel about the role of the S151 Officer on the YOO Recruit board in response to concerns about possible accountability gap and that a request to attend a meeting would be supported.

The Chief Operating Officer commented on the importance accountability and transparency of decisions made by YOO Recruit board. The Chief Operating Officer highlighted the decision to have ‘deep dive’ exercises done every three years and to present an update report annually on performance and governance matters relating to Council linked external bodies to the relevant scrutiny panels as evidence of this commitment.

The Chief Operating Officer suggested inviting a member of YOO Recruit board to talk to the panel about their work and would support the provision of information to enable the panel members to scrutinise and challenge the decisions to reassure itself about the working arrangements.

The Chief Operating Officer agreed to share details with the panel of the numbers of temporary employees recruited by YOO Recruit.

The panel discussed changes in the way people now search for jobs online since YOO Recruit was set up and commented on internet search where the results showed Adecco not appearing in the first few pages and queried if this operating model was still an effective way of recruiting temporary employees.

The Chief Operating Officer acknowledged the significant changes in the way in which people search for jobs and the switch to remote working has added to the challenge and highlighted the change post pandemic where employees in some areas are not required to be in the workplace every day. As a result, local authorities are not only competing with other local authorities but with private sector companies in trying to recruit employees with the required skills and experience in areas of shortage, who now have much greater choice about where they work for higher salary levels.

The panel queried if YOO Recruit recruited for posts on behalf on any other organisation. The Chief Operating Officer confirmed that YOO Recruit was primarily set up to recruit temporary employees for City of Wolverhampton Council. There was an early discussion about the possibility of arranging a contract with another local authority to provide a similar service, but this option was not pursued further.

The panel discussed in detail the finances of YOO Recruit and specifically the level of annual trading profits. The panel queried the decision of YOO Recruit board to annually to retain shareholder profits as reserves for cash flow purposes rather than pay dividends. The panel further queried the added value to the Council provided by the current operating model and suggested a more profitable option could be to consider providing recruitment services to external organisations.

The Chief Operating Officer welcomed the comments and advised the panel that the purpose of the ‘deep dive’ review was to consider if the current operating model is the still right one.  The Chief Operating Officer added that YOO Recruit was set up in 2016 and was right to offer a challenge about if the current model was still the best approach.

The Chief Operating Officer commented that the added value of having YOO Recruit to the Council is that it pays significantly less than other local authorities for agency fees but welcomed the need for check and challenge.

The panel discussed the background to the decision to set up YOO Recruit and there was support for the approach taken. The panel suggested a further report on progress should be presented to the panel in 12 months.

The Chief Operating Officer reassured the panel that clear guidance has been given to Council employees represented on external bodies such as YOO Recruit Board to make sure they can manage any potential conflicts of interest between their different roles and approach to be taken when they attend meetings to present reports to panels.

The panel discussed the contribution of YOO Recruit in supporting the aims of the Council and welcomed the opportunity to be consulted about the findings of the review and to comment on the options being considered.

The panel thanked the presenter for the report.

Resolved:

1.    The panel comments on the presentation to be noted.

2.    The Chief Operating Officer to provide details on the number of employees recruited by YOO Recruit.

3.    The panel agreed to receive a further progress report on the performance of YOO Recruit in 12 months.

4.    The Chief Operating Officer to present a full options appraisal report for pre-decision scrutiny to the panel.