Even a week is a long time in politics, so it’s probably not surprising that since I wrote about the IR35 ‘Hokey Cokey’ in October, all bets are now off. Since then we’ve had a change of prime minister and Cabinet, not to mention that the infamous ‘mini-budget’ has largely been junked. And so it means all the things we thought might happen with IR35 now won’t. We carry on (merrily?!) as we are. Or do we? I’m going to suggest it’s anything but merry right now, even if we are only a couple of weeks away from Christmas.
To say it is tough out there sounds like a drastic understatement. This very magazine carried the front page headline on 24 November: ‘Croydon debt spiral sparks s114 concerns.’ While Croydon’s circumstances are historic and at the extreme end of any spectrum of concern, they belie a far broader story. While ‘council tax bills may rise by 5%’ to quote another headline, 2023-24 budget setting looks to be a high stakes round of Jenga when it comes to balancing increasing demand with less money. It seems more s114s are just a matter of time.
All this comes at a time when the sector is losing more senior talent than it is growing and retaining. Permanent vacancies are going unfilled (sometimes two or three times over), and councils are turning once again to their senior management structures to look for cost savings and shared management opportunities. Increasingly councils are competing with one another – with their peers – for talent. Talent which is in very short supply. You only need to look as far as the number of permanent s151 or chief executive vacancies for a clear indication that demand far outstrips supply. Look further if needs be at the raft of chief executive appointments happening either internally or within individual parts of the market, like in London. It doesn’t mean councils aren’t getting great people for their jobs, but they are picking from smaller pools and it leaves holes elsewhere that are becoming ever harder and in some cases less desirable to fill.
The experts tell us that the recession will be (or is) short and shallow but a recession it still is. That it will be more keenly felt across the private sector is only part of the story, because its effects on other parts of the market have a direct impact on council service provision, precisely because more people need council support. So while a shorter, shallower recession is of some comfort, and while we have seen the pattern in the past of the public sector feeling it the least, this time may be harder. Interest rates on debts will rise further, affecting individuals and households as well as large organisations and councils are not immune here. Inflation is hitting families hard and is unlikely to ease during the next budget cycle.
With more need for services than ever, dwindling reserves and decreasing settlements, what does this have to do with recruitment and retention? Arguably everything. While many top posts carry statutory responsibilities and therefore cannot be left unfilled, many other important roles may be left vacant, even if just for a while. When it comes to recruitment, what is discretionary and what isn’t? Where will councils be forced to look for savings? What posts will be seen as unaffordable luxuries?
Few are surprised the proposed IR35 reforms were junked almost as hastily as they’d been thought up. Hiring interim managers is an expensive business, even more so inside IR35. Here again, demand significantly outstrips supply, but demand isn’t what it was in every case. The market remains buoyant for statutory leadership roles and those that are critical to delivering savings. Indeed, we are back into a market where interim managers will move roles before their current role is finished which is often as a direct consequence of better terms and security, even if the job they’re moving from hasn’t completely finished. Chances are that won’t change next year either.
However, look deeper into what you might term ‘luxury’ or ‘discretionary’ recruitment spend and increasingly those interim roles are either disappearing altogether, are being cancelled or are simply not being recruited to at present. It doesn’t mean that a council may not want to deliver the savings, efficiencies or improvements attached to those posts, but to hire interim managers on day rates just isn’t happening to the same extent it was even a short while ago. It means councils are shuffling the deckchairs so to speak.
Inevitably, good interim managers and a flexible workforce in general are part of most innovative resourcing plans, and councils that hire their interims proactively rather than reactively are likely to get the best out of them. While the market as a whole has become incredibly cost conscious, there are still opportunities out there for people who can make a difference to service provision or efficiencies. The challenge for councils is to give themselves time and space to get the right person. Interim management is so often the perennial after-thought but with planning and foresight, councils tend to get better people and better outcomes than if they leave these decisions to the last minute. It is a competitive market out there and when it comes to securing the best possible talent, nothing should be left to chance.
Neil Lupin is managing partner of Green Park Interim & Executive Search.
Tel: 07967 826026