Umbrella Companies and limited companies supplying interim managers have seen a sharp rise in demand emanating from the public sector, a new report from interim solutions provider Interim Partners reveals.

During Q3 2012, the public sector accounted for 40% of all enquiries for interim managers, which represents an annual surge of 13% on the 27% registered in Q3 2011. Paradoxically, the very austerity measures that drove a sharp decline in public sector interim management recruitment in 2010 have subsequently propelled demand upwards, as departments struggle to meet tough budgetary limits while maintaining services.

The bounce-back has occurred even against the backdrop of a government clampdown on off-payroll staff in the public sector after a media furore last year. This concerned high-ranking civil servants who were effectively in permanent engagement but who were nonetheless being remunerated through personal service companies to reduce income tax and NICs.

Dismissing last year’s Treasury proposals to crack down on off-payroll remuneration structures in the public sector as a “knee-jerk reaction to negative headlines”, Interim Partners’ associate director Steve Melber said: “Public sector demand for interims has remained very strong in the face of significant headwinds. Perversely there was a big fall in the public sector’s use of interim managers when the coalition’s austerity programme was first implemented – even though interim managers are an extremely effective tool in reducing costs without compromising service delivery.”

The NHS has been contracting with interim managers especially actively, the report reveals. The Health and Social Care Act is driving major structural change at a time when hospital trusts must make annual cost savings of at least 4-5%.

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