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back to article Leeds council cuts contractor rates

Leeds City Council is telling all its IT contractors to take a ten per cent pay cut. This has become standard practice for many private companies, especially hard-up banks, but is less common in the public sector. The contractor who contacted us felt the council was taking advantage of the economic downturn to force cuts on its …

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Silver badge

pay down, but council tax up

If Leeds council is anything like mine, even after forcing a pay-cut, they still manage to put up council tax bills by *far* more than the rate of inflation - by whichever measurement you use.

I wish I could run a business the same way councils run their (sorry, OUR) affairs.

No competition,

the ability to charge whatever you choose,

no discounts for early payers (pay once per year, the rate is still the same as if you pay monthly),

no ability for "customers" to opt-out - even from services thet don't get or want,

no shareholders to answer to,

more than inflation increases every year - even if services stay the same or get cut,

get your existing customers to pay for ex-employees pensions,

answerable to no-one,

legal enforcement for non/late payers.

Given a regime like that, I could be making more than Microsoft within a couple of years.

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Thumb Up

Agents

Hey Leeds Council, cut out the parasitic IT agency's getting 20% for sending an email, your contractor's doing the work can keep their rate, everyone's happy and the downturn gets rid of one more IT parasite.

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Anonymous Coward

They're also slow at paying invoices

Although thats the case with pretty much every part of the public sector...

At a time when the national and local government is waffling on about helping business, you'd think they'd be a bit more on the ball with that sort of thing.

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Bronze badge

@Pete

"get your existing customers to pay for ex-employees pensions"

Don't most businesses that have an in house pension work like that?

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But seriously....

How many times must this happen....we contract because the money attracts us and we keep our skills fresh and make us good value for money. Permies scoff (as always) but I'm fed up with watching company after company (and now council) jump on the bandwagon of 'right sizing'.

If people knew how to properly manage budgets: - I know that my contract is £X a day and I need him for 50 days then I need 50 x X then do the bloody business case.

If it stacks at X you don't need to piss everyone off by enforcing X - 10%!?

Forcing rates lower introduces crap skills into the market as the differential decreases. Then you get bad names on contractors and you're then only getting work by old school boys network.

Rant over.

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Anonymous Coward

The contractors may moan...

The contractors may moan, but the whole point of self-employment and the increased earnings is that the self-employed worker assumes risk. That's risk for extended periods of illness, risk of periods of unemployment, and, yes, risk of changes in the market rates.

Those who accept those risks become contractors; the rest of us take a much lower pay-packet in the form of a salary and let the company take the risk.

In the long-term, neither party is notably better off than the other -- we just all choose our own preferred lifestyle.

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@Ed Smith

Looks like you don't really understand the concept of market value there. Feel free to demand whatever pay rate you like, just don't expect many people to pay it right now.

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Stop

Full Time Contractors

I can't help but think that the over reliance on contractors in the public sector instead of actually hiring full time staff is a major cost load on the public purse. Simply put, there should be no need to hire contractors for most significant projects as they would be handled by the cheaper in-house people.. However I've seen this in many companies that don't understand IT who would rather pay twice as much just to outsource it (with all the communications problems that entails) than just hire some full time people with the requisite skills. If your IT needs are very sporadic (a few months a year at most) then contractors might be desirable. Then again we're talking about an industry that exists to reinvent the wheel as councils rarely seem to share knowledge, planning and IT developments with each other.

On the other side of the argument, full time IT people are usually underpaid for their skills and certainly under appreciated, and contracting allows them to "right price" their abilities.

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Flame

Supply And Demand

Quite simple.

Contractors are a free market. If the Council (or any organisation) believes it can get the same skills for less money, then why shouldn't it. It is after all, our money!

Contractors like everyone else have the right to minimum wage. £5.73 per hour. If you don't like the rate you're being offered, don't work. Those of us who are willing to work are more than happy to take your job.

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Anonymous Coward

Pensions

" "get your existing customers to pay for ex-employees pensions"

Don't most businesses that have an in house pension work like that?"

Most public sector employee pensions are funded the same way as private sector pensions used to be, by pension funds. There is a myth being put about at the moment that current public pensions are being paid for by current revenue. For the vast majority of public sector employees, this is (afaict) not the case, employees pay into a fund while they are employed, and when they draw their pension it comes from the fund.

Different rules may well apply to those who are able to get their snouts directly in the trough; that applies whether the tossers involved are private sector banksters or public sector chief executives or whatever.

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Unhappy

Only 10%

I'm a contractor for HP and they've cut mine by 25%, any jobs going at Leeds Council ?!

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Anonymous Coward

Welll mistakes do happen

and unmotivated workers tend to be more prone to mistakes, I can see the payroll system for council managers being particularly unloved. Still that could actually save the Council a lot of money, I am sure managers could work for nothing, it is not like they actually do anything.

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Anonymous Coward

Two things.

"The current climate is also seriously affecting the council’s ability to generate money from the sale of surplus land and buildings which in the past has allowed it to invest heavily in services."

so basically follow the gordon brown spending model, burn your assets on feckless spending

secondly how much IT spending does a local council need? that a 10% cut will make a huge difference

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Somewhat missed the point...

Rates and work return are not relevant. Nobody came in and took away assigned budget. By all means renegotiate at renewal time (both parties often do) and offer a lower rate. Then the decision remains with the contractor.

The point I make is not about how much someone gets paid but more about the commitment to funds thy they make on an agreed rate.

Nobody, permies or contractors like pay cuts - you shouldn't need them mid term if you managed your budget correctly...

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Right to minimum wage

No, contractors as owner-managed businesses don't have a right to anything, let alone minimum wage. Same deal as a corner shopkeeper. You can only take out of the business whatever profit is left over after you deduct operational expenses. There is no one else to fund a 'minimum wage'. If you are not able to attract and retain paying customers, you are entitled to not eat and fall behind on your mortgage. Or get a 'proper job'. Or do something else that you can succeed at. Conversely, in the boom times, you are entitled to take large chunks of money out of that business. That's the inherent risk of any business venture.

The other posters are right. Because contracting is a form of running an owner-managed business, you compete in a free market. You cannot escape that fact. In some climates, you actively take advantage of that, when supply/demand is more in favour of the supplier. That would not be right now.

It is actually technically incorrect to say 'The customer has imposed a ten percent pay cut' because

1. It is not 'pay' like wages, it is the payment of a Time and Materials format invoice for services by the contracting company, the same kind as is put in by the cleaning company and the vending machine maintenance company. So a 'pay cut' cannot happen, the council have no idea what the contracting company pays its operatives, they only know their contribution is to its turnover.

2. Similarly, they cannot 'impose' as they have no power to do so. What they can - and rightly have done - is say 'as customers, we are no longer prepared to buy services for X pounds, we will shop around and go with cheaper alternative suppliers'. As other posters correctly say, welcome to free market business. The value of your offering goes down as well as up. The idea of 'pay cut' is better expressed as the contracting company volunteering, albeit reluctantly, a discount to its customer in a bid to retain custom in a tough market. This is no different to any other seller of anything, be it cars, fruit and veg, hifi or what have you. The company can always choose to NOT offer such a discount if they so choose. This would depend on how valued that customer is to them.

Eventually, your offering value falls to zero, as whatever offering you provide no longer meets any business needs. For IT contractors in particular, this equates to outdated skill sets - or just being a grumpy old beggar who is a pain to have around.

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Paris Hilton

Cut productivity

Of course, you could always cut your productivity by 10%.

Paris, 'cause she has a nice body and no brains. Who cares what she charges per hour.

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