York's new Labour-run council says it plans to get the number of temporary agency staff working in the city’s public sector under control.

Despite awarding a maximum seven-year contract extension to the City of York Trading, the council’s temporary workers recruitment company, councillors agreed efforts need to be made to reduce the number of agency workers in the city.

The contract allows the council to claim a dividend from the agency’s profits, rather than pay expensive external recruitment agencies.

Labour's Cllr Katie Lomas said: “I think that, like everyone, I’m very keen to see us reduce our use of agency workers unless it’s absolutely necessary.”

She added: “Permanent jobs are important for both employer and employee and should always be number one and not just because of the impact on the budget when we have to pay a premium for agency workers.

“However, this contract means that where we do have to engage agency workers, the premium that we pay is much reduced and that we get a dividend from profits made by the agency, which would absolutely not be the case were we to try to let a contract with a commercial agency that we had no relationship with.

“Our efforts that we are making to reduce the number of agency workers are quite legitimate and proper and I know that officers are making efforts to do that right across the council.”

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However, Liberal Democrat group leader Cllr Nigel Ayre said the dividend was just a 1.4 per cent return on total spending and less than 1.2 per cent of overall turnover.

“The dividend itself is not a significant asset to the council,” he said.

Since 2013, the council has received £734,000 in dividends from the scheme, including £135,000 from last year.

Helen Whiting, head of human resources at the council, said: “If we were to bring it in-house, we would have to consider a number of things, like I’ve put in the paper, in terms of auto-enrolment, we’d have to set up an awful lot of resourcing, we’d have to put them on the local government pension scheme.

“There is a whole host of things to do there.”

Cllr Bob Webb thanked officers “for really getting the use of agency work under control because it will lower costs".

He said: “It’s going to take time but I think we’re on the right path now.”