The hourly rate the NHS can pay agency staff will be capped at 55% above the pay levels of permanent staff, under plans announced by the Department of Health.
The cap will be phased in for clinical staff, including doctors and nurses, from 23 November, subject to a consultation.
“For too long staffing agencies have been able to rip off the NHS by charging extortionate hourly rates”
It will initially be double the pay level of permanent staff, and will be gradually reduced to 55% higher by April 2016.
In a statement today, the DH said this would mean agencies “cannot charge the NHS a shift rate that is more than the hourly rate paid to existing substantive doctors, nurses and other clinical and non-clinical staff”.
The 55% top-up is to cover agency fees, holiday pay, pension contributions and national insurance costs, a DH spokesman told Nursing Times’ sister title Health Service Journal.
He said that for nurses the cap will be based on an hourly rate for permanent staff of about £15, which means that trusts would pay about £23 an hour for an agency nurse.
The DH said this, along with previously announced rules about procurement of agency nurses, is expected to save about £1bn over three years.
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Monitor and the NHS Trust Development Authority will launch a consultation on the caps this week. “Exceptional” breaches of the limits will be considered, but will require advance agreement.
The cap will not apply to interim managers employed through an agency, but recruitment will have to be approved by Monitor and the TDA.
Health secretary Jeremy Hunt said: “For too long staffing agencies have been able to rip off the NHS by charging extortionate hourly rates which cost billions of pounds a year and undermine staff working hard to deliver high quality care.”
Professor Sir Mike Richards, the chief inspector of hospitals, said: “I welcome the fact that this is being phased in, allowing staff and trusts time to adjust and minimising any risks to patient safety.”
Last week, it was revealed that providers’ combined financial performance in the first quarter of 2015-16 was £163m worse than planned, largely due to higher than expected spending on agency staff.
“The savings from these plans must be converted into permanent positions for nursing staff to ensure patient care is not compromised”
But the Royal College of Nursing warned that the plans should not be seen as a “cost-cutting exercise”.
Janet Davies, chief executive and general secretary of the RCN, said: “While capping agency charges may look like firm action from the government, it will not resolve the huge financial deficits trusts are facing because of spiralling patient demand and flat-lining budgets.
“Rising agency costs are a symptom of short-term workforce planning,” she said. “Any action on agency spending must go hand in hand with a longer-term strategy to train more nurses and properly value their work.
“These plans cannot be seen as a cost-cutting exercise as hospitals need these nurses to provide safe patient care,” warned Ms Davies.
“The savings from these plans must be converted into permanent positions for nursing staff to ensure patient care is not compromised,” she added.