Caps on rates of pay for agency nurses will be introduced from next week, under new government rules that aim to reduce NHS spending on temporary staff and encourage trusts to employ more permanent workers.
They will only allow NHS organisations to recruit non-permanent staff from approved agencies, and will place a cap on total agency staffing spend for trusts in financial difficulty.
Health secretary Jeremy Hunt said the new rules would tackle expensive agencies that are “ripping off the NHS”.
“Expensive staffing agencies are quite simply ripping off the NHS”
The announcement comes after NHS England chief executive Simon Stevens said at the weekend that the health service would to take collective action to tackle the high cost of agency spending.
Use of agency staff has risen from £1.8bn to £3.3bn in three years, according to official figures.
The Royal College of Nursing predicted in February that agency nurses alone would account for around £1bn of spending in the 2014-15 financial year.
The cap on hourly rates of pay for agency staff will initially apply to nursing staff, but will eventually be extended to doctors and other clinical, managerial and administrative staff.
Rates will be decided locally between NHS England, Monitor and the NHS Trust Development Authority and any breaches will be dealt with by the latter two organisations, according to the Department of Health.
The new measures are expected to save the NHS £400m a year on agency nursing.
Meanwhile, all management consultancy contracts will immediately be capped at £50,000, with trusts having to seek permission from their regulator, Monitor or the TDA, if they need to break this threshold for clinical reasons.
The total bill for management consultants was more than £600m last year.
Mr Hunt said: “Expensive staffing agencies are quite simply ripping off the NHS.
“It’s outrageous that taxpayers are being taken for a ride by companies charging up to £3,500 a shift for a doctor,” he said.
“The NHS is bigger than all of these companies, so we’ll use that bargaining power to drive down rates and beat them at their own game,” he added.
“In controlled, smaller numbers agency and bank staff will have a long-term future helping the NHS respond to fluctuations in demand”
Mr Hunt said that following on from the government’s commitment to providing the health service with an extra annual £8bn by 2020, the new agency rules would help NHS England deliver its side of the bargain on making efficiency savings.
“The path to safer, more compassionate care is the same as the path to lower costs,” stated Mr Hunt.
The NHS Employers organisation welcomed the government’s focus on the use of agency staff, but noted that temporary workers helped to ensure continuity and quality of care.
“In controlled, smaller numbers agency and bank staff will have a long-term future helping the NHS respond to fluctuations in demand,” said NHS Employers chief executive Danny Mortimer.
He said that further details on the new controls for agency spend were required and added that trusts could use other methods to bring down this bill.
“There is potential for NHS trusts to reduce spend on agency workers through further improvements in flexible working, technology and arrangements with local agencies,” he said.
The Royal College of Nursing said it was “encouraging” to see efforts from the Department of Health to tackle the problem of “excessive” agency spend.
“The health service needs to focus on the root cause of this problem, not just the symptoms”
But it warned that it would only work alongside other measures, such as recruiting agency staff into permanent roles, boosting training places and retaining existing staff.
“The health service needs to focus on the root cause of this problem, not just the symptoms. A lack of investment in nurse training and cuts to nurse numbers mean that trusts now have no choice but to pay over the odds for agency staff and recruiting overseas,” said Peter Carter, chief executive and general secretary of the RCN.
He added: “Further detail on these plans is needed to answer questions such as how a maximum rate will be set and whether it will vary based on location and experience.
“Patient safety must always come first, so any plans for a cap on spending must ensure that it does not prevent trusts from providing safe staffing levels when there are no alternatives,” he said.
Unison head of health Christina McAnea said: “The rise in the use of agency staff is down to the chronic underfunding of the NHS over the last five years, the need for trusts to meet safe staffing levels and the impact of long-term pay restraint.
“That’s also why an increasing number of nurses are choosing to leave the NHS to work for agencies because there they get better pay, increased flexibility and more control over their working hours,” she said.
“The government must limit the huge profits made by agencies, but no-one should be demonising agency workers,” she added.