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Agency pay cap comes into effect today

Monitor and the NHS Trust Development Authority (NHS TDA) have introduced caps on the hourly rates paid for all agency staff, which take effect at midday today (23 November). 

The price caps will apply across all staff groups – doctors, nurses and all other clinical and non-clinical staff – but will ‘ratchet down’ subject to monitoring on 1 February 2016 and 1 April 2016. 

In a letter to all NHS trusts and NHS foundation trusts employing agency staff, the regulators stated that the latest financial performance, which revealed the NHS has racked up a £1.6bn half-year deficit, highlights the need for “concerted further action” on finances in 2015-16, particularly to tackle the rapid growth of spending on agency staff. 

The regulators added that the new hourly price caps will build upon the new framework system that that has been launched to ensure only agencies provide quality staff at a price that is value for money can provide nurses to the NHS and the introduction ceilings on the numbers of agency nurses. 

The following table summarises the trajectory of the price caps:

Pay cap prices

Following the price cap consultation, Monitor and NHS TDA have decided not to include bank workers’ pay under the price cap rules

They said: “We will keep this under close review and if bank pay rates increase substantially, we will move to extend the price caps to bank workers.” 

All trusts are required to report to Monitor and TDA when they exceed the price caps. 

Saffron Cordery, director of policy and strategy at NHS Providers and a member of the NHE editorial board, said the implementation of hourly price caps for all agency staff and a cap on management consultancy spend has the potential to be a key part of returning the NHS to financial balance. 

“It is important that the regular monitoring process is implemented in a proportionate manner with minimum administrative burden so that the NHS frontline can focus on continuity of high quality care for all patients and service users,” she stated. 

“The success of the price caps will depend on all providers adhering to them so it is positive that Monitor and the TDA have listened to and responded to consultation feedback from providers.” 

But Janet Davies, CEO and general secretary of the Royal College of Nursing, added that the NHS needs an urgent cash injection. 

If the government hopes to solve this financial crisis by capping agency spend, it will be disappointed. This crisis was not caused by agency staff,” she said. “While it is right to reduce the money spent on short-term staffing, this should be done by increasing the supply of long-term staff, by training more nurses and paying them fairly. 

“The government must give the NHS the money it needs now, and make it easier for trusts to provide safe staffing in a sustainable way in the long-term. The government must act now to protect patients.”

Tom Hadley, director of policy at the Recruitment & Employment Confederation (REC), described the decision to introduce the caps, just five working days after the close of the official consultation, as “illogical”. 

“As of today, doctors and nurses who provide crucial front-line services to NHS patients – often at short notice and during unsociable hours – are having their pay cut,” he said. “This cannot be right and with increased winter pressure on the NHS soon to come, it puts patients’ health at risk. This policy will drive skilled professionals out of the NHS and make the current staff shortages even worse.”


Andrew Preston, MD Of De Poel Health+Care   23/11/2015 at 10:48

As a leading independent expert in managing the supply of temporary staff of all grades to the NHS and wider private health and care sector, de Poel health+care welcomes the introduction of agency rate caps in order to help NHS Trusts procure agency staff at more affordable rates and reduce the NHS’ current spend of £3.3bn every year. We are passionate about helping NHS Trusts to engage their temporary workforce in a completely different way and have a track record of doing so. Our neutral vendor model has been proven over the last 14 years and is widely adopted in the private health care sector where standardised, transparent pay rates and fixed pound agency margins have been implemented, putting a stop to continuing variation. Our whole existence is based on the ethos of raising standards, continuously adding value, reducing costs and helping our clients to optimise their relationships with recruitment agencies. This includes standardising service level agreements, setting and monitoring key performance indicators so agencies compete on quality of candidates rather than price, streamlining invoicing and timesheet management and ensuring full legal compliance. Through our innovative technology solution, e-tips ®, we enable NHS Trusts to maintain full visibility and control of their temporary labour spend through real-time Management Information, consequently paying substantially less in agency margins. Whilst an overwhelming majority of NHS Trusts are already using frameworks to obtain agency staff, negotiating pay rates set by themselves and central government, the introduction of a ban on the use of agencies outside these frameworks will go towards bringing much needed reform. Alongside this, de Poel health+care believes it is important to not lose sight of individual health care workers amidst these changes – reducing agency margins is one thing, reducing rates of pay is quite another. Agency workers are an integral part of the NHS workforce and we continue to champion their vital role in ensuring services continue to run smoothly, so that patient care is continually delivered as we move toward a 24-7 NHS.

Locum Recruiter   23/11/2015 at 12:33

Andrew, the existing framework agreements already have an in-principle ban on non-framework agencies. but hospitals still have to use them as in some cases the contracted rates are too low to procure sufficient quality-of-staff. What do you think will happen now that the rates have been reduced even further? The result will be MORE off-framework bookings, not less. No-one working for agencies disagrees with rate caps - but the fact is, there are already rate-caps in place. These rate caps have been negotiated and agreed by all parties. The problem is, there are now 'new' rate caps that have been wildly and thoughtlessly introduced with little or no consultation with anyone. There are also no caps on agency margins on the new rates. So really although the claim is to limit 'agency spend' what you are actually limiting is doctors pay. The current frameworks, the agreed and logical frameworks that are now being thrown out, do in fact have caps on agency margins.

AJP   26/11/2015 at 20:32

The problem isn't supposedly high rates paid to agency staff causing the NHS to lose money. Experienced Nurses with high level clinical skills are leaving the NHS in droves because their skills are not recognised financially and the pressures placed on them are becoming intollerable. Who wouldn't leave for better pay, a flexible approach to shift work and no hassle from bullying NHS managers? Experienced staff aren't grown on trees and it is a national disgrace the way NHS staff are treated by bullying management. Virtually no-one in the NHS has had a reasonable pay rise for the best part of eight years. If it wasn't so disgusting it'd be a joke. There has also been a spectacular failure of manpower planning in the NHS. Again the over-reliance of overseas staff is a disgrace.

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