14.10.15
Hunt to introduce ‘strict’ agency spending cap from November
As part of a “tougher clampdown” on staffing, health secretary Jeremy Hunt has announced a pay cap on agency staff as well as limits to how much each organisation can spend with temporary staffing agencies.
The hourly price cap is expected to save £1bn on agency spending over three years, to be reinvested in frontline care and a “truly seven-day NHS”.
The move, which will apply to all types of agency staff, will be phased in from 23 November, subject to consultation by Monitor/Trust Development Authority (TDA).
It will build on previous “strict” controls announced earlier in the year – such as the mandatory use of frameworks for nursing staff, the cap on nursing spend “coming into force shortly”, the cap on agency spend for trusts and FTs receiving interim support from the Department of Health or in beach of their licence, and a requirement to obtain approval for consultancy contracts over £50,000.
Hunt, making the announcement yesterday (13 October), 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.
“The tough new controls on spending that we’re putting in place will help the NHS improve continuity of care for patients and invent in the frontline – while putting an end to the days of unscrupulous companies charging up to £3,500 a shift for a doctor.”
The government claimed that agencies can charge more than three times what a doctor might earn from a normal shift – or an hourly rate of more than £50 for a nurse that, if regularly employed, would be paid around £15 an hour.
It now hopes to “end the practice” of agencies charging up to £1,800 for a standard shift for a nurse – as well as to tackle the health service’s £3.3bn yearly agency bill.
When Monitor and the NHS TDA revealed the NHS had racked up a £1bn deficit during the first quarter of the year, trusts and foundation trusts blamed most of this on expensive agency staff. Within trusts alone, agency backfill had added £380m to the deficit bill during the first three months of 2015-16.
At the time, NHS Providers boss, Chris Hopson, said that the “only significant extra new opportunity on the horizon” was introducing an agency staff spending cap, but said it would only “come very late in the year” and just at the point when “demand for agency staff is likely to be at its greatest”.
But after the cap was announced, Janet Davies, chief executive and general secretary of the Royal College of Nurinsg, said that while the move "may look like firm action", it will not resolve the "huge financial deficit" in the service.
"Successive governments have failed to train or employ enough nurses, and pay restraint is forcing nursing staff to supplement their income through agency work. If they can no longer afford to work for the NHS, they will go elsewhere, the workforce crisis will become even worse and patient care will suffer.
"Rising agency costs are a symptom of short-term workforce planning. 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."
How caps will be implemented
They will be initially be set “slightly higher” than the pay that permanent staff receive, and then gradually reduced to the same level as them by April next year.
The gradual reduction hopes to help trusts manage the change better.
Since the caps will be “ratcheted down” over time, future agencies will not be able to charge the NHS a shift rate above the hourly rate paid to existing substantive doctors, nurses and other clinical and non-clinical employees.
This is aimed at closing the reward gap between short-term agency staff and those in substantive posts, who “provide better continuity of care for patients”.
Trusts will be able to override these caps where “absolutely necessary” to protect patient safety, but these overrides will be subject to scrutiny by Monitor and the NHS TDA.
The two bodies will also shortly publish guidance on the agency caps in the NHS and launch a consultation on its rules, the specific cap amounts and the relevant impact assessment.
The caps were developed and are supported by clinical leaders in the CQC and NHS England.
Professor Sir Mike Richards, chief inspector of hospitals, said: “Introducing the cap on the amount trusts pay agencies for staff is the right thing to do. I welcome the fact that this is being phased in, allowing staff and trusts time to adjust and minimising any risks to patient safety.
“Close monitoring will allow us to assess the impact on individual trusts. CQC will work closely with NHS Improvement to ensure ongoing patient safety.”
Interim very senior managers paid on an agency basis will also have their salaries subject to the Monitor/TDA consultancy approval process. NHS England will take over the equivalent of that responsibility for CCGs.