What has the impact been of recent caps on NHS agency staff spend?

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Almost four months to the day since the first caps on agency spending were introduced by Monitor and the NHS Trust Development Authority – and with new framework agreements due to come into force next week – what do we know about the impact of these measures so far?

Unfortunately, not a huge amount. Although NHS providers are submitting weekly data returns to Monitor and the Trust Development Authority, no official figures have yet been published. Without this we are, to some extent, in the dark about the effect of the measures, instead relying on piecing together other sources of information such as Freedom of Information requests and individual trust and agency experiences, to try and gauge early indications of impact.

Before we delve into what these sources indicate about progress, here’s a quick rundown of the measures.

  • In September 2015, trusts were set individual expenditure ceilings for agency nursing staff.
  • In November 2015, caps on the hourly rates paid for agency staff were introduced (set at 150 per cent above basic pay for junior doctors, 100 per cent for other medical and all other clinical staff, 55 per cent for non-clinical staff).
  • The caps on hourly rates were further tightened on 1 February (to 100 per cent for junior doctors and 75 per cent for other medical and all other clinical staff, remaining at 55 per cent for non-clinical staff). The caps are supposed to fall again on 1 April to 55 per cent above basic pay for all agency staff (still TBC).
  • There is a ‘break glass’ provision for trusts that need to over-ride the caps on ‘exceptional safety grounds’. Shifts exceeding the caps are reported to Monitor and the Trust Development Authority weekly.
  • From 1 April 2016, all staff groups will be procured through Monitor and Trust Development Authority-approved frameworks.
  • The caps on hourly pay rates will extend to ambulance trusts from 1 July.
  • Compliance is a condition of access to the Sustainability and Transformation Fund.

So what do we know about the effects of the caps to date? On the whole, the information points to only patchy success in enforcing even the more ‘generous’ early caps. A recent discussion with one agency suggests that it has largely managed to reduce its rates to below the cap for nurses in London (which benefits from the London weighting on pay) but that it has been more difficult in areas outside the capital, where in the majority of cases (particularly for highly specialised or critical care nurses) rates have been above the 75 per cent cap. In the case of allied health professionals, some areas are operating within the cap but a majority are not, again particularly outside London. For doctors the story is even more marked. Here the agency report that they were not able to meet the first round of caps in the vast majority of instances, with wide variation between grades and specialties.

Figures published in the Nursing Times paint a similar picture: 85 per cent of acute trusts that responded to their Freedom of Information request had exceeded the nursing cap since it was introduced. More than 20 trusts had gone over the cap for more than 100 shifts a week.

This intelligence may not tell us much about what will happen as the hourly pay limits continue to ratchet down and begin to bite. The real test will come when all the price caps – for doctors and nurses alike – drop to 55 per cent above basic rate of pay (originally planned for April 1 2016). (This might not seem particularly low, but it includes all related costs – employer pension contributions and National Insurance, holiday pay and an administrative fee. Effectively the 55 per cent cap means an agency worker ‘should not be rewarded more than an equivalent substantive worker’ which may not be enough to attract staff to work what is sometimes effectively overtime).

There may be two scenarios: the optimist view is that trusts will be increasingly able to operate in line with the measures as they bed in and the market adjusts to new, lower rates of pay for agencies and for their staff. Alternatively, if for whatever reason the caps are not enforced on such a widespread basis and the majority of providers cannot live within them, the credibility of these measures and any future decisions to further tighten the rates may be called into question.

The major risk we see is that the solution being pursued by the national bodies fails to address the underlying issue of shortage of supply; in recent years providers have increasingly been forced to rely upon more expensive temporary staff to fill vacancies because they simply cannot recruit sufficient permanent staff.

This view is echoed in recent reports from the National Audit Office, the NHS Pay Review Body and the Public Accounts Committee, which concluded that ‘the NHS will not solve the problem of reliance on agency staff until it solves its wider workforce planning issues’. The danger then, if more stringent caps are enforced and the shortage of permanent staff not tackled, is that providers will simply not be able to get the staff they need. This was a very real concern highlighted by finance directors in the February edition of our Quarterly Monitoring Report, where more than 20 per cent thought that agency limits would affect their ability to recruit the staff they needed to provide safe care to patients. Controls on agency staff should be part of a wider workforce strategy that ensures the NHS can attract the staff it needs.


VIVAN LifeSciences

Comment date
22 May 2017
Very useful tips. Well described this information. Keep updating new blogs.

michael Burnell

Comment date
15 May 2017
quite a few nurses i know have tried to get jobs at our local hospital but the hospital will not employ them yet employ them from a local agency at many times more than they would if they worked for the n h s. I nurse i know has worked through the agency for some years and has begged them to take her on .The hospital refuse saying there are no full time vacancies.Yet she still works there through the agency.She gets less wages but the agecy charge a vast amount more. WHY !

David Doyle

CAMHS Nurse,
Epione Health Solutions Ltd
Comment date
23 April 2017
So now we have caps and IR35! The government/HMRC and Trust Managers are completely deluded if they believe that locum workers will just roll over and just accept this or return to the NHS. For me and all my colleagues i'm off to the private sector for rates that properly reflect the worth of locum workers. So in short this attempt to bully locums has backfired big style! With IR35 you expect me to relocate hundreds of miles with large upfront relocation expenses to while paying the same as a nurse who has pension, job security, sick pay, holiday pay and training costs covered and now get paid around

Andrew Achara

RMN- Nurse,
Acharra Ltd
Comment date
29 March 2017
NHS has too many "managers". If they seriously want to save money they should start by cutting down the hefty salaries and bonuses of these managers. Employ more frontline professional staff to do the job and stop wasting money on these managers. Of course this will not happen because the managers are the ones who make the false policy that limiting agency rates of pay will save the NHS money. Agency staff will shift their services somewhere else and it is the patient who will suffer from acute staff shortages. Agency staff are experienced professionals who are dedicated to patient care.

George Brown

IT COntractor,
Comment date
30 August 2016
Typo should have read:
Of the policy writers and decision makers I only ask this - that you at least have the decency to include yourselves in you own policies.

George Brown

IT Contractor,
Comment date
30 August 2016
THe widespread application of the agency caps has been ill-informed, and for the sort of pay packages that MONITOR/ NHS Improvement are in receipt of I would have expected something substantially better of them? I don't think that my all inclusive day rates of £350 per day are excessive. I come with 33 years experience of delivering healthcare IT into the NHS. Some members of NHS Improvement are on more than £250,000 pa, with 2.5x salary pension ===== THIS is where the focus on savings should be?

I often report to managers who have at best 10 year experience. I'm also one of a smaller number of IT consultants who also have a clinical background themselves, and normally spend my time fixing the poor decisions made by those above me who do not have the business savvy nor experience not to make the errors in the first place?

I'm afraid to tell you that you've not saved money (by effectively shutting down the market for NHS contractors), you've cancelled programmes of work that had to happen (for things like a paperless NHS). Those programmes of work will still have to happen at some point in the future - the NHS's ambitions for safety, cost efficiencies etc demand it. Apparent monetary savings are just a result of cancellation of work, closures of clinical departments such as A&Es, and reigning in of clinical activity.

Meanwhile - while all this is going on I understand that NHS Improvement are still paying some of their agency supplied resources up to £1,800 per day?

Of the policy writers and decision makers I only ask this - that you at least have the decency to include ourselves in you own policies. Failure to do so just sends the messages of hypocrites on a gravy train?

Dave Brown

Occupational Therapist,
Comment date
02 August 2016
I decided after a couple of years on and off to become a locum OT. The main reason was flexibility because of my new family (new daughter) and I wanted some say about when and where to work to keep my job as an OT fresh and learn new skills. In my experience, generally speaking, I have failed to get excited about career progression because I have witnessed so many empty promises and too many back handed managerial laziness which has frustrated me! So far, AHP's have always been in the hierarchical perspective as low compared to collegues earning a lot of money for not looking at the bigger picture. My rate has been cut twice since i started locuming 6 months ago. A part of me wonders (in comparison) with the top heavy organisations and trusts I have worked for that money being spent on AHP's has mainly been scrutinised to try and cost save, however whilst not providing adequate cover to wards who need essential discharge planning and of course poor historical perception of what uniqueness an AHP can provide to a patient journey, Doctors and Nurses are still often considered the prime workforce of the NHS! It is such a shame and some days I wonder if AHP's will ever get the recognition they deserve and not get dragged into this "ideal". Maybe I am biased but having a good Therapy team with a good manager can make such a difference, but I suppose that could be said for all teams. Resources are thin and this is just alienating experienced professionals more. I put my heart and soul in everything I do and the Junior Doctors I have worked with have mostly been fantastic. I am saddened that the NHS is crumbling and many professionals are leaving to look after their own interests. Of course there are very dangerous locums out there and it angers me they get paid a lot for doing very little, utilising them takes good managers but recognising own responsibility as well as a professional is something that is missing. Self awareness! Saying that though in every orgainsation you will have good and bad workers and this problem will unfortunatly never go away. Same with Locums.

karl Gallagher

Operating Dept. Practitioner,
Comment date
11 July 2016
I was in conversation with a manager at the trust I work mostly in and was informed that one department had cancelled 179 operations due to inadequate staffing in the last twelve months. This had become worse since the start of the agency cap last november. The trust recieves approx £12000 for each of these cases, totalling over £2000000 in revenue. The cost to use agency to bolster the team would be a fraction of that. And as I mentioned that is only one surgical speciality. How can management be satisfied at losing out on millions of pounds of revenue all to save a few quid on staffing. Thats the type of leadership the NHS has. Inept, fragmented and lazy.
Im looking to move out of healthcare after 22 years including 8 as a member of the armed forces. I will not aquiese to half pay. Try imposing a cap on your morrisons shop!

Jayne Kahende

nurse / midwife,
Comment date
08 July 2016
Lack of adequate staffing levels is the fundamental problem. Capping without addressing the issues that bring about the need for agency staffing is pointless. Most agency workers are there because of no job satisfaction. They are fed up of low pay, staff burn out, shift patterns that are not family friendly, restrictions on when and how long they can take annual leave, short staffing, resulting in no breaks and lack of support by management. Agency working gives them the flexibility of choosing to work when and where they want.

By capping, the problem of NHS spending on agency staffing will only indicate a slight improvement in the very near future, but the danger lies with the numbers of extremely experienced agency staff who have and will continue to seek other avenues of making a livelihood, be it working further away from home or abroad or starting up little businesses. This will only continue to exacerbate the problem of under-staffing - which takes us back to the initial problem!!!

If the NHS is to save money, it could address it's top heavy structure. Too many managers doing nothing but audit, statistics, risk management details, which if the hospitals were adequately staffed would not be necessary, but whose numbers today are necessary to keep tabs of the mishaps befalling from eg., a nurse, assisted by a health care assistant working a 14 and 1/2 hour shift and looking after 12 patients on a day shift! Realistically, how many such shifts can one do before s/he calls in sick? Then what happens? BACK to the agency!

David Burgess

Comment date
03 May 2016
I agree with imposition of agency caps.

I have worked in theatres for over twenty years. I have seen the vastly inflated pay rates given to agency staff, and the attraction they have.
I have also seen the decline in the quality of agency staff. Newly qualified ODPs join an agency as soon as they can.
It is vastly demoralising to work along aside substandard, inexperienced agency ODPs while knowing that they are earning three times as much as you. The inexperience is not their fault but the unprofessionalism and laziness most of them display very much is.
I'm not saying that all agency ODPs are like this. There are some very good ones, but the vast majority of them in no way are worth their inflated wages.

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