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

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.

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#545935 Darren Kilroy
Deputy Medical Director
East Cheshire NHS Trust

In our organisation, through a structured and consistent series of agency spend review groups which meet weekly with senior clinical and managerial membership, we've made huge strides in improvement. The agency spend challenge has given us a catalyst to review rosters, job plans and processes, flushing out inefficiencies, highlighting inconsistencies in shift allocations, and - importantly - enabled us to use this work as a real-terms boost to workforce engagement.

Although we, like everyone else, continue to struggle with some elements of supply, we have eliminated medical agency spend in A&E above cap, eliminated the use of any HCA agency staff completely, improved our rota management systems, introduced a medical internal bank with weekly pay, and forged a strengthened network of relations within and beyond the organisation.

We have worked, via our procurement team and through diligent conversations, with our agency partners to collaboratively trim margins and rates. We have negotiated with agency doctors one by one to drive down costs. And we have monitored it all through a series of financial and operational trackers which are reviewed weekly.

So although there is pain in this exercise, there is also organisational reward to be had.

#545936 Duncan Kennedy
Audity Ready

It is fair to assume caps are hear to stay therefore I agree that a collaborative approach between supplier, agency worker and trust must be the way forward. From a patient safety perspective it is vitally important the NHS employment checks required are not compromised by agencies in their attempt to protect shrinking margins. The impact of the caps on the quality checks that should be performed needs to be watched to ensure this does not happen.

#545937 Andy Harrison
Path-to-Health Limited

From comment above looks like it could cost a lot of management time trying to stay in line to be successful. Though maybe too early to tell and overall assessment may depend on how uneven much of the staffing shortfall is e.g. regional/local differences. Also on how much more pressure will be placed on existing staff to increase their hours worked. Interesting to see if CQC inspections pick up increasing problems with staffing levels as move forward

#545943 Jon Kyffin
Clinical Site Manager
Basildon & Thurrock NHS Trust

Additionally, any work people undertake for an agency is taxed as a second job, at 40%, and usually in the bottom of half of a particular pay band. people are relucted to carry out additional hours in thier usual work only to be paid significantly less than what they should. Trusts should be free to pay staff overtime as there are benefits- Trust already have payroll systems in place, there is no agency markup to pay and the indidial staff members get paid there wort and don't have to pay excessive tax on thier earnings. As long as the unjust way people working extra shifts are treated are addressed the agency caps will lead to worrying staff shortages.

#545949 Daniel Stevens
Urology Trainee

Junior Doctors will not cover rota gaps if shifts are subject to these rates. The odd locum shift was attractive as they were well remunerated and justified the loss of time with family (and rest) that extra work meant. Rotas are already staffed at unsafe levels all over the country, and these caps will endanger patients by worsening this. There is no goodwill left in the NHS and managers will either have to accept dangerous staffing levels or be extorted for last minute locum by agencies.

#545953 Jennifer Burgess

Bringing back the internal medical banks would be fantastic. I worked as an HCA at my local hospital during 2006-2009 whilst I was doing my psychology degree. At some point after I left it was shut down and the job contracted out to a private agency. The bank had one part time admin who co ordinated the shifts from onsite, and had a good relationship with the matrons and her staff so she was ideally placed to serve the clinical needs of the hospital and the needs of her staff. In addition the ward had my number so they could contact me last minute. What a waste of money to outsource this to a company when it can be done in-house, with the additional benefit of increasing loyalty and morale in the workforce as they see themselves as hospital, and not agency, staff.

#545964 Umesh Prabhu
Wrightington Wigan and Leigh FT

Life is all about demand and supply. It is easy to cap the rate if there is adequate supply of well trained doctors, nurses or other professionals. But when there is sever shortage of supply the market force decides the rate. Imposition of junior doctors contract will make sure the shortage of doctors will increase hugely over next year or two.

Capping agency rate may reduce agency bill to some extent but unless there are more well trained doctors, nurses and other professionals to recruit either the cost will go up or quality of care and patient safety will suffer. When patients suffer staff will also suffer and when there is shortage of doctors, nurses or other professionals patients and staff will suffer and NHS will suffer.

#545965 Chris Jingree
Oncology Clinical Fellow

It's very interesting to see that some trusts are clearly taking the imposition of this market restriction to act on issues of rota management and effective in-house locum work. The benefits are enormous to both the trust and the agency worker with no requirement for a middle man. Most staff would prefer to work in-house for a reasonable rate but unfortunately many trusts have not focussed on trying to modernise their rota management with well trained staff or modern software. This leads to many people using external agencies instead.

I remember working at a northern hospital that had extremely low rigid rates for most grades of work - only one of my colleagues ever volunteered to take these shifts and the rest were either unfilled or a more senior staff member took the role (@ their pay rate). I suspect this is what will happen over the next few weeks to months.

#545976 Matthew Lewis
Consultant and Group Director
Sandwell and West Birmingham

One can only hope that the effect of the cap will be to encourage some staff to take up substantive posts, instead of working as long-term locums - this would have a positive effect on stability and expenditure.

#545981 Santosh Pradhan
Consultant EM

Few doctors will work at the suggested capped rate from April. Huge rota gaps so demand vs supply don't match- bound to breach cap rates.
Suggestion1- caps not applicable to Trust staffs either permanent or bank temporary. This has attracted some full time Locums to join banks. However we don't have enough people to cover gaps. If this exclusion can be applied to Locums not only to bank staffs, but to any staffs who have permanent jobs at same level in any NHS trust. This would help doctors working in neighbouring trust to help each other without the capped disadvantage. This would then minimise the role of people who have exploited the role of Locums only lifestyle.
Suggestion 2. More transparent and visible caps on spend on managers, or number of high profile exec members. Eg. Salary +bonus for CEO, CFO, director of operations, etc, as well as hourly rate for their oncall - director on call, senior site manager. This can then be compared to senior doctors hourly rate or shift rates which is publicised in media widely. This will at least give some reassurance that saving is not forced to frontline healthcare staffs.

#545988 Stephen Mhiribidi

Some Trusts are choosing to let waiting lists go up as they will not budge on caps. NHS will regress to the days of 9 month or more waits for a simple scan. As other commentators said above, supply is not comparable with demand here. At this rate, I can assure you that the NHS is doomed- maybe that's the plan; who knows? A lot of sites are not working anywhere near capacity as a result. Obviously I have vested interests, however initial outlook is poor. The facts speak for themselves. If gvt seriously want to fix this, they need to focus on renumeration and other benefits of permanent staff. Nothing to do with greed as suggested by some callous entities!

#546080 Steven Houghton
Locum Advanced Theatre Practitioner

Having been in the profession for 37 years I gravitated to Agency employment due to the lack of career advancement 'on the shop floor' I have gained a wide range of appropriately qualified expertise in many disciplines (most notably, tertiary paediatrics) and for many years have nurtured, trained and evaluated many post graduate Doctors, ODPs and nurses within this highly specialised, under recruited and often very demanding/stressfull discipline. There exists no grade above a band 7 within the Operating Theatres that acts as a 'hands-on' mentor/safety net for either student or aspiring grades above a band 6, as a band 7 or above, experieced practitioners are, without exeption, tied to a desk for one reason or another. I am sympathetic to the mission statements of the various individual Trusts that I'm employed by and I totally buy into the progression of patient care and all of it's cost constraints. Consequently it is always, bilaterally, problematic when talk of the cessation of my contract comes around because the management in theatres are never given the adequate time frame in which to reach the 'projected outcome' of the business cases put forward neccessitating my initial employment.
I truly invest myself in the trust that I work for, I am not a single-minded mercinary with finances as my main aim. I am a health care provider who cares about what I do. Please do not villify Agency workers because amongst our numbers, you will find that we contain, within our ranks, a huge percentage of the expertise and experience that the NHS truly needs. It's up to the powers that be to decide on how to approach this skills deficit.
Ask ANY Consultant Clinician a straight question...whether a good Agency worker makes a difference to the outcome of a day in the acute setting....If they're honest, the will tell you that we make a massive difference.

#546081 chris moonesinghe

Reading the above comments from directors and managers alike; their appears to be a symptomatic group delusion as to historical amnesia and a collective delusional state of mind.

This state of panic has been caused by several distinct decisions made by the NHS managers; both clinical and administrative. Firstly by the decision by admin staff to curtail the training of all non clinical staff. To facilitate the creation of foundation status; leading undoubtedly to much back slapping and lucrative bonuses; but with insufficient staff to replace those retiring, let alone those, leaving for personal or career reasons . Secondary, the plundering of other countries health care gap, to provide "good VFM" most foreign staff work for 1-3 years service with costs running into the thousands. Finally by allowing non qualified staff to fulfil the roles of registered professionals. Such delusion lead inexorably to Mid Staffs where our patients paid the price for our folly and delusions of grandeur; by dying needlessly. The warning cries were there, but was ignored. Then came Frances who dared to tell the truth.

The current financial debacle stems from the realisation that qualified staff are needed. However there is still a delusional state of mind amongst NHS managers that the agencies are "ripping of the NHS" there are 3 NHS bodies who collectively are tasked with lowering the actual pay rates. Monitor admitted to the Public Accounts Committee that in excess of 80% of the over spend is due to the increase in nurses and doctors to care for our patients and not the actual hourly rate.

But still those actually responsible for this criminal state are not punished; nay they are promoted. The manager for ward 34b Mid Staffs was promoted, TWICE as for the rest, as PM Cameron admitted in parliament not a single manager had even been disciplined.

What does it take for the light to go on, and at least be honest as to the real reasons for the mess the NHS is in, and deal with it!

#546084 Helen Frances
Agency Nurse
Self employed

Coming from a wide and varied background spread over 20 years since qualifying as an RGN, I too have managed to stay on the shop floor - rather than climb into managerial shoes and hide in offices or behind clipboards.
Agency work was the only way I could manage my family and keep my relationship together and although I did have other options, nursing was in my heart.
Bank work is not actually an acceptable option as the remuneration is not reflective of my advanced skills and experience.
I refuse to work for the low pay afforded by them. Tried it at Leighton and it's unviable for a main wage earner.
Most agency staff I know are unofficial mentors to all staff, through our vast knowledge and experience. Even managers look to us fir advice, as we are in fact independent thinkers confident in our abilities and decision making on the whole.
Forcing us to leave the roles we're in by slashing our wages by this degree will only harm the already faltering NHS that struggles day to day to function with sickness, stress and mistakes made by inexperienced staff. Most agency nurses are smart enough and savy enough to find better paid employment rather than go back to NHS employment.

#546087 Mandy Bunce
NHS and private sector

I couldn't agree more if there were even doctors nurses and ODPs in the first place to cover the service needs there wouldn't be the need to use locum staff but unfortunately there isn't. They way the government is approaching this by capping things aren't going to improve just going to get worse.

#547558 Gillian. Hart
Health care assistant

I agree agencies should be used as little as possible, because a lot of agency workers are inexperienced for the job. They might as well not be there .

#547563 David Burgess

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.

#547816 Jayne Kahende
nurse / midwife

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!

#547823 karl Gallagher
Operating Dept. Practitioner

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!

#547978 Dave Brown
Occupational Therapist

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.

#548119 George Brown
IT Contractor

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?

#548120 George Brown
IT COntractor

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.

#549168 Andrew Achara
RMN- Nurse
Acharra Ltd

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.

#549519 David Doyle
Epione Health Solutions Ltd

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 £19

#549665 michael Burnell

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 !

#549820 VIVAN LifeSciences

Very useful tips. Well described this information. Keep updating new blogs.

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