NHS spending on temporary staff +24%

Concerns have been raised over the NHS' ability to cut spending by the recommended £22bn by 2020 after the financial performance of service trusts has 'deteriorated sharply'. Many believe excess spending lies in the frequent use of agency staff, which increased by 24% between 2013 and 2014 due to difficulties in hiring permanent staff.

Action needed ‘urgently’ to get value for money from use of agency staff

The NHS will not solve the problem of reliance on agency staff until it solves its wider workforce planning issues, the Public Accounts Committee (PAC) has stated.

In the committee’s latest report it was noted that NHS acute trusts’ spending on temporary staff increased by 24% between 2012–13 and 2014–15, as a result of difficulties recruiting permanent staff and new requirements for safe staffing levels.

During the inquiry into NHS financial sustainability, NHS England said that spending on temporary staff was also the largest driver behind trusts’ increasing deficits.

However, the MPs stated that NHS England and NHS Improvement should be clear that spending on agency staff is only one contributing factor to the deficit.

PAC added that they should set out how they will support providers to secure the collective action that is needed to “get value for money from the use of agency staff as a matter of urgency”.

It was noted that NHS England and NHS Improvement plan to use the collective bargaining power of the NHS, as a large employer, to drive down prices paid for temporary staff. For instance, NHS Improvement estimates that the predicted £4bn expenditure by trusts on agency staff in 2015–16 could be £880m lower if there were no excessive agency charges.

The MPs said they accept that the cost of agency staff may be excessive, but “we also note that the use of agency staff in the NHS is nothing new and that the opportunity for agencies to take advantage of staff supply shortages was predictable”.

Tackling the root cause

They added that the root cause is the volume of temporary staff required, as opposed to the element of the associated costs which is the agencies’ commission. Until the NHS solves its workforce planning issues, including the lack of affordable homes for NHS staff, it will not solve the problem of reliance on agency staff, the report states.

Meg Hillier, chair of the PAC, said: “The Committee is also concerned by the approach of government to trusts’ spending on agency staff—finding that while this spending has contributed to trusts’ deficits, the Department of Health, NHS England and NHS Improvement ‘are only recently making serious attempts to control agency spending’.”

Back in November, Monitor and the NHS Trust Development Authority (NHS TDA) introduced caps on the hourly rates paid for all agency staff. The price caps apply across all staff groups – doctors, nurses and all other clinical and non-clinical staff.

Responding to the PAC report, a Department of Health spokesman said: “We know some parts of the NHS are under pressure due to our ageing population, but we disagree with the claim that we are not acting quickly enough.

“We are intensively supporting challenged trusts to improve finances, while clamping down on rip-off staffing agencies and helping hospitals become more efficient by sharing best practice across the service.”

NHE recently spoke to Stephen Dangerfield, chief executive of NHS Professionals, who said that trusts were responding positively and proactively to the caps. However, he added that staff should be encouraged back to NHS banks in order to help tackle the issue.

Paul Briddock, director of policy at Healthcare Financial Management Association (HFMA), said: “Unsustainable agency staffing costs have impacted the overall deficit, but instead of focusing on a quick fix to reduce these costs, we would back calls to solve the much bigger workforce planning issues that ultimately lead to the need for agency staff in the first place.”