• Tracey Sherring
  • 12/01/2016
  • Insights
  • Adecco Group

As an agency that works extensively with the NHS and sits on many of its frameworks, we understand the challenges the NHS face, and we recognise the need for controlling and reducing agency spend.

However, recent months have seen some cost-controlling moves that risk hampering its effectiveness in competing for talent, and remain the NHS that we all love and take pride in.

Since November 2015, Monitor and NHS Trust Development Authority (TDA) have introduced caps on the hourly rates paid for all agency staff. The impact on the interim recruitment market has been swift and significant. We have taken a look at the impact the caps have had on the workforce of our NHS customers, and the challenges they will face. We’ve also attempted to offer some potential solutions to address the route causes of the high reliance on agency staff.

What our customers say

We’ve spoken to a number of our customers in recent weeks to see how the Monitor pay rate caps have impacted the recruitment and use of agency workers. Of those, three in five said they had been affected by the pay caps, with only one in ten believing it will solve their workforce challenges. Interestingly 60% would welcome the opportunity to create an alternative solution with Monitor.

Potential challenges for NHS organisations as a direct result of Monitor Agency Worker pay caps:

  • - Drain of talent from the sector as professional non-clinical interims look to other sectors to protect their earnings
  • - Drop in quality of temporary workers as the top talent will not be available at the new pay rates
  • - Work to rule mentality – Many senior interims on daily rates currently work well over a standard 37.5 hour week without claiming any additional hours. The new pay rates will likely induce a “work to rule” mentality.
  • - Retention of permanent employees - Greater pressure on existing substantive employees as they are expected to handle more within their daily remit or alternatively expected to train interims who do not have the required skills they were recruited for.

Clearing up misconceptions

There is a misconception among some NHS employers that the recent pay rate cap is about capping agency margins. Where framework agencies are being used, this is simply not the case. This directive is instead capping the amount of money the Agency Worker receives at 55% above Agenda for Change equivalent salaries. Admittedly, where non-framework agencies are being used, this directive does fail to limit the margin the agency receives as they can pay candidates any rate they choose, thus protecting their higher margins. However, ultimately the pay rate cap will impact the worker directly, which may have a knock-on effect on the NHS’ ongoing ability to attract the best talent.

Know your worker

A potentially less damaging impact would be to acknowledge the clear distinction between a temporary worker covering a substantive position versus an interim covering a Management post or a consultant providing services not available in-house. These are hugely different skillsets and require different levels of expertise: where an NHS organisation is looking to engage temporary cover, the Monitor Agency Worker pay caps are not an unreasonable solution to spiralling pay rates. However, where Interim Management or consultancy services are required, these skills needs to be paid for and applying the cap will not result in organisations being able to acquire the calibre of individual needed to add value to the project and/or organisation.

Mandating Frameworks

If, as an NHS Employer, you are concerned about the cost of agency margins, then the easiest solution is to engage with an agency on the Crown Commercial Service (CCS) framework. This can be either the Non-Medical Non-Clinical framework or the Contingency Labour 1 framework. All agencies on these frameworks supply at fixed margins and are audited monthly on their pricing to ensure they are compliant.

It is currently believed that at least 50% of all agency spend is with non CCS recognised agencies. By simply mandating the switch to using agencies on the CCS frameworks NHS organisations would achieve significant real savings, whilst still attracting the right calibre of temporary worker.

Supply V’s Demand

Whilst agencies have been given a hard time in the press over the last few months, with Jeremy Hunt being particularly vocal about “rip off” agency fees it is worth exploring the issue of supply and demand. Recruitment agencies are simply supplying a demand created by the NHS. The greater the demand, the greater the shortage of skilled temporary workers and hence the workers are able to inflate their pay rates, creating the high pay rate environment currently seen. This is particularly relevant in the nursing and locum market although can also been seen in the non-clinical markets, particularly within interim management and Information Technology. While skills shortages remain high and training and investment in these areas is far off making an impact, the need for agencies will continue, and will remain valued by hiring staff.

Workforce Management

The real answer to the problem surely lies in a more holistic approach to how the NHS attracts and retains its workforce. Taking the view that a more engaged, better paid and fully staffed workforce may seem like a more expensive option but would surely pay dividends in the long run.