Staff pay rises and elective care cuts: Is the NHS robbing Peter to pay Paul?

Our healthcare workers are amongst the most deserving of pay rises amidst COVID-19 pressures and the cost-of-living crisis. We all welcomed the July announcement that stated over one million NHS staff will receive a pay rise of at least ￡1,400. And on the surface, this is unarguably good news. ? ?

Reading between the lines, however, this money must come from somewhere. And when the press release on the gov.uk website is footnoted with “The government is committed to living within its means and delivering value for the taxpayer, and therefore we are reprioritising within existing Departmental funding whilst minimising the impact on front line services.” the penny drops. It is NHS staff and patients who will ultimately pay the price. ? ?

NHS England made a statement to the Telegraph after the pay rise announcement stating, “Given the requirement to fund this within existing Department of Health budgets, we will need to release money from existing programmes, regrettably impacting on the planned rollout of tech and diagnostic capacity across the health service.” ?

?It begs the question, is NHS England having to rob Peter to pay Paul??

What are the knock-on effects? ? ?

Funding the NHS Pay Review Bodies’ pay recommendations (4.5% rather than 3%) creates a cost pressure of ￡1.5bn this year - and it looks to be that elective care will take the hit. The suggestion is that the NHS will have to slow down the planned roll out of Community Diagnostic Centres (CDCs). While there are clearly savings to be made in the short term, this will ultimately put more pressure on hospitals as underlying health issues aren’t captured early enough in the community. ??

There are currently 6.63 million people waiting for NHS treatment. This backlog threatens to reach up to 13 million - and the truth is, these backlogs do not affect us all equally. Waiting lists have increased by 55% in the most deprived areas since April 2020, compared to a 36% increase in the least deprived areas. ?

There’s no doubt our staff need a pay rise but redistributing vital funding from elective services is not the answer. It not only risks exacerbating the current health inequalities inflicted on our most underserved communities, but it also serves to apply additional pressure on the workforce. ? ?

Preventable health complaints will develop into issues that require hospital admissions. Poor access to GP services leads to increased A&E visits and a lack of capacity in social care means patients are not being discharged from hospital quickly enough. These pressures already exist in the NHS and have seen staff leave the profession in their droves, with more than 400 workers quitting every week.??

Considering that nearly half (46%) of the healthcare professionals surveyed in Deloitte’s 2021 ‘understanding the drivers of inequity in public health’ report felt addressing the backlog of elective care was the biggest challenge to the public health system, it seems short-sighted to exchange one problem for another. ? ?

Further constraints on a depleted workforce ?

In addition to these extra pressures on services and staff, NHS Trusts are now also being tasked with further reducing agency spend. This is with the proviso they will unlock part of the additional funding they so desperately need, while limiting their access to a flexible on-demand workforce. Frustratingly for NHS Trust’s Financial Directors, it also presents a false economy. ?

Trusts are being asked to ‘prioritise substantive and bank staff’ and ‘encourage workers back into substantive and bank roles.’ But as I outlined in my previous article, around half of the potential qualified nursing candidates in the UK have never worked for the NHS. There is no winning these workers ‘back’. Limited by the rigidity of permanent positions or employment via a staff bank, it is simply not viable for the majority of the healthcare staff who work for temporary staffing agencies to utilise their skills as the NHS would like. ?

The introduction of the Agency Rules in 2016 was intended to reduce ‘agency expenditure and move towards a sustainable model of temporary staffing’. Although the price caps are now largely out of date and escalated rates prevalent across England, the greater controls were effective in generating year-on-year reductions in agency spend since 2016 up, until the pandemic.?

In many respects, this was a sensible response, with the use of temporary staff identified as a key driver of budget overspend by the NHSEI. And yet, these caps, or any other form of pricing controls, do not apply to bank staff, in-house banks or outsourced banks. Subsequently, spend on unregulated and uncapped staff banks have increased from ￡2.98 billion in 2016/17 to 3.78 billion in 2019/20.? Although 21/22 data has yet to be published by the NHSE, it will undoubtedly show further significant increases in staff bank expenditure.?

We’re now in a position where savings on agency staffing has been offset by rising bank costs and the overall workforce costs have increased. For me, that sits at odds with the government being ‘committed to living within its means and delivering value for the taxpayer.’ ??

This NHSE mandate, which calls on Trusts and Integrated Care Boards (ICSs) to cut agency spend by 10%, already four months into the financial year, offers no appreciation for the very different cost and value propositions agencies deliver across the market. For example, expensive off-framework agency supply has been increasingly prevalent in response to the pandemic. It is not uncommon for Trusts to engage a worker from these types of suppliers at the equivalent of NHS band 8 pay to fill a band 5 vacancy. ??

By contrast the ‘value for money’ planned framework agency suppliers continue to be held at arm’s length, due to an anti-agency political rhetoric that has been commonplace for successive Governments regardless of their party. Despite clear financial evidence, there has been no recognition from policy makers that framework agency suppliers are often the most cost effective of all the employment types when total cost is attributed to substantive and bank staff. ??

Why are we still ignoring the needs of the workforce? ?

Policy makers must understand that agency supply is here to stay in the NHS, in both primary and secondary care because it serves the needs of the workforce. Agency work is attractive to a broad range of candidates; typically, the semi-retired, those who care for family members and those working part time in the community or private healthcare who seek total flexibility with no mutual obligation to work. These needs cannot be met by a staff bank, collaborative or otherwise. ?

Working for a collaborative staff bank as a second employer is tax prohibitive, as well as having to manage the friction of two employers. When working for an agency, the contractor is afforded complete flexibility, operating between different hirers and locations at their preference and availability. This is exactly why temporary staffing agencies exist and have proven so valuable to other sectors where the agency acts as the single payer. ? ?

?Going forward?

It is both easy (and standard practice) to blame NHS overspend on agencies. However, much like the lack of additional funding for NHS pay rises, the impact of these short-sighted responses is much more complicated; negatively affecting staff, patients and NHS service users - and undermining confidence in the system itself. ?

To address this, policy makers must move beyond an anti-agency at all costs perspective, while health care providers should focus on the removal of the very high-cost, profit seeking off-framework suppliers. These off-framework suppliers, many of whom were born because of, and are profiteering from, the pandemic response, are high in cost and low in value. Sadly, the ongoing political rhetoric puts all agency supply into the same bucket.??

There is cause for hope, however. This same mandate goes on to state, “Through this system approach, we are encouraging all Integrated Care Boards (ICBs) to explore how they might develop or expand collaborative bank, staffing sharing arrangements and interoperability between temporary staffing solutions”. The NHS moving to 42 regional Integrated Care Systems presents a fantastic opportunity to evolve a holistic approach to workforce management across primary and secondary care. ?

?Learning from other sectors who have utilised agencies to their full potential, ICBs should seek to build strategic relationships with healthcare workforce providers who specialise in Recruitment Process Outsourcers (RPO), Master Vendor (MV) and Managed Service Providers (MSPs). ??

?Maxxima specialises in these consultative services, alongside supplying the NHS with thousands of Allied Health Professionals.?A&E Agency and Pulse Healthcare are two other examples of Acacium Group companies that work closely with care providers to afford better access to the flexible labour market, providing doctors, nurses and mental health professionals to Trusts and ICBs at the best price and value. This not only benefits candidates and care providers, but also fulfils the government’s objectives of ‘delivering value to the taxpayer’.?