The total bill for agency staff within NHS trusts in England decreased by £700m in 2016/17 from £3.64bn to £2.86bn, representing a 20% reduction.

Hourly pay rates across all grades of locum staff in the NHS fell during 2016/17, as rate caps introduced by NHS Improvement (NHSI) and more stringent workforce management began to curb the spiralling cost of temporary staff. Commission rates simultaneously continued to fall.

The biggest reduction in pay rates was seen among Consultants, who make up 40% of all locum spend, as average rates fell by 2.3% to £91.89 an hour.

Despite a reduction in both average rates and the total cost to the NHS, the annual cost remained £3.3m in 2016/17 for the top ten highest earning locums. If these locums’ pay rates were limited to within the price caps, the annual saving would be £888,197, the equivalent of almost 1,500 Core Consultant shifts.

The findings are in the fourth annual ‘Taking the Temperature’ report produced by Liaison, the organisation which provides financial and workforce services to two thirds of the NHS, and benchmarks the last financial year (2016/17) with the previous findings. It is the largest review of NHS spending on medical locums carried out.

The report analyses pay and commission by grade and specialty across 61 trusts and boards that Liaison supports with its workforce services, and compares results by size, type, region and agency.

The trusts and boards researched in the report booked over 6,000 locums for a combined total of more than 2.3 million hours and paid out £160m in pay and commission during the year.

Pay and commission rates have shown significant variation regionally, with a difference of £21.44 per hour between the most and least expensive regions across all grades and specialties. At £50.49 per hour, average pay rates continue to be lowest in London, compared with £69.78 in South Central, which shows the highest rates despite a £3.04 decrease on 2015/16 figures.

Unfilled substantive vacancies were the cause of 86% of hours booked in 2016/17, an increase of 20% over two years. Bookings due to sickness and service pressure have fallen by 2.1% since 2015/16, indicating trusts and boards are introducing better workforce planning practices, but are continuing to suffer from a lack of supply, especially in specialist roles, which was the cause of 51% of escalated rates in 2016/17.

Andrew Armitage, Managing Director of Liaison, said:

“It’s been a year of positive change for our clients. We have seen significant signs of progress as the rates introduced in 2015 and agency expenditure ceilings set out in 2016 begin to make a real impact in reducing the cost of temporary staff to the NHS. The lower overall bill, reduced pay rates and a reduction in commission across most staffing grades represent a real breakthrough and emphasise the fact we are seeing significant issues being addressed.

“In addition to the impact of NHSI measures, we are also seeing an increasing appetite for more collaborative working from our clients, to understand their agency spend and share best practice on how to reduce it.

“We know the NHS faces an ongoing battle and there is clearly still work to be done with a supply shortage continuing to force the hand of trusts and boards in regards to some specialist locums, but where there is scope for improvement, progress is being made and we will hopefully see this trend continue in 2017/18.”

Among the report’s key findings:

  • Average hourly pay rates decreased most notably for Consultants, by £2.19 per hour.
  • Commission, as a percentage of the total pay and commission bill dropped from 11.27% in 2013/14 to 9.77%.
  • Some trusts are paying almost three and a half times the £55 wage rate for Consultants in General Medicine, at highest rates of £187 per hour.
  • Bookings due to substantive vacancies have increased 20% between 2014/15 and 2016/17.
  • Across the top ten highest earning locums, the annual cost to the NHS was £3.3m  for the equivalent of 17 Whole Time Equivalents (WTE).  If rate caps were enforced for these Consultants, the annual saving to the NHS could be £880,000 a year.
  • Overall average pay rates increased in six out of 11 regions, most significantly in the West Midlands where hourly rates increased by £2.89. At £50.49 per hour, average pay rates in London remain the lowest, showing a decrease of £0.76 since 2015/16.
  • Overall pay rates paid by South Central trusts remain the highest in the country, despite showing a demonstrable improvement of a £3.04 reduction on 2015/16.
  • Commission rates vary by 38% regionally. Overall commission rates decreased the most in London where – at £6.22 per hour – rates are now the lowest in the UK.

Liaison works with NHS trusts and boards to give more control over temporary staff spending, directly addressing each of the key issues faced, including, maximum hourly rates for agency staff, ensuring trusts are only engaging with framework agencies and highlighting maverick buying that can be flagged and challenged.

By encouraging further collaboration between trusts and boards, Liaison helps to keep locums working within the system rather than them relying on costly third parties for staffing requirements. It is estimated that around 60-70% of medical locums are already employed elsewhere within the NHS, meaning such cooperation can have a significant impact in reducing costs.

The data in this ‘Taking the Temperature’ report is derived from Liaison’s direct engagement service, part of its STAFFflow and TempRE offering that comprises a range of services helping trusts and boards control their agency staff spending. Over 20% of all NHS trusts and boards in England and Wales are using Liaison’s services to help them to better manage their temporary staffing costs.

Liaison’s independent support provides NHS trusts and boards with a technology enabled service that offers transparency, guidelines and benchmarking to help them track performance, identify areas of necessary improvement and enable significant movement towards control of agency staffing spend. Prior to Liaison’s contribution, trusts and boards often lacked the power to check, challenge and change rates at the point of booking. The information they receive on their temporary staff usage helps them manage this spend more effectively by building their own bank, negotiating discounts and eradicating invoice errors.

The 2016/17 annual ‘Taking the Temperature’ report can be downloaded here: http://liaison.co.uk/taking-temperature-annual-report-201617.