Jeremy Hunt has defended his controversial move to cap spending on agency staff. The health secretary said current rates paid by the health service are “not market forces at work, but market failure”.

  • Health secretary says new curbs on agency rates are necessary to correct “market failure” that has made temping “far more lucrative” than full-time NHS contracts.
  • Asked if he is willing to see short-term ward closures to force agencies to accept lower rates, Mr Hunt accepts there will be a “difficult period of adjustment”.
  • Health secretary says he will be happy for an NHS manager to be paid more than prime minister if it is “merited” by their track record.

The health secretary was speaking exclusively to HSJ at the end of a week that has seen new controls unveiled for NHS executive pay and agency spending, plans announced to give hospitals individual targets for procurement savings, and work suspended on the National Institute for Health and Care Excellence programme to determine safe staffing levels.

He insisted the health service should not interpret these measures as a signal that national priorities were “swinging back” from a focus on quality at the end of the last parliament to a focus on finances.

Citing “huge amounts of evidence” that “quality and efficiency go together”, he told HSJ: “I’m saying that I expect quality to go up, and I don’t accept the argument that it’s a choice between quality and resources.”

He continued: “I would say that actually when the provider sector is predicting deficits significantly higher than before, you might have expected most secretaries of state to say, ‘now I want the pendulum to swing back towards financial balance’.

“What I’m saying is of course it has to be sustainable, but I’m expecting quality to carry on going up, because I don’t want to sacrifice the hard won lessons of Mid Staffs.”

He added: “It isn’t quality if it isn’t sustainable. £3.3bn spent on agency staffing [in 2014-15] is not sustainable, so that’s why the significant changes I’ve made on agency staffing this week will help people with their deficits this year.” 

Asked if he was willing to see hospital wards closed in the short-term to force staffing agencies to accept lower rates, he said: “There will be a difficult period of adjustment, but we need to go through it, because actually what we have is not market forces at work, but market failure at work. 

“Because the agencies have chosen to rip off the NHS with their pricing policies, they’ve created a structure where nurses and locum doctors are choosing to become full-time agency nurses, full time locums, because it is far more lucrative than having a full-time contract with the NHS. And that is not sustainable. It’s a shortage of nurses only created by the huge disparity of fees between off-framework agency rates and regular contract rates, and that has to end.”

The health secretary said: “In the end, there are two players in the market, there are the buyers and the sellers. I am the buyer, and I’m deciding what prices I’m prepared to pay for agency staff, and I’m not prepared to be ripped off anymore.”

Asked what the government could do to make it more attractive for staff to go back into permanent roles, he replied: “One thing that unites all of us in the NHS is the need to put patients first in everything we do. We will have more resources to look after patients if we’re not ripped off by agency staff. We’ll have more money to look after staff if we’re not ripped off by agency staff.” 

Under the new spending controls announced this week, any trust that wants to pay a new manager more than the £142,500 earned by the prime minister will have to justify it to the DH. Mr Hunt said: “If a manager deserves to be paid a higher rate I will support it wholeheartedly, because I think we need top people working in the NHS. I think running a hospital is one of the most difficult things you can do. So if it is merited by someone’s track record then I would support it.

“But it needs to be the exception not the norm. And it also needs to be something that particular manager is able to explain to his own staff.”