Health secretary Jeremy Hunt will today unveil plans to cap agency and management consultancy spending by NHS trusts.

HSJ understands the Department of Health has estimated the proposals will lead to £400m in savings on agency staffing and reduce consultancy spending by £150m.

The proposals, which will come into effect in autumn, include a maximum hourly rate for agency supplied doctors and nurses working in the NHS. There will also be a requirement that trusts seek “specific approval” from regulators when signing a consultancy contract worth more than £50,000.

Trusts deemed to be in financial difficulty will also have a total spending limit for agency staff applied by Monitor and the NHS Trust Development Authority.

In a move likely to be welcomed by NHS providers, Mr Hunt will also propose an outright ban on the use of agencies that have not signed up to pay framework agreements. These are designed to limit the costs of temporary staff by setting prices and commission rates in advance.

HSJ understands agencies signed up to the framework agreements will be able to supply staff up to the capped level. Initially the cap will apply to nursing staff, but will eventually be extended to other clinical and management roles.

Ministers are confident they do not require legislation to bring in the cap, which will be locally set with regulators and providers taking into account local circumstances and regional labour markets.

Jeremy Hunt

The NHS ‘must deliver its side of the bargain for patients by eliminating waste’, Jeremy Hunt will say

The spending restrictions will likely have to be applied using different mechanisms for different sectors of the NHS. In particular, it may be more complex to apply them to foundation trusts, which have been granted a higher level of autonomy from the DH and Monitor. While it is relatively straightforward, as HSJ reported on Friday, for Monitor to impose spending controls on FTs that are in breach of their licence for financial reasons, it has less power to do so for FTs that are not in breach.

HSJ understands that in response to the DH’s announced intention, Monitor will imminently begin consultation on changes to its risk assessment framework – the document that sets out its triggers for intervention. It is understood that these changes are intended to make it easier for Monitor to intervene on financial grounds, and to send a clear signal to FTs that, even if they are not in breach, they cannot afford to take any actions that suggest they are not securing best value for money.

The DH said the “spiralling” cost of agency staff caused the NHS provider sector to spend £3.3bn last year and highlighted cases were doctors were earning up to £3,500 a shift. The bill for management consultants was more than £600m last year, it said.

Mr Hunt will say: “[NHS England chief executive] Simon Stevens said the NHS needed an extra £8bn by 2020 and the government has invested that. Now the NHS must deliver its side of the bargain for patients by eliminating waste, helped by the controls on spending we’re putting in place.

“Expensive staffing agencies are quite simply ripping off the NHS… The NHS is bigger than all of these companies, so we’ll use that bargaining power to drive down rates and beat them at their own game.”

NHS Employers chief executive Danny Mortimer said he welcomed the plans, but more detail was needed. He said: “Patient safety is our absolute priority and it’s important to remember that agency staff are useful for ensuring continuity and quality of care.

“There is potential for NHS trusts to reduce spend on agency workers through further improvements in flexible working, technology and arrangements with local agencies.”

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