Jeremy Hunt’s comments made earlier this week demonstrate the government’s resolve to address overspending in the NHS, but in the context of using recruitment agencies to supply temporary staff, are the criticisms fair?
The answer to that question is a simple ‘No’, says Adrian Marlowe, Chairman of the Association of Recruitment Consultancies (ARC). “Jeremy Hunt refers to charges ‘by some agencies’ of £3500 for the supply of a doctor for a single shift. As a taxpayer I am shocked by this revelation which I guess we must all assume is true, noting that top professionals in many sectors may charge day rates of this size. The comment is about unjustified rates, and was supported in March this year when the Telegraph reported that NHS hospitals have paid doctors and nurses record sums amid a spiralling crisis in Accident & Emergency departments, with locum medics able to charge up to £3,200 each per shift, and agency nurses on ‘unprecedented rates of up to almost £1,900 a day’.
Given this, Mr. Hunt has a real basis for looking into this area and on the face of it saying that expensive staffing agencies are ‘ripping off the NHS’. The regulator Monitor separately reported that NHS trusts overly rely on agency staff, so it is easy to see why Mr. Hunt has said what he has and that there are genuine reasons why he wants to cap overall spending in this area. There is a temptation for me, as Chairman of an association that is pledged to support its agency members and improve the landscape for recruitment business in the UK, to say that it is a shame he has used what appears to be inflammatory language casting aspersions on the agency sector. However, an emotional response is not what is required. The ‘ripping off’ comment I believe is only made because it is the agencies that submit the bill to the NHS, and it’s best if we look behind this.
If you read between the lines it is clear that Mr. Hunt recognises the use of supply agencies to support the NHS. He wants to cap rates and limit, but not ban, the use of agencies. So the criticism is directed at the rates charged by some, and perceived over reliance on agencies. That’s why the focus now should be on why plainly exorbitant rates are being charged, and why the NHS uses agencies at all. If the rates were reasonable on the face of it, would this attack be mounted? If the NHS were not suffering from major staff shortages and had no peaks in staffing requirements, had its own bank of qualified staff to fall back on, would this issue arise?
I am not an expert on the NHS but I know a thing or two about agencies and how they work, and a little bit about market forces. If there’s a shortage of a commodity and demand for it increases, prices inevitably go up, and the reverse happens if there is an oversupply. This applies in the same way to the NHS where by all accounts there is a critical shortage of staff both generally and for peak pressure times. I don’t want to state the obvious but given the comments made I feel I ought to.
Because of this critical situation two factors come into play. First managers of NHS Trusts know they need the staff and will be criticised if they fail to meet targets, and indeed may lose their jobs if targets are not met. Second, all staff, whether regular or temporary, know this. Those staff who choose to work temporarily are in a position to bargain for better rates, and by that I mean rates that reflect the shortage and the pressure due to the targets. The ‘piggies in the middle’ are the recruitment agencies who are engaged by the NHS to find staff often at very short notice. When they are given a requirement I assume they are given an applicable rate by NHS procurement. They then have to find temp staff who will work for those rates, allowing for the agency margin charge (the agency is not going to do this for nothing and margin charges or fees will have been agreed with the NHS in advance).
Given market forces and the knowledge that temporary staff have of the staff shortages and emergency requirements, it is often impossible to find people to work for scale rate. The agency may say to the candidate that the rate quoted by the candidate is not acceptable, but could find itself without candidates who are savvy enough to know that if one agency will not put them forwards another one will. The outcome is that an agency will put forward those applicants that it can find and specify the rate the candidate will work for. Can it realistically do anything else? It is then down to the hiring NHS Trust to agree the rate or otherwise.
We now are told that trusts have been agreeing very high, indeed shocking, rates but it is entirely wrong to suggest that this is the fault of the agencies. If the issue were about agencies charging exorbitant margins, that would be a different matter, but as things stand this does not appear to be the criticism, and I hope that Mr. Hunt notes this point.
Given that rates charged are driven by market forces working on the minds of temporary staff, and supply and demand, surely the government is right now to restrict rates the NHS is allowed to pay by law. After all the NHS belongs to the taxpayer that wants value for money. Logically if temporary staff cannot by law earn higher rates they would not be in a position to find work at those rates. Of course this could lead to a large number of nurses and doctors looking to the private sector for work, but the glut should result in prices reducing.
The reason for staff shortages in the first place is outside my remit, but so far as rates are concerned the outcome should be better pricing following market forces at work with a nudge from the government. A good result maybe for the taxpayer, assuming there is no mass migration of doctors and nurses abroad and rates are balanced to remain sufficiently attractive to necessary temporary staff, but please let’s not point the finger of blame for the historical position at agencies who have worked hard to support the NHS and provide it with the flexible workforce it needs.”
Adrian Marlowe
ARC Chairman
