The government health leaders threaten to take legislative action if further savings on “rip-off temporary staffing agencies” do not follow by the autumn.

In a letter to the trusts and ICBs, the government claims the reduced spending on agency staff in the last year has helped to improve the quality-of-care patients receive, reduce waiting lists and “enhance safety - as reducing reliance on agency staff has been shown to decrease clinical incidents”. 

The government is also linking pay rises to NHS staff to cutbacks in agency spend.

The savings are part of a package of reforms which the government says this year will allow the full funding of above-inflation pay rises to all NHS staff, including resident doctors and nurses.

Health minister Ashley Dalton and NHS England CEO Jim Mackey this week wrote to all trusts and ICBs integrated care boards to urge them to “ultimately eradicate agency spending altogether. If the government does not feel further progress has been made by the autumn, it will consider taking further legislative action.”

Health and social care secretary Wes Streeting announced strict agency spending limits last November and ordered trusts to reduce their spend on agency staff by 30% in the short term. The money, he said, would be reinvested in the frontline and the wider NHS workforce.

Health minister Ashley Dalton said: “The taxpayer has been footing the bill for rip-off agencies for too long – while patients have languished on waiting lists and demoralised staff faced years of pay erosion.

“That’s why we are pledging to eliminate this squander, and through our Plan for Change we are making major progress and seeing a radical reduction in costs.”

The NHS spent £3bn on agency staff in 2023 to 2024, the government said, adding: “Recruitment agencies have charged NHS trusts up to £2k for a single nursing shift, thanks to the 113,000 staffing vacancies across the service.”

The government said that all NHS workers, including doctors and nurses, will receive real terms pay rises for the second year in a row, fully funded from central budgets.

It is funding a pay rise of 4% for consultants, speciality doctors, specialists and GPs, with dentists also receiving a contract uplift to increase their pay.

Resident doctors will see their pay rise by an average of 5.4% (a 4% rise plus a consolidated payment of £750), “and we expect the average full-time basic pay of a resident doctor will reach about £54,300 in 2025 to 2026. Agenda for Change (AfC) staff, which includes nurses, health visitors, midwives, ambulance staff, porters and cleaners, will see their pay rise by 3.6%. The starting salary for a nurse will now be around £31,050, up from around £27,050 in 2023”.

A new delivery group is being established across the Department of Health and Social Care and NHS England to monitor progress on tackling agency spending, and ensure trusts are taking robust action, the government said.

Trusts were previously ordered to reduce ‘Bank’ use – NHS staff who work temporary shifts at hospitals – by at least 10%, on top of strict agency spending limits across the health service. They have now been told to evaluate them against the local market to ensure they are not more than the average equivalent agency rate.

Nicola McQueen, CEO at NHS Professionals, said: “We strongly welcome today’s bold and progressive workforce policy announcement from the Secretary of State to significantly reduce external agency spending and put more investment back into patient care.

“NHS Professionals was created with the core purpose of reducing the NHS’s reliance on expensive external agencies. NHS Bank services are transforming workforce deployment, boosting productivity, and driving substantial cost reduction across the NHS.”

McQueen continued: “Last year we displaced over £680m of external agency fees across NHS trusts and healthcare organisations, providing more than 40m hours of patient care. We look forward to working closely with our NHS client trusts and partners to deliver even more savings across the NHS.”

For industry reaction, see our other story here. If you are a recruitment agency working with NHS trusts and healthcare organisations, let us know your thoughts on the government announcement.

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