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Monitor Agency Caps: How are NHS Contractors Affected?

On 23rd of November, Monitor and the NHS Trust Development authority have introduced a cap on what NHS providers can pay per hour for an agency worker, despite if workers aren’t hired on an hourly basis.

As of November 23rd, Monitor has set the pay cap for non-clinical staff at 55% more than the average yearly salary of a permanent staff member. For junior doctors, the rate is 150% and for all other staff members it is 100%.

Pay Rate Agency Staff Table

(Table from the official Monitor Price Cap guide for agency staff, page 6)

This applies to all NHS trusts and foundation trusts (receiving interim support from DH or in breach of their license for financial reasons). These do not apply for ambulance trusts.

These caps are in effect immediately and are compulsory. A ‘break glass’ provision has been included so that trusts can override the caps where patient safety will otherwise be compromised (Page 11).

So what does this mean for non-medical contractors?

The price caps apply when: a contractor who works for an agency fills a shift directly, an agency finds a worker to fill a shift but the trust pays the worker directly or staff are paid through their limited/services company but still found via an agency.

In regards to non-medical roles, majority of contracts are not exceeding this cap. However, there are some roles which are (primarily the more senior roles) where some agencies charge larger fees. Some non-medical sectors such as IT will be more affected than others, due to the soaring demand across both private and public sectors across the world for their skills.

For a full list of bands and their maximum hourly rate, click here. (Page 10)

It is also noteworthy that there are contract roles that do not have a permanent equivalent. Such role is an Aareon QL Consultant. While their rate for knowing such a niche programming language is set higher compared to a traditional language programmer, will this now be capped at the traditional programmer’s rate?

Why has the caps been introduced?

These price caps have come with the announcement that the NHS currently has a deficit of £1.6bn within the first 6 months of this financial year and is expected to continue growing until April next year. This is a massive increase from the £820 million overspend for the entire previous year.

By the end of the second financial quarter of 2015, 190 of 241 NHS providers reported a deficit.

Staff shortages within the NHS have meant that more trusts have to turn to agency staff to fill the gaps. While agency staff will generally be paid more for temporary work, this increased of demand has meant some agencies fees have become exorbitant.

During the first and second quarter of the financial year of 2015, the NHS has spent £1.86bn on agency staff – mostly on nurses and locum doctors to fill unplanned activity.

It is hoped that these caps on agency staff will help return the NHS to financial stability and reduce NHS provider’s deficits.

The idea behind this move is to move contractors into being hired permanently so the NHS can cut their agency fees and improve staff retention. However, what Monitor may not realise that by including non-medical roles within this cap, contractors can easily turn to the private sector with their transferrable skills, unlike medical professionals who have a more limited choice of private healthcare (such as BUPA) or moving overseas.

This writer belief is that this cap will worsen the staff shortages of the NHS as agency staff will become scarcer in the long-term. The ‘break glass’ provision will almost certainly be used and the agency fees after this will most likely be even more exorbitant.

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