NHS Agency Spend Crackdown: Is the £1 Billion Reform a Long-Term Solution?
Why Is the Government Cracking Down on NHS Agency Spending?
Why has the UK government decided to take such a hard line against temporary healthcare staffing agencies? The answer lies in a startling financial revelation: over £3 billion was spent by the NHS on agency staff in 2023–24 alone.
In some extreme cases, recruitment agencies charged NHS Trusts up to £2,000 for a single nursing shift. This model, once a safety net for temporary shortages, has evolved into a costly dependence, prompting a systemic overhaul.
On 2nd June 2025, the Department of Health and Social Care (DHSC), alongside NHS England, confirmed that nearly £1 billion has already been saved in just one year through a robust crackdown on external agency spending.
The initiative is a central part of the Plan for Change, a strategic policy framework aimed at modernising the NHS workforce and redirecting financial resources to frontline care and staff wellbeing.
The reforms are not just financial in nature. They represent a strategic pivot toward sustainable staffing practices that prioritise long-term NHS resilience, patient safety, and staff equity.
How Much Was the NHS Spending and Where Did It Go?
In recent years, the NHS has increasingly relied on agency workers to bridge significant staffing gaps caused by high vacancy rates, recruitment challenges, and burnout post-pandemic. The 2023–2024 financial year saw agency staffing costs balloon to £3 billion, with over 113,000 vacant roles across the health service.
A large proportion of this spend did not translate into consistent or high-quality care. Agency staff often work short stints, lack familiarity with NHS systems, and are unable to provide the continuity essential to effective treatment. Furthermore, these temporary roles came with a high financial premium.
This led to a situation where permanent NHS staff earned significantly less than agency counterparts performing the same duties, creating disparity and dissatisfaction within the workforce.
The government identified these inefficiencies as a critical threat to both patient care and NHS budget sustainability, prompting the introduction of urgent policy action.
What Reforms Have Been Implemented to Reduce Agency Reliance?
In November 2024, Health and Social Care Secretary Wes Streeting issued a mandate requiring all NHS Trusts to reduce agency spending by 30% in the short term. The reforms were aggressive but necessary. Alongside this initial target, several other structural changes were introduced:
- Spending caps were imposed on agency fees, limiting what NHS Trusts could pay for temporary roles.
- Trusts were directed to reduce ‘Bank’ staff usage by at least 10%, ensuring these rates did not exceed local average agency costs.
- A central oversight group, jointly led by DHSC and NHS England, was formed to monitor trust-level compliance and progress.
- Letters from Streeting and NHS England Chief Executive Jim Mackey reminded Trusts and Integrated Care Boards (ICBs) that failure to comply could result in legislative intervention by autumn 2025.
These measures are enforced not only to control expenditure but also to shift NHS culture towards prioritising internal staffing solutions, long-term workforce planning, and fair compensation for permanent staff.
How Are the Savings Being Reinvested Into the NHS?
The headline figure of £1 billion saved in 2024–2025 has become a powerful symbol of what financial reform can achieve when guided by purpose. According to the DHSC, this windfall is being reinvested into the very areas that were being undermined by excessive staffing costs.
Among the primary uses of the redirected funding:
- Tackling long waiting lists, allowing more timely interventions, and reducing pressure on hospitals.
- Enhancing patient safety, as continuity of care improves with stable, permanent teams.
- Funding substantial pay increases for core NHS staff, reversing years of pay stagnation and improving job satisfaction.
The strategic goal is clear: by reducing waste on temporary staffing, the NHS can not only provide better care but also create a more attractive and rewarding environment for its long-serving professionals.
How Are NHS Staff Being Rewarded Under the New System?
One of the most significant criticisms of NHS workforce policy in recent years has been the disparity in pay and conditions between agency staff and NHS employees. The 2025 reforms aim to address this imbalance.
Through savings generated from the crackdown, above-inflation pay rises have been awarded across multiple NHS job bands:
| NHS Role Category | Pay Rise Details (2025–26) |
| Resident Doctors | 5.4% (including a £750 consolidated payment); avg. pay to reach £54,300 |
| Agenda for Change (AfC) Staff | 3.6% increase; includes nurses, ambulance staff, midwives, cleaners |
| Consultants and GPs | 4% increase in funding centrally |
| Dentists | Uplift the contract value to reflect fairer compensation |
| Nurse Starting Salary | Increased from £27,050 (2023) to £31,050 (2025) |
These adjustments not only help retain NHS professionals but also make the public sector more competitive with private recruitment alternatives.
What Role Are NHS Trusts and Banks Expected to Play?
The pressure is now on NHS Trusts and Integrated Care Boards to adhere to new compliance standards, reduce external spend, and report progress transparently.
Trusts have been instructed to benchmark their Bank staff rates (temporary NHS-employed workers) against local agency averages, ensuring that NHS-sourced temporary labour is not just cost-efficient but also competitively positioned.
This reform is supported by the growth of internal workforce solutions such as NHS Professionals. Led by CEO Nicola McQueen, NHS Professionals was created specifically to displace agency reliance and manage flexible workforce needs internally.
In 2024 alone, NHS Professionals:
- Displaced £680 million in agency fees
- Delivered over 40 million hours of patient care
- Partnered with multiple NHS Trusts to provide 24/7 workforce cover without relying on third-party recruitment firms
This model exemplifies what the government sees as the future of NHS workforce deployment: a robust internal staffing ecosystem driven by cost efficiency, clinical quality, and organisational continuity.
What Happens Next If NHS Trusts Don’t Comply?
Both the Health Secretary and NHS England have made it clear that if progress stalls, legislative enforcement may follow. This is not an idle threat.
In their joint communication dated 2nd June 2025, Streeting and Mackey issued a clear warning: if further improvements aren’t evident by autumn 2025, new laws may be introduced to ensure compliance.
To reinforce this, a delivery group has been tasked with monitoring Trust compliance. This group will track agency use reductions, pay benchmarking, and overall adherence to the government’s workforce strategy.
For Trusts, this is both a responsibility and an opportunity: to prove that the NHS can be financially disciplined without compromising care standards or staff welfare.
Can These Reforms Deliver Long-Term Workforce Sustainability?
While the immediate financial savings are undeniable, the bigger question remains: can this model create a sustainable NHS workforce? The answer lies in a few critical areas:
- Long-term recruitment: The NHS must attract new talent by improving training pathways and career progression.
- Retention: Pay increases are a good start, but workplace culture, workload balance, and mental health support must follow.
- Flexibility: NHS employment models need to evolve to offer the same scheduling flexibility that made agency work appealing in the first place.
- Technology and planning: Digital workforce planning tools will play an essential role in predicting staffing needs and preventing short-term crises.
The agency spend crackdown is not an isolated financial measure, it’s a test of the NHS’s ability to transform itself from within.
Conclusion: Has the Crackdown on NHS Agency Spend Paid Off?
The early results of the NHS agency spend crackdown are undeniably positive. A nearly £1 billion reduction in agency fees within a year is an extraordinary achievement and a strong indicator that coordinated reform can deliver significant impact.
However, this is just the beginning. Sustaining these gains will require NHS Trusts to maintain discipline, innovate internally, and continue to build a workforce that is empowered, fairly compensated, and committed to long-term service.
The Plan for Change has demonstrated what’s possible when political will meets strategic execution. Now, the onus is on the system, from policy leaders to frontline Trusts, to turn this momentum into a lasting legacy for British healthcare.
Frequently Asked Questions
Why was agency spending so high in the NHS?
High vacancy rates, staff burnout, and long waiting lists drove the NHS to rely on expensive temporary staffing to maintain basic service levels.
What is the government’s Plan for Change?
It’s a reform agenda introduced to cut wasteful spending, improve workforce pay and retention, and modernise the NHS staffing model.
How much did the NHS save in 2024–2025 through these reforms?
Almost £1 billion was saved in a single year by reducing reliance on external agency staffing.
How are these savings being used?
They’re funding patient care improvements, waiting list reductions, and real-terms pay increases for NHS staff.
What happens if Trusts don’t meet the agency reduction targets?
The government has indicated that it may take legislative action if improvements are not seen by autumn 2025.
How is NHS Professionals involved in the reform?
NHS Professionals is helping Trusts replace agency roles with in-house staffing solutions, delivering major cost savings.
Will the NHS eliminate all agency spending?
That is the long-term goal. However, some emergency use may still occur, but under stricter financial and operational controls.
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