1.National bodies have set trusts unrealistic efficiency targets. This has caused the development of overly optimistic and aggressive staffing profiles which have subsequently led to staffing shortfalls. These have had to be met by increased use of agency staff. The Department and more recently Monitor and NHS England set trusts efficiency targets of 4% in real terms each year from 2012–13 to 2014–15, and expected trusts to submit financial and workforce plans that would meet these challenging targets. NHS Improvement acknowledged to us that the 4% efficiency target in 2014–15 was unrealistic. Trusts forecast that significant efficiencies, around £1 billion annually, would come from reducing their pay bill (although in practice they achieved less than two-thirds of this amount). To align with these financial plans, trusts’ workforce plans typically understated how many staff they would need. Over the same period, trusts were also under pressure to ensure they had enough staff following the failings in care at Mid Staffordshire NHS Foundation Trust. However, trusts could not recruit as many permanent nursing staff as they considered they needed and so filled the gaps, in part, with more costly agency staff. NHS Improvement referred to trusts’ “perception” that they needed to increase staff to meet the safe staffing guidelines published by the National Institute for Health and Care Excellence, and suggested that trust boards needed to exercise more judgement in setting staffing levels. The Department told us that trusts should be aiming to achieve quality in a sustainable way within the resources available.
Recommendation: The Department, NHS Improvement and Health Education England should provide greater national leadership and co-ordinated support to help trusts reconcile financial, workforce and quality expectations. They should report back to us in December 2016 summarising what actions they have identified and implemented.
2.Efforts to retain existing clinical staff are not well managed, which may further increase shortfalls. The cheapest and best way of ensuring the supply of staff is to retain the valuable staff that have already been trained. The limited available data suggest that, within NHS hospital and community healthcare services, the proportion of nurses leaving increased from 6.8% in 2010–11 to 9.2% in 2014–15. Trusts are responsible for managing the staff they employ but it is not clear who is accountable nationally for controlling departure rates. NHS Improvement told us that it aims to support trusts to manage staff effectively. The Department accepted that there is not enough data on why clinical staff leave the NHS and where they go when they leave.
Recommendation: NHS Improvement should review trends in clinical staff leaving the NHS and variations between trusts, and provide us with a plan by December 2016 on how it will support trusts to retain staff better.
3.The shortage of nurses is expected to continue for the next three years. Trusts have not been able to recruit the nurses they need, and Health Education England told us that it expects the supply of nurses will not meet the demand until 2019–20. The shortage of nurses has been caused by a number of factors. First, fewer new nurses have been trained as the Department cut the number of training places in four consecutive years, with 3,400 fewer places commissioned in 2012–13 compared with 2008–09. Second, the number of nurses recruited each year from outside the European Economic Area fell by 10,700 in the decade to 2014–15. Third, fewer nurses are returning to practice than previously–on average 2,700 fewer returned each year between 2010 and 2014, compared with a decade earlier. The shortages of nurses and other non-medical staff are highest in London (over 12%), where staff turnover is higher than in other parts of the country. In October 2015, the Home Office added nurses to the ‘shortage occupation list’, which should make it easier for trusts to recruit from overseas as, for example, applicants are prioritised a visa. However, there has been little coordination of overseas recruitment and return-to-practice initiatives, with trusts potentially competing for the same staff.
Recommendation: The Department, NHS Improvement and Health Education England should set out a plan for how the shortage of nurses will be addressed over the next three years, including how they will better coordinate overseas recruitment and return-to-practice initiatives and how they will attract nurses to those areas with the highest shortfalls.
4.The significant increase in agency costs is mostly due to higher volumes not higher rates. This is largely the consequence of inaccurate headcount planning within both the trusts and the centre. Spending on agency staff increased by half from £2.2 billion in 2009–10 to £3.3 billion in 2014–15. At both this session and our session in January 2016 on the sustainability and financial performance of acute hospital trusts, the witnesses gave the impression that the rise in agency spending was mainly due to increased hourly rates. For example, NHS England told us that some agencies had taken advantage of trusts’ need for staff to charge “rip-off” fees. In fact, the rise in spending is mostly the result of trusts needing to use more agency staff, often to cover vacancies. The National Audit Office’s analysis suggests that around three-quarters of the increase in spending on temporary nurses from 2012–13 to 2014–15 was due to greater use of such staff. The Department and NHS Improvement have introduced new rules that seek to control spending on agency staff, including mandatory caps on the hourly amount that trusts can pay agencies. However, they have not addressed the underlying causes of the increased demand for agency staff. The Department aims to save the NHS £1 billion by March 2018 through the caps on agency rates, although NHS Improvement acknowledged that achieving this ambition in that timeframe would be challenging.
Recommendation: As well as capping hourly rates, the Department and NHS Improvement also need to address the fundamental issue of the increased demand for agency staff; they should report back to us in December 2016 on progress in reducing use of agency staff and achieving the intended savings.
5.We are concerned that a lack of affordable homes in some parts of the country is affecting the supply of permanent NHS staff. For example, nurses and healthcare assistants find it virtually impossible to afford to live in some parts of London and other areas where it is expensive to rent and buy property. Trusts can pay staff recruitment and retention premiums and high-cost area supplements, but these are unlikely to enable many clinical staff to become permanently based in the areas where they work. NHS Improvement told us that some land being disposed of as part of the NHS estates rationalisation plan had to be sold for homes for nurses and other healthcare staff. We are not convinced, however, that the availability of affordable homes for NHS staff has been adequately considered as part of the Department’s plan to generate £2 billion from disposing of surplus land. We remain of the view that ultimately, until the NHS addresses the lack of affordable homes, it will remain reliant on agency staff.
Recommendation: The Department should set out how it will take account of the housing requirements for NHS staff, particularly in high-cost areas, in order to support permanent staffing.
6.We are concerned about the impact that the proposed changes to the funding system could have on applicants for nurse, midwifery and allied health professional training. In the 2015 Spending Review, the Government announced plans to reform the funding system for health students by replacing grants with student loans. Nurses and other non-medical undergraduates do not currently pay tuition fees and receive a grant towards their living expenses and a mean-tested bursary. The proposed changes also involve abolishing the cap on the number of student places for nursing, midwifery and allied health subjects. We heard that there are currently about three applicants for each nurse training place. However, there is no guarantee that this position will continue if the funding system is reformed and the changes could have a negative impact on both the overall number of applicants and on certain groups, such as mature students or those with children. Health Education England told us that it had not assessed whether the changes would deter prospective students from applying.
Recommendation: The Department and Health Education England should assess the likely effect of the new funding system on rates of applications for nursing, midwifery and allied health training courses, including whether the impact is consistent across different demographic groups and courses and how the changes are expected to affect the relative number of overseas students to home students. We also expect them to monitor the effects in real-time and report back to us in autumn 2018 after the first year of the new funding system.
7.No coherent attempt has been made to assess the headcount implications of a number of major policy initiatives such as the 7-day NHS. The Department has mandated NHS England to implement 7-day services in the NHS by 2020, and the NHS Five Year Forward View envisages more care being provided outside of hospitals and closer to people’s homes. Both of these initiatives are expected to involve changes in the number and mix of clinical staff. However, the Department has not adequately assessed the impact on the clinical workforce of implementing 7-day services, and so does not know if there will be enough clinical staff with the right skills. The 2015 Spending Review committed an additional £10 billion in funding for the NHS by 2020. The Department reported that this amount was intended to cover 7-day services, alongside meeting the other objectives set out in the Five Year Forward View. However, the £10 billion is a pot that the Department seems to expect will cover everything–despite not having separately costed 7-day services and other initiatives. We are therefore far from convinced that the Department has any assurance that the increase in funding will be sufficient to meet all of its policy objectives.
Recommendation: All major health policy initiatives should explicitly consider the workforce implications, and specifically the Department should report back to us by December 2016 with a summary of the workforce implications of implementing the 7-day NHS.
8.Limitations in the data on staffing pressures make it difficult for health bodies to make well-informed decisions about workforce planning. The National Audit Office’s report highlighted a range of gaps in the available data on the NHS clinical workforce, which mean the data are not sufficiently reliable or comprehensive to support Health Education England’s workforce planning decisions. An electronic staff records system is used by nearly all trusts, but there are limitations in the data that are collected and reported. These include poor information on vacancy rates, leaver rates and course completion rates, which are important indicators of workforce pressures. There is also no systematic information on why clinical staff leave the NHS, where they go when they leave, or why they transfer between providers. The Department and Health Education England told us that they were reviewing the workforce data that they would like to have available.
Recommendation: The Department, working with its arm’s-length bodies, should set out how it will ensure there is systematic reliable data on workforce pressures, including vacancy rates and reasons why staff leave the NHS, to help them manage the supply of clinical staff more effectively.
5 May 2016