The future of contingent labour in the NHS

The future of contingent labour in the NHS

October 2014

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The future of contingent labour in the NHS Contents

04 Foreword

05 Executive Summary

14 1.0 Introduction

15 2.0 Background to contingent labour

usage in the NHS

2.1 Contingent labour usage through to 2005/06

2.1.1 Developments in the use of temporary

nursing support

2.1.2 Wider use of temporary labour across the NHS

2.2 Temporary labour usage through to 2010

23 3.0 A review of funding and subsequent

efficiencies

3.1 Austerity: the impact on the NHS workforce

3.1.1 The rise of new forms of temporary worker

engagement models

3.2.2 The inability to legislate for unforeseen change

31 4.0 Endeavours to optimise the use of

contingent labour

4.1 Endeavours to channel recruitment industry

spend through frameworks

4.2 Endeavours to manage bank and agency staff

procurement through frameworks service partners

4.3 Current state: towards agency visibility and control

4.4 The commercial realities of visibility and control models

4.4.1 The impacts of a fundamental review of service

provision

4.4.2 The impacts of a rise in outsourcing

4.4.3 The impacts of worker and agency choice

4.4.4 The uniqueness of hiring into the front-line of the NHS

41 5.0 Future state – beyond visibility and

control into informed choice

5.1 Understanding and optimising the effects of

legislative change

5.2 Delivering value through enhanced management

information and market intelligence

5.3 Contributing to workforce strategy planning

44 6.0 Contingent working within the future

public services arena

6.1 Individual Services

6.2 Neighbourhood Services

6.3 Commissioned Services

6.4 Integrated public sector solutions.

6.4.1 Shared NHS solutions

6.4.2 Cross departmental service provision

6.5 Strategic Partnerships – a blended (internal / external)

approach to public services provision

6.6 Staff-led Social Enterprises / Mutuals

51 7.0 The use of contingent working across

the extended enterprise – a future view

7.1 Utilising contingent working in an ever expanding

variety of forms

7.2 Incorporating contingent working within the overarching

workforce planning / strategy of the extended

enterprise.

7.3 Accommodating an increasing need (hirer) and desire

(worker) to be engaged more flexibly.

7.3.1. Mutually beneficial ‘flexible hours’ working

7.3.2. The rise of multiple simultaneous careers.

7.4 Embracing the principle of payment for results /

outcomes based working.

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Foreword

If the task of providing efficient and

effective public health services twenty

four hours a day - every day - was not

enough of a challenge, those involved

in the running of the National Health

Service (NHS) are simultaneously

wrestling with the reality of undergoing

the largest transformation of the service

since its inception within the confines of

significant, ongoing cost constraint.

Transformation on the scale being currently witnessed will

require the ongoing support of the most critical element of

any service provision – its people. To add an additional

layer of complexity to this task, however, the UK’s National

Health Services are delivered by one of the most diverse

workforces of any sector – in terms of both who they work

for and how they work.

It is a study of this workforce complexity that this report

sets out to examine, with a focus on those who invaluably

provide their services on a contingent basis. It looks at how

we arrived at where we are today and, more importantly,

what the future looks like from an efficiency perspective for

those involved in managing the service-critical contingent

labour element of public service provision.

Whilst, understandably given all of the above, the use

of contingent labour – in all its guises – has been high

within the NHS, it has often been viewed as a ‘cost’ that

must be controlled and, wherever possible, decreased.

Increasingly, however, dialogue about the strategic value

of non-permanent resource as a component of the whole

extended workforce that delivers our National Health

Services is coming to the fore. The move to ‘informed

choice’ about when, where and how to engage contingent

labour is truly on the horizon.

At the same time as we consider the factors that are

impacting demand and its needs from a management

perspective, we also seek to raise awareness to what is

also playing out on the supply side. The way people want

to be engaged in work is fundamentally changing too –

and gathering momentum – to the point that it cannot be

ignored when modelling the composition of extended

public services workforce of the future. One of the most

enlightening insights is that many appear to want the same

thing as those they seek to work for – to improve the

outcome of public services provision. They also recognise

that if they achieve this, what they perceive to have been a

downward spiral of reward for their historical endeavours

may start to be afforded to spiral in the opposite direction.

Not a bad outcome for all our collective endeavours.

We hope that this report provides some useful insights into

ever changing world of the contingent worker, and we look

forward to discussing the means of successfully engaging

them with you at some stage in the future.

Andrew Preston

Managing Director

de Poel Clarity

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Executive summary

Introduction

The efficient and effective running

of the National Health Service (NHS)

is a dynamic and complex task –

not least so, at present, due to the

transformation process that it is

undergoing. In addition to meeting all

its statutory responsibilities, it must

meet these service obligations within

available funding.

The key component in the delivery of

NHS services – many of which must be

accessible twenty four hours a day and/

or seven days a week – is, ultimately,

people. By virtue of the challenges

presented from providing continual,

round-the-clock care to all who require

it, the extended workforce that

delivers our national health services is

both complex and diverse – and the

contingent labour component within it

is, without question, service critical.

Background to contingent labour

usage in the NHS

More than in any area of public services provision, the NHS

utilised a diverse range of ‘temporary’ labour solutions

in order to meet its contingent needs. Initially, this mostly

took the form of bank and agency workers, but has further

diversified in recent years.

Contingent labour usage through to

2005/06

Such was the perceived significance of use of bank

and agency nurses at the turn of the century - £790

million spent covering around 10% of all shifts, the Audit

Commission recommended that all trust boards should

have a senior person with overall responsibility and board

level accountability for the use of temporary staff.

NHS Professionals was created by the Department of

Health in November 2000, effectively attempting to make

engagement of contingent resource through their bank

a more reliable and more cost effective channel than

recruitment agencies. By the middle of the decade, the

Department of Health reported that 75% of trusts were still

operating their own banks, whilst 22% used NHSP.6

Additionally, a series of framework agreements was set

up by the NHS Purchasing and Supply Agency (PASA)

and NHS Employers undertook work to encourage better

management of temporary labour. Expenditure on agency

staff as a percentage of total NHS pay bill reduced from

5.64% in 2002/3 to 3.57% in 2005/06.

6. National Audit Office – Improving the use of temporary nursing staff in NHS acute and foundation trusts: http://www.nao.org.uk/wp-content/uploads/2006/07/05061176es.pdf

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The future of contingent labour in the NHSExecutive summary

Temporary labour usage through

to 2010

Due to challenges presented by the commencement

of organisational change and ongoing skills shortages,

by 2008/09, agency spend as a proportion of the NHS

England paybill, was heading back towards 5%. To add

further organisational and financial challenges to the

equation, from the autumn of 2009, the UK was to bear the

further impact of European legislation on temporary labour

costs. The 1st August 2009 saw the full implementation

of the European Working Time Directive (EWTD) into

UK legislation – crucially, limiting workers to a maximum

48-hour week, averaged over a six month period. As a

consequence, the cost of locum cover rose considerably.

It is no surprise, therefore, to see the figures for total

temporary labour spend spike in the last part of the decade

– which, once again, brought agency spend and usage

acutely into view of policymakers.

Austerity: a review of funding and

subsequent efficiencies

In the decade through to 2010, from an employment

perspective the NHS had witnessed the largest increases

of any area across the public sector.

A target for NHS efficiencies of £20bn was announced

that were to be achieved through a programme of Quality,

Innovation, Productivity and Prevention (QIPP) by 2014/15,

which was followed, in July 2010, by the Department

of Health (DH) publishing its White Paper, Equity and

excellence: Liberating the NHS, setting out its long-term

vision for the future of the service. Further, the new

government’s Spending Review had confirmed predictions

that the NHS in England would be significantly challenged

through receipt of a budget rise of just a 0.4% over the four

years through to 2014/15.

By June 2012, the DH reported that the NHS had made

efficiency savings of £5.8 billion in 2011-12, virtually all of

the forecast savings of £5.9 billion.19 In 2012/13, a further

£5bn in savings was delivered.20

Austerity: the impact on the NHS

workforce

According to analysis by The Kings Fund, the NHS staff

pay bill rose by around 5%, in cash terms each year from

2006/7 to 2010/11.22 As a result of both pay restraint and

a reduction in staff numbers, they conclude that the total

NHS pay bill grew by just 0.7% between 2010/11 and

2012/13 – equivalent to a real reduction of more than 3%.

In terms of numbers, the DH reported that, from a total

workforce perspective, the total number of staff deployed

within the NHS (financial year average WTE) reduced

during 2011-12 by 2.55%, from 1,125,877 to 1,097,180.23

From a contingent labour perspective, the total workforce

number for 2011/12 included 78,806 non-NHS workers. This

equated to 7.1% of whole workforce numbers and 6.6% of

whole workforce costs.23

19. NHS – Progress in Making NHS Efficiency Savings – 13th December 2012: http://www.nao.org.uk/wp-content/uploads/2012/12/1213686.pdf)

20. Department of Health – Annual Report & Accounts 2012/13: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/229996/Annual_Report.pdf)

22. The Kings Fund – The NHS Productivity Challenge - May 2014: http://www.kingsfund.org.uk/sites/files/kf/field/field_publication_file/the-nhs-productivity-challenge-kingsfund-may14.pdf

23. Department of Health – Annual Report & Accounts 2011/12: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/212977/23735_HC-66-DoH.pdf

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By 2012/13, the total number of staff employed within the

NHS had reduced during the year by 1%, from 1,097,181 to

1,085,627.20 Contingent labour numbers had increased

to 8% of the total workforce and 8.5% of total paybill,

however. From an agency perspective, Monitor reports

that, in 2012/13, Foundation Trusts alone spent 1.178

billion, or 4.4% of its paybill, on contract and agency

labour. Recently published figures for 2013/2014 show

that, proportionally, contract and agency spend in the

sector increased to 5.2% in the year (£1.373 billion) – an

overspend of 162%, or £849 million against plan.31

The rise of new forms of temporary

worker engagement models

One category of non-permanent staffing that has emerged

over recent years – and one that is subject to on-going

controversy - is ‘directly engaged temporary workers’.

The key benefit of the model to Trusts is that if payment

to the worker is not via an agency, the payment does not

attract VAT. Additionally the rise in the use of temporary

workers employed by a third party, so called ‘Umbrella’

workers, emerged once the Agency Worker Regulations

were implemented in 2011. Where employment is compliant

with options within the Regulations, fall outside stipulations

that legislate for pay and benefit parity for temporary

workers with a worker in a comparable permanent post.

Further, data for 2012/13 on Zero Hours Contract workers

suggested that there were 67,000 workers in the NHS on

these contracts.28

The inability to legislate for

unforeseen change

When something as significant as the Francis Report is

published, recommending a need for a more systematic

and responsive approach to determining ‘safe’ nurse

staffing levels, a new dimension relating to productivity and

efficiency comes into play.

As it will increasingly become unacceptable to operate with

this level of vacant posts, and with skills shortages abound,

it can safely be assured that a proportion of this additional

supply will be secured on a contingent basis.

Endeavours to optimise the use of

contingent labour

Much work has been done around the category of

temporary labour, from a NHS procurement perspective,

since the turn of the century – first by NHS PASA, then

Buying Solutions and, latterly, by Crown Commercial

Solutions – to assist with the efficiency and safeguarding

agendas associated with the use of contingent labour.

20. Department of Health – Annual Report & Accounts 2012/13: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/229996/Annual_Report.pdf)

28. Social Work Association – Zero Hours Contracts in NHS & Social Care – 17th July 2013: (http://www.sochealth.co.uk/2013/07/17/zero-hours-contracts-in-the-nhs-and-social-care/)

31. Monitor – Performance of the NHS Foundation Trust Sector – year ended march 2014 http://www.monitor-nhsft.gov.uk/home/news-events-publications/latest-press-releases/nhs-

foundation-trusts-take-more-staff-improve-patient-care

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Endeavours to channel recruitment

agency spend through frameworks

Spend captured through the CCS frameworks have had

varying success. The AHP/HSS spend of £83 million

through agencies in 2013/14 was impressive – as was the

£289 million captured through the NMNC framework.

Comparatively, the recent re-lets of the Locum Doctors and

Nurses and Social Care workers frameworks has been less

impressive, however, which the Cabinet Office accredits

to the fact that “several Crown Commercial Services

customers (and reported spend from these customers)

remain with call off contracts through now expired

framework agreements. We fully anticipate that spend

through the most recent frameworks…will increase once

these call-offs have expired.”

Alongside the re-let of this CCS contracts, others have

also emerged – creating a significant potential of a dilution

of effort (amongst procurers and providers alike) – and

perhaps, more critically, confusion within the marketplace.

Endeavours to manage bank and

agency staff procurement through

frameworks service partners

Whilst the guided access to singular recruitment agencies

through frameworks had been progressing within the NHS

for almost a decade and a half, it is only in recent years that

framework solutions have become available through which

to manage their engagement.

That said, the adoption of the neutral vendor solutions

within clinical supply has, to date, been minimal – just

£0.5m captured by the Nursing & Social Care Neutral

Vendor option within the framework in its first year and

nothing captured by the equivalent within the Locum

Doctors framework. Early suggestions as to why point

to the siloed approach that has been taken to procuring

managed solutions and the fact that providers are devoid

of whole team visibility when managing supply for just one

category.

Current state – towards agency

visibility and control

With efficiencies forefront in everyone’s mind, it is not

surprising that the course towards managed solutions that

deliver strategic, case-by-case procurement of individual

agency workers has been diverted to solutions that deliver

more basic, tactical yet critical need over recent years –

cost reduction.

For the ambitious service transformation planned for the

NHS to reach its successful conclusion, however, future

managed solutions will need to enable the choice as to

how all forms of contingent labour are deployed, engaged

and rewarded, on a case-by-case worker basis. As such,

cost reduction and control must now become a utility

component of the solution rather than the sole driver.

Public service provision has a large and diverse range of

stakeholders.

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The commercial realities of visibility

and control models

If ever there were a time in the NHS’ history when the

volume of future requirement cannot be guaranteed and

the flexibility to approach and secure scarce talent will

be an imperative, the next few years will bear witness the

criticality of accommodating these needs.

Managed programmes that are not built to accommodate

fluidity of need that the ensuing service transformation will

bring but are, instead, focused purely on obtaining visibility

and control of activity may actually result in being a very

costly experience for the NHS. The following depict the

need for ongoing fluidity in approach:

• The impacts of a fundamental review of service

provision

If non-mandatory frameworks intended to support the

agenda for change actually constrain the NHS from

accommodating the flexibility required to deliver reform,

they will simply be ignored.

• The impacts of a rise in outsourcing

A study by the NHS Support Federation in December

2013 discovered that more than £5bn worth of contracts

to run or manage clinically-related NHS services were

advertised in the last nine months of 2013.41 Of the fifty

seven contracts for clinical services awarded during that

period, 70% went to private sector providers.

Just as the reform of service provision within the NHS

impacts workforce requirements (including agency

worker volumes), outsourcing delivers a critical blow to

volumes – it removes them completely from the scope of

NHS supply.

• The impacts of worker and agency choice

Where feasible, many agencies and their candidates are

taking their availability elsewhere. Hirers, frustrated by

the residual quality of candidate issues that result once

those most qualified to supply walk away, are contacting

agencies directly outside the programme and/or

candidates are seeking to be engaged directly, outside

of the whole process and its terms. When this happens,

non-fulfilment and off-contract supply become inevitable.

• The uniqueness of hiring into the front-line of the NHS

One additional important area of note when considering

the likely success of the solutions available through

existing frameworks is that each individual that they

are hiring – be they a nurse, a doctor or an AHP - is a

component of a team. There is, however, no solution

available through the critical front-line skills category

frameworks that can achieve team visibility – and,

therein, accountability. In times of flux, organisations’

reliance upon their people becomes heightened. Hiring

decisions made without full knowledge of the dynamics

of the team you a resourcing into – particularly for

skills being required on a temporary basis – could be

misjudged.

41. HSJ – NHS contracts ‘going to private firms’ – 16 January 2014: http://www.hsj.co.uk/news/nhs-contracts-going-to-private-firms/5067114.article#.U4OB4yjoo2w

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43. Department of Health – Personal Health Budgets and NHS continuing healthcare, 1 February 2012: https://www.gov.uk/government/news/personal-health-budgets-and-nhs-continuing-healthcare

Future state – beyond visibility and

control into informed choice

Beyond the ability of managed programmes to contain the

costs of agency labour sits a raft of other capabilities that

are rising in importance:

• Understanding and optimising the effects of

legislative change

From a contingent labour perspective, the UK has

witnessed a swathe of recent legislation which has

compounded the need for all those involved in the

provision and management of temporary, contract and

interim workers to be fully cognisant and diligent in the

application of these governing principles.

Automation of these processes has become a pre-

requisite. With these insights, it will also be possible

to cost model options around future engagement of

workers – informing choices before hiring decisions are

made.

• Delivering value through enhanced management

information and market intelligence

Transactional data capture should translate into a

management information output. One of the key reasons

why real-time, rather than retrospective reporting is

essential, however, is that NHS Trusts need to be able

to make in-year adjustments to service provision as

much as they need timely information for forecasting

and budgeting purposes. They also need to be assured

of compliance on a daily basis rather than doing an

evaluating of past performance to see whether it was up

to par.

• Contributing to workforce strategy planning

Perceptions around contingent labour being a commodity

where usage must be controlled are shifting towards

realisation that it is actually a strategic pool of resource –

the intelligent use of which has the potential to underpin

the sustainability and growth in public services provision.

Future contingent working within

the future public services arena

• Individual Services

Whilst personal budgets were initially only available for

social care, the Secretary of State for Health announced

in October 2011 that, “subject to the evaluation of trials,

by April 2014 everyone in receipt of NHS Continuing

Healthcare will have a right to ask for a personal health

budget, including a direct payment.” 43

As this takes effect, in essence this will amount to a

significant fragmentation of supply and, with it, dispersed

need for contingent labour.

• Neighbourhood Services

With an increasingly substantive number of charities,

social enterprises and Community Interest Companies

and Mutuals providing services that were historically

delivered directly by and the NHS, once again workforce

requirement, including the contingent component, has

become disparate and fragmented.

• Commissioned services

When considering the volume of suppliers involved

in running 6% of NHS services that the DH states are

delivered by external providers,43 the result will be an


11

exceptionally long tail of smaller providers that make up

the private sector running of public services. All will have

their own strategies for the deployment of contingent

workers – all of whom will be removed from NHS

calculations and considerations as soon as externalised

service delivery is in place.

• Integrated public sector solutions

- Shared NHS Solutions

From a regional shared solutions perspective, there is

much that has the potential to be considered from a

primary-care perspective – which is likely to be driven

through the 211 Clinical Commissioning Groups – and,

whilst not significantly yet, in time there is a degree of

certainty that we will see greater levels of regionalised

acute service provisioning as well.

- Cross departmental service solutions

Beyond the formation of shared service solutions within

the NHS context, a blended approach to care provision

involving the NHS and local government is in the

process of playing out.

In blending the workforce needs of local government

with those of the NHS, it is hoped that this will lead

to more considered, strategic use of the essential

contingent labour element upon which these services

have been historically underpinned. It may, in fact,

become the first example of a large-scale initiative that

exercises informed choice, on a case by case basis,

against each singular user’s (patient’s) needs.

- Strategic Partnerships – a blended (internal / external)

approach to public services provision

Of the 684 Private Finance Initiatives (PFI) that are

operational across the public sector, 209 are within the

NHS - the largest number of any department. 46 From a

people perspective, where workforces are transferred

to partner providers, TUPE regulations often to not

extend to agency workers. As such, another major

component of historical contingent labour requirement

transfers away from the NHS into private sector

management.

The use of contingent working

across the extended enterprise – a

future view

Within the future extended enterprise that delivers our

national health services, overall workforce strategy will

sometimes be set entirely by an individual enterprise –

sometimes by the collaborative partners charged with

delivering the solution. What is certain in all instances,

however, is that the use of contingent labour – in all its

evolving facets – will bear little resemblance to historical

usage.

• Utilising contingent working in an ever expanding

variety of forms

Even within legacy definitions of ‘temporary working’

it was acknowledged that some of this labour would

be engaged directly by the hiring organisation and

some would be supplied via staff banks and agencies.

Beyond these traditional means of engagement now

lies an extending range of options that the now blended

public/private/Third sector public services enterprise is

experimenting with utilising.

46 (http://www.nao.org.uk/wp-content/uploads/2013/11/Savings-from-operational-PFI-contracts_final.pdf)

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• Incorporating contingent working within the

overarching workforce planning / strategy of the

extended enterprise.

To enable this to happen effectively, one final component

of change needs to occur: the shift from contingent

labour being viewed as incidental to it being recognised

as a truly strategic component of the total resource that

organisations deploy.

• Accommodating an increasing need (hirer) and desire

(worker) to be engaged more flexibly.

Beyond the clear needs of the hiring organisation is a

rising tide of sentiment amongst the working population

which centres around an increased interest in working on

a contingent basis. The reasons for this are numerous. It

is this new choice to work flexibly, and subsequently live

outside routine, that is one of the most significant shifts

that those engaged in people resourcing are going to

have to learn how to accommodate.

• Mutually beneficial ‘flexible hours’ working

Whilst the recently closed government consultation

into the use of Zero Hours contracts49 will undoubtedly

tighten up on unacceptable conditions relating to such a

form of contingent working, there is evidence to suggest

that a significant proportion of people working in this

manner are happy to continue to do so.

Beyond this ultimate form of flexible working lie the

growing ranks of semi-skilled and skilled professionals

who chose to work outside the legacy concept of fixed,

long term employment with one hirer. The UK’s self-

employed population now stands just shy of 4.55 million

– c.15% of the UK workforce. The desire for increased

flexibility is clearly a two way thing.

• The rise of multiple simultaneous careers

Extrapolating this desire to work on a flexible basis out

further, there is growing evidence that what may have

commenced as a need to piece together multiple income

streams to survive has, for some, turned into an interest

in pursuing multiple simultaneous careers.

Embracing the principle of payment

for results / outcomes based

working.

Outcomes based commissioning in public services

is nothing new, albeit it is currently undergoing a

reinvigorated push. Whilst the buck for outcomes

achievement has historically stopped with the service

provider, there is growing evidence in other circles of the

extension of payment for results extending through to the

worker.

Within public health provision, such a move would be

a seismic shift for both resourcing and service delivery

teams – but if the targeted improvements in public services

outcomes are to be truly delivered, it may become a

necessary requirement.

49. ONS – Underemployment data: http://www.ons.gov.uk/ons/rel/lmac/underemployed-workers-in-the-uk/2012/sty-underemployed-workers-in-the-uk.html


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Conclusions:

As the future provision of public services will be delivered via an extended enterprise of public, private and Third Sector providers,

awareness to a widening variety of forms of contingent labour is increasing.

Amongst the broadening definition of contingent workers sits an increasing number of people who are choosing to work flexibly (including the pursuit of multiple simultaneous careers) and who embrace the principle of outcomes based working and reward.

The resourcing of contingent labour will become a strategic component of overall workforce strategy and, as such, will become more closely aligned to HR planning.

As legacy facets of managed service provision, such as visibility, control and cost optimisation become expected – and viewed almost as ‘utilities’ – the future challenge will be to deliver the appropriate quality of hire against each and every need (regardless of how fragmented ownership of the ‘whole team’ delivering the services is).

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1.0.Introduction

The efficient and effective running of the National Health Service (NHS) is a dynamic

and complex task. In addition to meeting all its statutory responsibilities, it must meet

these service obligations within available funding. In order to do so, as we will go on to

observe during the course of this report, it has to continue to evolve through exercising

its discretion to decide how to provide these services according to local priorities.

The key component in the delivery of NHS services – many

of which must be accessible twenty four hours a day and/

or seven days a week – is, ultimately, people. As such, the

stated workforce of just over 1.57 million, or just over 5% of

the UK workforce1, feels somewhat low when considering

the sheer volume of activities that the NHS is required to

undertake. In reality, as the provision of public services is

delivered through a blend of people deployed by a number

of agents - the NHS itself, the Third and private sectors –

numbers are significantly higher.

To add to the complexity of understanding people

deployment in NHS delivery, beyond those on employment

contracts, all providers are further supported by a raft of

contingent resource. This includes directly engaged ‘bank’

and temporary workers, agency sourced labour (paid on

hourly PAYE or as day-rate contractors) and temporary

workers employed and deployed by third service providers.

Within official statistics, this contingent resource is lumped

together as ‘temporary’ or ‘non-permanent’ employees

and included in the overall workforce numbers. Across the

entirety of UK plc, the proportion of temporary workers

runs at just over 5%.1 Within the NHS, the Department of

Health (DH) determined that, according to official statistics,

agency and contract workers alone constituted almost

an average of 4% of the total NHS workforce in 2011/12.2

In addition, however, the NHS’ extensive utilisation

of internally and externally managed staff banks and

employed temporary workers for contingent cover adds

significant volumes to the temporary headcount. Whilst

no further aggregate research is available that points

to what the combined number of contingent workers is

today, anecdotal evidence suggests the non-permanent

workforce remains sizeable and of critical importance to

service delivery.

This report firstly explores the NHS’ past and current

dependency on temporary labour and observes the

endeavours in play that have sought to manage its

engagement. Secondly, the report studies the impact

of recent austerity measures on NHS service provision,

and how that has impacted the make-up and volumes of

temporary resource engaged through the NHS into its

areas of service provision. The third section of the report

looks at the blended landscape of public, Third and private

sector service provision and makes some observations

around workforce strategy in this maturing state. Finally, it

offers a view from the very people that organisations seek

to deploy. Worker sentiment - around when, where and for

whom they wish to be engaged - is shifting. Understanding

and responding to this changing sentiment will be critical

for all those engaged in the provision of public health

service to remain able to access the skills required to do so

in the long term.

1. ONS Labour Market Statistics: http://www.ons.gov.uk/ons/dcp171778_361188.pdf2. Department of Health - Better Procurement, better Value


15

2.0Background to contingent labour usage in the NHS

2.1Contingent labour usage through to 2005/06

Whilst the stated NHS workforce of just over 1.57 million1, or 5.2% of the UK workforce, is acknowledged as now merely a

component of the overall headcount involved in the provision of public health services, its legacy dependency on contingent

labour is worthy of exploration.

More than in any area of public services provision, the NHS utilised a diverse range of ‘temporary’ labour solutions in order to

meet its contingent needs. Initially, this mostly took the form of bank and agency workers, but has further diversified in recent

years.

Such was the perceived significance of use of bank and agency nurses at the turn of the century - £790 million spent covering

around 10% of all shifts - in its 2001 report, Brief Encounters3, the Audit Commission recommended that all trust boards should

have a senior person with overall responsibility and board level accountability for the use of temporary staff.

Additionally, in a prelude to an endeavour to cut agency spend (£360m of the £790m) and set common standards for quality

and safeguarding amongst the NHS temporary workforce, NHS Professionals was created by the Department of Health

in November 2000. Its aim was to provide ‘better value for money for NHS Trusts, and attractive work arrangements for

healthcare professionals wishing to work flexibly in the NHS.’4 – effectively attempting to make engagement of contingent

resource through their bank a more reliable and more cost effective channel than recruitment agencies. In 2004, NHS

Professionals became a Special Health Authority and subsequently changed its status to a limited company wholly owned by

the Department of Health.

Other measures that were raised for consideration, to address both cost and quality/safeguarding issues, were the introduction

of a series of framework agreements to be set up by the NHS Purchasing and Supply Agency (PASA) and work by NHS

Employers to encourage better management of temporary labour.

1. ONS Labour Market Statistics: http://www.ons.gov.uk/ons/dcp171778_361188.pdf3. Audit Commission - Brief Encounters: http://archive.audit-commission.gov.uk/auditcommission/sitecollectiondocuments/AuditCommissionReports/NationalStudies/brencbrief.pdf4. NHS Professionals website: www.nhsprofessionals.com

16

2.1.1Developments in the use of temporary nursing support

When just considering the category of temporary nursing, activity levels in the decade running through to 2004/5, as published

by the DH, show that both the volume of bank and agency worker usage increased substantially. According to data disclosed

in a House of Commons Committee of Public Accounts report in 2007, 62% of the aggregate annual spend delivered 71% of the

total temporary shifts via staff banks, leaving 38% expenditure going to the recruitment agencies that covered 29% shifts.5

With NHS Professionals (NHSP) published accounts showing just £229 million spend captured within 2004/05 out of a stated

£660m bank spend, there was evidence of substantive autonomous nursing bank activity in play that NHS Professionals had

yet to capture. According to the DH, 75% of trusts operated their own banks, whilst 22% used NHSP.6 The report also noted

that “NHS Professionals faces a tension between its strategic role to improve the quality of the temporary labour market and its

operational requirement to make temporary staffing more cost effective.”

5. Department of Health - Improving the use of temporary nursing staff in NHS acute and foundation trusts - Twenty-ninth Report of Session 2006–07: http://www.publications.parliament.uk/pa/cm200607/cmselect/cmpubacc/142/142.pdf6. National Audit Office – Improving the use of temporary nursing staff in NHS acute and foundation trusts: http://www.nao.org.uk/wp-content/uploads/2006/07/05061176es.pdf

Fig 1. Department of Health’s estimate of the number of shifts worked and the estimated expenditure

on all temporary nursing staff across the NHS

£1,400

£1,200

£1,000

£800

£600

£400

£200

£0

12

10

8

6

4

2

0

1995/96 1996/97 1997/98 1998/99 1999/00 2000/01

Exp

en

dit

ure

, £

mill

ion

Nu

mb

er

of

shif

ts (

mill

ion

s)

Estimated number of temporary sta� shiftsEstimated spend on bank sta�

Non-NHS (agency) spend on nursing

2001/02 2002/03 2003/04 2004/05

Source: Department of Health - Improving the use of temporary nursing staff in NHS acute and foundation trusts - Twenty-ninth Report of Session 2006–07


17

2.1.2Wider use of temporary labour across the NHS

With regard to the effectiveness of agency activity captured through NHS PASA frameworks, the same report additionally noted

that “the NHS Purchasing and Supplies Agency (PASA) agreements have moderated the cost and improved the quality of

agency nursing staff, but trusts continue to use agencies that are not on the framework agreements.”

The reasons for continued use of non-framework agencies are numerous. Firstly, the frameworks are non-mandatory. Secondly,

even with extensive lists of approved agencies to select from, there will be inevitable gaps in supply capability (geographical,

skills set and sufficiency-wise). Additionally, a number of agencies ran non-framework sister companies into which relationships

could be afforded – notably to address the gaps in supply capability.

In further evidence given to the House of Commons Public Accounts Committee, the DH stated that, for the previous ten years,

it had anticipated that growth in the NHS workforce would reduce the demand for temporary staff. It noted that “despite a

significant increase in substantive NHS staffing over the decade, the demand for temporary nursing remains high, but there

have been significant changes in the overall profile of the types of temporary nursing staff being deployed in the NHS, and also

in the patterns of flexible working.” 7

For the Committee, this raised several critical policy questions relating to this area of critical front-line supply. “Why (had)

demand remained high, what (had) driven the shift from agency nursing to other forms of temporary staffing and what (was)

the impact on cost and quality of care of these changes?” Moreover, the Committee questioned what would drive changes in

flexibility in the next few years and what would be the subsequent impact on the profile and delivery of flexibility in nursing?

6. National Audit Office – Improving the use of temporary nursing staff in NHS acute and foundation trusts: http://www.nao.org.uk/wp-content/uploads/2006/07/05061176es.pdf7. House of Commons Public Accounts Minutes of Evidence, (2007)

In terms of what recruitment agency spend equated to as a percentage of overall staffing costs, there was a steady decline in

the overall proportion of use of third party resources through to the middle of the decade, and slightly beyond.

The National Audit Office attributed this reduction to four key factors:

• Improvement in the management of temporary nursing staff, and greater use of nursing banks and NHSP

as an alternative to agencies.

• The NHS Purchasing and Supply Agency Framework agreements through which trusts were

encouraged to procure agency nurses.

• Implementation of NHSP which helped to manage the agency market.

• Financial pressure on trusts had encouraged them to impose stricter internal controls on expenditure.6

18

Whilst agency spend had proportionally diminished, the rise in bank usage meant a higher overall dependency on temporary

labour by mid-decade. It was unsurprising, therefore, that with both the spiralling expenditure and the challenges that NHS

Professionals and PASA framework were experiencing with regard to capture and control, temporary labour became a focus

of the Department of Health’s (DH) attention. To this end, in December 2005 the department listed the need for ‘managing

temporary staffing costs as a major source of efficiency’ as one of ten high-impact workforce changes.

Counter to the plans of the DH, what subsequently ensued in the second half of the decade, however, was significant ebb and

flow in the use of temporary labour.

Fig 2. Expenditure on agency staff as a percentage of total NHS pay bill, England 2002/03 – 2005/06

8. NHS Expenditure on agency staff – Commons Library Standard Note: http://www.parliament.uk/briefing-papers/SN04866/nhs-expenditure-on-agency-staff

6

5

4

3

2

1

0

5.64

2.42

1.08

5.06

All agency sta�

Nursing

Medical

2002/03 2003/04 2004/05 2005/06

1.84

1.18

4.21

1.331.09

3.57

1.040.83

Source: NHS Expenditure on agency staff – Commons Library Standard Note 8


19

2.2Temporary labour usage through to 2010

With agency spend showing a further reduction into 2006/07, mirrored in lower activity levels for NHS Professionals as well

(£236m reported in Annual Accounts against £273m turnover in 2005/06), the DH may have thought that the strategy of

lowering overall temporary labour dependency was paying off.

If (the use of temporary labour) makes sense

and is safe for patients then the Department

would certainly condone it but not if it was done

in an unplanned way or in any way that affected

the care of individual patients.

With the middle of the decade also marking the

commencement of the reconfiguration of the NHS, which

we explore in detail in the next chapter, questions began to

be raised as to whether the falling spend was attributable to

effective strategy or cost pressures. From a temporary nursing

perspective, the DH considered “that reductions in the level

of use and expenditure on temporary nurses since 2005

were not solely a direct response to financial troubles within

the NHS, and that its work to reduce temporary nursing

preceded the current financial difficulties.” It also stated

that it had been working with the highest spending trusts to

exchange information on best practice.5

Department of Health5

5. Department of Health - Improving the use of temporary nursing staff in NHS acute and foundation trusts - Twenty-ninth Report of Session 2006–07: http://www.publications.parliament.uk/pa/cm200607/cmselect/cmpubacc/142/142.pdf6. National Audit Office – Improving the use of temporary nursing staff in NHS acute and foundation trusts: http://www.nao.org.uk/wp-content/uploads/2006/07/05061176es.pdf8. NHS Expenditure on agency staff – Commons Library Standard Note: http://www.parliament.uk/briefing-papers/SN04866/nhs-expenditure-on-agency-staff9. House of Commons Health Committee – Public Expenditure on Health and Personal Social Services 2009: http://www.publications.parliament.uk/pa/cm200910/cmselect/cm health/269/269i.pdf10. NHS Pay Review Body - Market-Facing Pay - How Agenda for Change pay can be made more appropriate to local labour markets: https://www.gov.uk/government/uploads/system/up loads/attachment_data/file/253926/22159_Cm_8501_AccessibleLR_1_.pdf

5

4

3

2

1

0

3.2

All agency sta�

2006/07 2007/08 2008/09 2010/112009/10

N/A

4.5

2.7

4.7

Fig 3. Expenditure on agency staff as a percentage of total NHS pay bill, England 2006/07 – 2010/11

Source: NHS Expenditure on agency staff – Commons Library Standard Note8 and House of Commons Health Committee – Public Expenditure on Health and Personal Social Services 2009 9 and NHS Pay Review Body - Market-Facing Pay - How Agenda for Change pay can be made more appropriate to local labour markets. 10

20

By 2008/09, agency spend as a proportion of the NHS England paybill was heading back towards 5%. In terms of the

proportion that was running through formal frameworks, the following data showing the number of hours supplied to the NHS

through these channels over a 12 month period from 1st April 2008 to 31st March 2009 was released by the DH:

As these frameworks are non-mandatory, as previously mentioned, there was clearly more activity taking place outside the

framework agreements that through them. When considering that the size of the NHS workforce (1.55 million in Q1 2009 1 ), this

framework capture would equate to around 1.3% of headcount. As previously identified, with agency spend equating to 4.7% of

the all England NHS paybill in the year, there was still much more activity that the frameworks had potential to capture.

In addition to agency workers, the Information Centre (now the HSCIC) published NHS nursing workforce data for the first time

in March 2010 showing that 4.8% (15,538) of the total nursing workforce (322,425 whole time equivalents (WTE)) were bank

nurses. 12 In total, therefore, it was clear that temporary workers as a proportion of overall the NHS workforce in England was

heading back to around 10% of assignments as had been the case at the turn of the century.

To add further organisational and financial challenges to the equation, from the autumn of 2009, the UK was to bear the further

impact of European legislation on temporary labour costs. The 1st August 2009 saw the full implementation of the European

Working Time Directive (EWTD) into UK legislation – crucially, limiting workers to a maximum 48-hour week, averaged over a

six month period. As a consequence, the cost of locum cover rose considerably. Notably, as evidenced by the Royal College

of Surgeons in a survey of 165 Trusts, the cost of hiring locum or temporary doctors to prop up NHS hospitals in England

“rocketed”. 13

1. ONS Labour Market Statistics: http://www.ons.gov.uk/ons/dcp171778_361188.pdf 12. Flexible Nursing – A report prepared for NHS Professionals – Institute for Employment Studies 2010: http://www.nhsprofessionals.nhs.uk/download/comms/184_nursing%20report_final_07.07.2010.pdf

Source: They Work for You – response from Ann Keen (Parliamentary Under-Secretary, Department of Health; Brentford and Isleworth, Labour. NB: data provided is an extrapolation of data provided from 1 April 2008 to 31 December 2008.

Medical locums 2,696,341 71,902 1,598

Nursing 6,087,209 162,326 3,607

Allied Health Professionals 1,999,240 53,313 1,185

Health Science Service Sta� 1,013,188 27,018 600

Professional and Administrative Services 15,633,410 416,891 9,264

Ancillary 1,258,342 33,556 746

Totals for year ending March 2009 28,687,730 765,006 17,000

Number WTE weeks

(@37.5)

WTE

(@45 weeks)

Fig 4. Hours supplied into NHS though recruitment agency frameworks – 2008/09


1800

1600

1400

1200

1000

800

600

400

200

0N/A

All sta�

Other sta�

Nursing, midwifery & health visiting

199

7/9

8

199

8/9

9

199

9/0

0

20

00

/01

20

01/

02

20

02

/03

20

03

/04

20

04

/05

20

05

/06

20

06

/07

20

08

/09

20

09

/10

20

10/1

1

21

The effect of the UK’s implementation of the Regulations was particularly damaging for units providing 24-hour acute care

where staffing requirements were already high and complex. As a result, Trusts were forced to try and engage staff already on

their payroll to fill gaps – as ‘internal locums’. The largest increase in costs, however, came from the amount paid to external

recruitment agencies as the NHS was “forced to seek doctors from all over the world on highly paid short-term contracts as

the supply of available UK doctors runs dry.” Spending on external agencies increased by almost £200 million in the year

2009/2010 alone, to almost half a billion pounds.

It is no surprise, therefore, to see the figures for total temporary labour spend spike in the last part of the decade – which, once

again, brought agency spend and usage acutely into view of policymakers.

13. Royal College of Surgeons - NHS locum doctor spend spirals as EU regulations bite: http://www.rcseng.ac.uk/media/medianews/nhs-locum-doctor-spend-spirals-as-eu-regulations-bite

Fig 5: Locum doctor spend in 165

Trusts – 2007/08 to 2009/10

Fig 6: Recruitment agency spend – 1997/98 to 2010/11

Source: Royal College of Surgeons survey results published in NHS Locum doctor spend spirals as EU regulations bite.13

Source: Various

2007/8 (£) 2008/9 (£) 2009/10 (£)

Internal locums 206,165,975 273,399,522 310,875,152

External agencies 173,758,168 280,101,157 467,284,294

Total locum doctor spend 384,367,109 548,663,681 758,363,084

22

Conclusions:

Agency usage has historically been much higher in NHS than across the breadth of UK plc.

More measures were introduced throughout the first decade to contain costs and ensure the safeguarding associated with supply than to determine its strategic value.

As such, procurement solutions largely took a ‘visibility and control’ approach to the channelling of supply, aimed at suppressing rather than, necessarily, optimising usage.


23

3.0Austerity: a review of funding and subsequent efficiencies

In the decade through to 2010, NHS expenditure has increased in real terms by 71% to £103 billion (2010-11) - an average annual

real-term increase of 5.5% - which was well above inflation for the same period. From an employment perspective, the NHS had

witnessed the largest increases of any area across the public sector:

The NHS had been under pressure to find cost efficiencies and productivity improvements for a number of years before the

current wave of austerity considerations came into effect. As a result of the findings and recommendations of a report by

McKinsey15 commissioned by the Labour government and published in 2009, however, the NHS was about to embark on a

major programme of transformation – the scale of which was unprecedented within its history.

The report highlighted that, if the forthcoming spending review “resulted in a significantly lower rate of growth in NHS spending

than has been the case for the last eight years…a possible funding gap of £10-15bn in 2013/14, or 10% of spend” could result. Its

findings, however, pointed to the fact that “the NHS in England could potentially capture efficiencies in health and healthcare

services by between 15 and 22% of current spend, or £13-20bn over the next 3-5 years.”

In June 2009, David Nicholson, then NHS Chief Executive, announced to health service finance directors that the NHS trusts

would have to deliver between £15 billion and £20 billion in efficiency savings over three years from 2011 to 2014.16 This was

followed by the publication of a target for NHS efficiencies of £20bn that were to be achieved through a programme of Quality,

Innovation, Productivity and Prevention (QIPP) by 2014/15.

14. Audit Commission – Work in Progress: http://archive.audit-commission.gov.uk/auditcommission/sitecollectiondocuments/Downloads/201112workforceproductivity.pdf 15. McKinsey - Achieving World Class Productivity NHS in the NHS 2009/10 – 2013.14: Detailing the size of the opportunity: http://www.nhshistory.net/mckinsey%20report.pdf 16. Telegraph – NHS Chief tells trusts to make £20bn savings – 14th June 2009 trhttp://www.telegraph.co.uk/health/healthnews/5524693/NHS-chief-tells-trusts-to-make-20bn-savings.html.

35

25

15

5

-5

NHS

Cumulativepercentagechange

Police

Education

Year

Local government

00 01 02 03 04 05 06 07 08 09 10 11

Fig 7 Rates of change in UK public sector employment (FTE) by service

Source: Audit Commission - Work in Progress 14

2009 2010 2011 2014-15

MarchMcKinsey report one�ciency savings

NovemberDavid Nicholson announcese�ciency challenge

JanuaryQIPP plans for strategichealth authorities

MarchStrategic health authorityintegrated plans

OctoberSpending review for2011-12 to 2014-15

Up to £20 billion ine�ciency savings(planned)

24

By July 2010, under the new coalition government, the DH

published its White Paper, Equity and excellence: Liberating

the NHS, setting out its long-term vision for the future of the

service. To achieve its vision – ‘to put patients at the heart of

everything the NHS does’ - it proposed a number of reforms

to the structure and operation of the service, which were

subsequently refined in the Command Paper Liberating

the NHS: Legislative framework and next steps, which it

published just six months later. As an indication of the speed

with which reform was intended by the government, the

Health and Social Care Bill creating the necessary legislative

change was published in January

2011. Commenting on the proposals, the House of Commons

Health Committee concluded that “the scale of the challenge

is daunting and the risks of non-delivery are significant”.18

In the meantime, the new government’s Spending Review

had confirmed predictions that the NHS in England would be

significantly challenged through receipt of a budget rise of

just a 0.4% over the four years through to 2014/15.

By June 2012, the DH reported that the NHS had made

efficiency savings of £5.8 billion in 2011-12, virtually all of the

forecast savings of £5.9 billion.19 In 2012/13, a further £5bn

in savings was delivered.20 Concerns have been raised,

however, including by NHS England itself, that further gains

of this scale may be unachievable as this figure contained a

number of one-time savings and forced wage suppression.

In July 2013, it flagged that the gap may actually be widening

rather than being eroded: “In England, continuing with

the current model of care will result in the NHS facing a

funding gap between projected spending requirements and

resources available of around £30bn between 2013/14 and

17. National Audit Office - Department of Health – Delivering Efficiency Savings in the NHS - Briefing Paper for the House of Commons Health Committee – September 2011: http://www.nao. org.uk/wp-content/uploads/2011/12/NAO_briefing_Delivering_efficiency_savings_NHS.pdf 18. House of Commons Health Committee: Second Report of Session 2010-1119. NHS – Progress in Making NHS Efficiency Savings – 13th December 2012: http://www.nao.org.uk/wp-content/uploads/2012/12/1213686.pdf)20. Department of Health – Annual Report & Accounts 2012/13: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/229996/Annual_Report.pdf)

Source: Department of Health – Delivering Efficiency Savings in the NHS – Briefing Paper for the House of Commons Health Committee – September 2011 17

“ To plan for and ensure a flexible, mobile,

well supported NHS workforce based on local

needs both now and in the future. By delivering a

framework to support the NHS to reduce agency

staff costs, to reduce sickness absence and

increase labour productivity.

Workforce strand of QIPP

Fig 8. Timeline for NHS savings


FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18 FY 18/19 FY 19/20 FY 20/21

140

135

130

125

120

115

110

105

100

95

90

£bns

Total projected costs

Projected resource

25

2020/21 (approximately 22% of projected costs in 2020/21). This estimate is before taking into account any productivity

improvements and assumes that the health budget remains protected in real terms.” 21

NHS England also highlighted the major challenges and the future trends – so substantive, it believed, that they have the

potential to “threaten the sustainability of a high-quality health service.”

21. NHS England – The NHS belongs to the people – A call to Action: http://www.england.nhs.uk/wp-content/uploads/2013/07/nhs_belongs.pdf

Fig 9. Projected resource vs. projected spending requirements

Fig 10. Future pressures on the NHS

Source: NHS England - The NHS belongs to the people: a call to action

DEMAND FOR NHS SERVICES

SUPPLY OFNHS SERVICES

Ageing society

Increasing expectations

Rise of long-termconditions Limited productivity gains

Increasing costsof providing care

Constrained public resources

Source: NHS England - The NHS belongs to the people: a call to action

26

3.1Austerity: the impact on the NHS workforce

As previously stated, the composition of the NHS extended

workforce, particularly acute hospital staffing, is a complex

construct. As well as having to cope with staff turnover,

sickness and absence - and the essential professional

development of its workforce - there is the added challenge

of accommodating highly variable patient demand from a

headcount perspective and the need to address the issue of

skills availability.

The employment of temporary (bank, contract and agency)

staff to meet variability in workforce demand and skills

availability has been subject to considerable scrutiny

over the last fifteen years - not least because it has been

regarded as an area of potential cost savings through

improved efficiency. What has been given less consideration,

however, is a key external factor that cannot be ignored:

changes in worker sentiment towards how they wish to be

engaged. We return to this subject later in this report.

According to analysis by The Kings Fund, the NHS staff pay

bill rose by around 5%, in cash terms each year from 2006/7

to 2010/11.22 As a result of both pay restraint and a reduction

in staff numbers, they conclude that the total NHS pay bill

grew by just 0.7% between 2010/11 and 2012/13 – equivalent

to a real reduction of more than 3%.

In terms of numbers, the DH reported that, from a total

workforce perspective, the total number of staff deployed

within the NHS (financial year average WTE) reduced during

2011-12 by 2.55%, from 1,125,877 to 1,097,180.23

From a financial perspective, the initial impact of the

Government’s two-year pay freeze for public sector workers,

which commenced on 1 April 2011, was a reduction in the

growth in the NHS pay bill by an estimated £1.42 billion the

year 19 – and actual in-year savings of £850 million.22 Further,

the National Audit Office (NAO) noted that 80% of Trusts and

Foundation Trusts reported that wages were their greatest

area of efficiency saving within the year.23

From a contingent labour perspective, the total workforce

number for 2011/12 included 78,806 non-NHS workers. This

equated to 7.1% of whole workforce numbers and 6.6% of

whole workforce costs.23

By 2012/13, the total number of staff employed within the DH/

NHS was stated, in the Annual Report & Accounts, to have

reduced during the year by 1%, from 1,097,181 to 1,085,627.20

Contingent labour numbers had increased to almost 8% of

the total workforce and 8.5% of total staff costs, however.

19. NHS – Progress in Making NHS Efficiency Savings – 13th December 2012: http://www.nao.org.uk/wp-content/uploads/2012/12/1213686.pdf)20. Department of Health – Annual Report & Accounts 2012/13: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/229996/Annual_Report.pdf)22. The Kings Fund – The NHS Productivity Challenge - May 2014: http://www.kingsfund.org.uk/sites/files/kf/field/field_publication_file/the-nhs-productivity-challenge-kingsfund-may14.pdf23. Department of Health – Annual Report & Accounts 2011/12: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/212977/23735_HC-66-DoH.pdf

Year Non-permanent

sta� numbers (WTE)

Non-permanent

sta� spend(£000s)

Non-permanent sta�

number as a % of total

sta� number (WTE)

Non-permanent sta�

spend as a % of total

sta� spend

Year

2011 / 12 78,806 7.1% £3,042,891 6.6%

2012 / 13 87,192 7.9% £3,985,074 8.5%

2013 / 14 107,078 9.5% £5,223,999 10.9%

Source: Department of Health Annual Report & Accounts – 2011/12 and 2012/13

Fig 11. Non-permanent staff percentages and spend as a proportion of total staff spend (all DH and NHS activities)


Contract and agency

spend (£000)Plan

Percentage of

total paybillVariance to plan

Year

2012 / 13 1,078 4.2% N/A N/A

2013 / 14 1,373 5.2% £523m £849m (162%)

27

3.1.1The rise of new forms of temporary worker engagement models

Of the 2011/12 non-permanent staff bill, the DH attributed £2.4bn to acute NHS service provision in its Better Procurement,

Better Value, Better Care report published in August 2013. It also claimed that the national average non-permanent workforce

percentage in 2011/12 was 4%. Whilst no comparable front-line service data is yet available for the financial year 2012/2013

– apart from the whole department data published within the DH annual report (above), which shows a substantive hike in

2012/13 - the report states that the DH “will seek to help the NHS reduce its non-permanent staff bill by 25 per cent, by the end

of 2015-16.”

The Department of Health’s Annual Report and Accounts for 2013/14, published in late July, evidence that this strategy has

been clearly under strain. Far from reducing, the DH/NHS non-permanent staff costs actually increased by 31% to £5,223,999 –

or 10.9% of total workforce costs. News of such a significant increase had, in part, been preluded by Monitor. Having reported

that , in 2012/13, Foundation Trusts alone spent 1.178 billion, or 4.4% of its staff costs, on contract and agency labour, recently

published figures for 2013/2014 show that, proportionally, contract and agency spend in the sector increased to 5.2% in the

year (£1.373 billion) – an overspend of 162%, or £849 million, against plan. 31

As is often the case in time of challenge, necessity drives invention – which is sometimes easier to accommodate than

adaptation. Within the NHS, there are three ‘creative’ temporary worker engagement models where usage has accelerated

since the efficiency reforms have come into play.

One category of non-permanent staffing that has emerged over recent years – and one that is subject to on-going controversy

- is ‘directly engaged temporary workers’. The initiative primarily utilises recruitment agencies just for the purposes of sourcing.

Thereafter, the relationship transfers to the Trust (or a third party). In-house resourcing teams additionally recruit temporary

workers for direct engagement.

31. Monitor – Performance of the NHS Foundation Trust Sector – year ended march 2014 http://www.monitor-nhsft.gov.uk/home/news-events-publications/latest-press-releases/nhs-foundation-trusts-take-more-staff-improve-patient-care

Fig 12. Foundation sector – Contract and agency spend 2012/13 and 2013/14

Source: Monitor - Performance of the NHS Foundation Trust Sector – Year ended March 2014.

28

In an initiative launched into the market in 2011 by PwC and Liaison Financial Services, branded as STAFFflow, the key benefit

of the model to Trusts is that if payment to the worker is not via an agency, the payment does not attract VAT. With a service

charge reported to be in the region of 6% of worker payment20, that still leaves a 14% efficiency if the worker is engaged directly

compared to full the VAT element on worker payment where invoiced via an agency.

Fuelled by reported concerns over the model by some recruitment agencies, some of whom have suggested that they are left

with no choice but to supply workers in this way, the industry’s trade bodies raised issues with HMRC relating to the potential

‘tax avoidance’. HMRC’s current stated position with regard to these models suggests that they are keeping a watchful eye on

their application and evolution.

In terms of the levels of current adoption of PwC/Liaison’s STAFFflow model, the enterprise claimed, in May 2014, to be

currently live in 42 Trusts/Boards, to be processing an annual gross pay run-rate of £79 million and to be realising annual

savings to the NHS of £18 million.25 Similar models are also operated by other major accounting firms and managed service

providers.

20. Department of Health – Annual Report & Accounts 2012/13: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/229996/Annual_Report.pdf)25. www.liaisonfs.com

This direct contracting gives trusts greater visibility of and control of their recruitment costs -

for example they can see exactly how much a locum is being paid and how much is going to

the recruitment agency - and helps them manage their workforces more effectively.

There is a reduction in agency costs on which VAT is chargeable, as there is for any

organisation employing someone directly rather than using agency staff.

PwC and Liaison joint statement – June 2013

“HMRC is aware of this issue and we are actively looking into it to ensure the right tax is paid.

A placement for a period of one or a few shifts is clearly not consistent with a contract of

employment but, rather, a supply of staff by the agency, liable to VAT in full.

NHS Trusts can either employ people and assume the responsibilities that go with that or use

agency staff and incur VAT in full. That choice is for NHS managers but the VAT rules are clear.

HMRC Statement – 27th June 2013


29

3.1.2The inability to legislate for unforeseen change

From a procurement perspective, CCS has also recently re-let its Locum Doctors framework with a specific Lot included

through which to accommodate ‘fixed term employment through employment agencies.’26 Whilst clearly stating that the

supplier introduces a candidate and the Trust will employ them directly, it also specifies that this is ‘not intended as a VAT

efficiency/mitigation Lot.’27

Since the implementation of the Agency Worker Regulations in October 2011, there has also been a significant rise –

nationally, and across all sectors - in the use of temporary workers employed by a third party. So called ‘Umbrella’ workers,

where employment is compliant with options within the Regulations, fall outside stipulations that legislate for pay and

benefit parity for temporary workers with a worker in a comparable permanent post. Whilst predominantly supplied

via recruitment agencies into the NHS (and, therein, are captured under agency spend), their engagement status (and

associated costs and liabilities) differ significantly.

One last category of temporary workers - under the current focus of significant attention - is those workers engaged

on Zero Hours contracts. This amounts to engagement where no guaranteed hours are given. Whilst data for 2012/13

suggested that there were 67,000 workers in the NHS on these contracts (47,443 clinical and 13,334 non-clinical), there is

no certainty as to whether they are recorded as permanent or non-permanent (i.e. temporary) workers.28 We look at this

form of worker engagement in more detail later in the report.

If all stated intentions could be applied to a status quo, there may be sufficient will and intent within the NHS to achieve

the required results. When something as significant as the Francis Report is published, recommending a need for a more

systematic and responsive approach to determining ‘safe’ nurse staffing levels, a new dimension relating to productivity

and efficiency comes into play.

With all hospitals, from April 2014, now required to publish staffing levels on a ward-by-ward basis together with the

percentage of shifts meeting safe staffing guidelines, it is of no surprise that workforce strategy in the field of nursing is

under significant review. According to Health Education England, the workforce planning process revealed that employers

were intending to employ 2.1% more nurses during 2013/14 (an additional 3,700 FTE nurses).30 A report published by

Monitor at the end of May 2014 confirmed activity well beyond this prediction: staff numbers in Foundation Trusts actually

increased by 16,000 FTE more than the 8,000 planned for the year. This equated to a 4.1% headcount increase against the

1.4% planned.31

26. Crown Commercial Services – Locum Doctors framework RM1570: http://ccs.cabinetoffice.gov.uk/contracts/rm157027. Crown Commercial Service – Presentation on Locum Doctors framework RM 1570: http://ccs.cabinetoffice.gov.uk/sites/default/files/contracts/RM1570%20Customer%20Presentation_0.pdf 28. Social Work Association – Zero Hours Contracts in NHS & Social Care – 17th July 2013: (http://www.sochealth.co.uk/2013/07/17/zero-hours-contracts-in-the-nhs-and-social-care/)30. NHS Employers – NHS Qualified Nurse Supply and Demand Survey - Findings – May 2014: http://hee.nhs.uk/wp-content/uploads/sites/321/2014/05/NHS-qualified-nurse-supply-and-demand-survey-12-May1.pdf31. Monitor – Performance of the NHS Foundation Trust Sector – year ended march 2014 http://www.monitor-nhsft.gov.uk/home/news-events-publications/latest-press-releases/nhs-foundation-trusts-take-more-staff-improve-patient-care

30

In a survey published by NHS Employers in May 2014, 83% of respondents indicated that they were experiencing qualified

nursing supply shortages. The average vacancy rate (those not permanently occupied) was running at 10% (12,566), 40% of

which were being covered by a variety of temporary staff (including 17% as agency workers).30 As it will increasingly become

unacceptable to operate with this level of vacant posts, and with skills shortages abound, it can safely be assured that a

proportion of this additional supply will be secured on a contingent basis.

Conclusions:

Whilst contingent labour usage in the NHS has continued to be

highlighted as a source of efficiencies through curtailed usage, need

for temporary resource has been rising.

Unplanned service needs and growing skills shortages are creating

the increased demand. Whilst some alternative engagement models

are offering some relief on costs, the overall proportion of paybill that

temporary labour constitutes is increasing.

29. The Health Foundation - Closing the NHS funding gap: Can it be done through greater efficiency? http://www.health.org.uk/public/cms/75/76/313/4700/Closing%20the%20NHS%20 funding%20gap%20-%20Can%20it%20be%20done%20through%20greater%20efficiency.pdf?realName=ZLAruR.pdf30. NHS Employers – NHS Qualified Nurse Supply and Demand Survey - Findings – May 2014: http://hee.nhs.uk/wp-content/uploads/sites/321/2014/05/NHS-qualified-nurse-supply-and- demand-survey-12-May1.pdf

Source: The Health Foundation - Closing the NHS funding gap: Can it be done through greater efficiency? 29

2014/15

2021

Short term challenge of coping with a di�cult period of financial contraction

set aginst the need to make QIPP savings of up to £20 billion by 2014/15.

Medium-term challenge of transforming services to ensure care is fit

For the future and to support the nhs to close the £30 billion funding gap by 2021.

Interventions here to make short-term budget savings will impact on the sytem’s ability to deliver radical service transformation by 2021.

Presure to increase spending in the acute sector as a response to Francis (e.g. increased numbers of acute nurses) will impAct on the system’s ability to deliver radical service transformation.

Fig 13. The twin-track

challenges facing the NHS

– financial challenges and

quality concerns


31

4.0Endeavours to optimise the use of contingent labour

When an organisation does an investigation and finds

a sizeable spend within a procurement category, it will

endeavour to put solutions in place to ensure that money is

either well spent, if affordable, or reduced if not.

As earlier detailed, much work has been done around the

category of temporary labour, from a NHS procurement

perspective, since the turn of the century – first by NHS

PASA, then Buying Solutions and, latterly, by Crown

Commercial Solutions – to assist with the efficiency

and safeguarding agendas associated with the use of

contingent labour.

Across the whole of the public sector, engagement levels

with regard to framework usage continue to rise.

Additionally, from a generic recruitment perspective, the

department can attest to significant achievements in terms

of visibility and control.

Until recently, what had remained less clear, however,

was the extent to which temporary labour spend is being

channelled through the available frameworks into the NHS.

32. Government Procurement Services (now Crown Commercial Services) – Performance Review 2012/13: http://ccs.cabinetoffice.gov.uk/sites/default/files/images/2087-13%20Performance%20review%201213.pdf

2009/10 2010/11 2011/12 2012/13 2012/13

Plan Actual

12

11

10

9

8

7

6

5

4

3

2

1

0

£bn

7.07.6

8.4

10.0

11.4

Fig 14. Managed Spend of goods and services

through GPS (now Crown Commercial

Solutions) framework agreements

Source: Government Procurement Services (now Crown Commercial Services) – Performance Review 2012/13 32

“ 2012/13 was a successful year for GPS as we

built upon the hard work of 2011/12 and delivered

an excellent set of financial and operational results.

This has resulted in an increase of more than 35%

in spend under management to reach a total spend

of £11.4 billion. Savings increased to £1.2 billion, with

an additional £1.6 billion delivered from working with

departments to maintain the reduction in the use of

consultants and contingent labour

(compared with a 2009/10 baseline).”

Government Procurement Services (now Crown

Commercial Services) Performance Review 2012/13

Source: Freedom of Information request FO1319615

32

4.1Endeavours to channel recruitment agency spend through frameworks

With 2008/09 hours data, previously cited, evidencing that the capture of recruitment agency spend through frameworks was

proportionally low, anecdotal evidence had additionally suggested that adoption levels still result in the majority of this area of

spend being procured outside of these available routes.

Information obtained for this report as a result of a Freedom of Information request, shows mixed results in terms of framework capture.

Considering that the AHP/HSS NHS market in England was estimated at £97 million per annum (based on 2007 figures)33, the

level of capture through its corresponding framework has been impressive.

Originally forecast with potential for £250 million spend per annum34 when tendered in 2009, and now forecast as – from 2014/15 –

having potential client spend of £200-£400m,35 the NMNC framework has, likewise, had relative success, in terms of adoption.

Whilst the larger category spends for nursing and locum doctors on frameworks prior to 2014/15 were not obtained, the capture

rate through the new frameworks which commenced in July 2013 are of notable interest:

33. Crown Commercial Services - Background to AHP/HSS framework (CM/AST/08/4966): https://ccs.cabinetoffice.gov.uk/contracts/cmast08496634. 2009 PIN Notice for Non-Medical, Non-Clinical (NMNC) temporary and fixed term staff framework (CM/AAC/09/5124): http://www.qsl-tenders.co.uk/tender-notice.php?ted_id=584420& showTab2&x=e1a1ad1aff75b0e551134217833747ea 35. 2013 PIN Notice for Non-Medical, Non-Clinical (NMNC) temporary and fixed term staff framework (CM/AAC/09/5124): http://ted.europa.eu/udl?uri=TED:NOTICE:103857-2013:TEXT:EN:HTML&src=0

2009/10 £78,515,343 £28,699,825

2010/11 £63,543,532 £184,120,519

2011/12 £59,830,931 £177,324,720

2012/13 £80,072,861 £240,410,282

2013/14 £83,454,991 £288,944,962

2014/15 £3,881,750 £22,148,165

Spend captured through Allied Health

Professional (AHP) and Health Science

Services (HSS) framework - CM/AST/08/4966

Spend captured through Non- Medical,

Non-Clinical (NMNC) framework

- CM/AAC/09/5124

YearFig. 15 – CCS framework

capture (AHP/HSS and

NMNC 2009/10 – 2014/15)


July 2013 / March 2014 £74,099,266 Nil

2014/15 £9,661,356 Nil

Spend captured through

Locum Doctors framework (RM1570):

Lot 2 – Temporary

Spend captured through Locum

Doctors framework (RM1570):

Lot 3 – Fixed-Term

Year

Year Spend captured through Locum Doctors framework (RM1570): Lot 2 – Temporary Spend captured through Locum Doctors framework (RM1570): Lot 3 – Fixed-Term

July 2013 / March 2014 £74,099,266 Nil

2014/15 £9,661,356 Nil

Fig.16 – CCS frameworks

capture - Locum Doctors

2013/14 – 2014/15


Fig. 17 – CCS framework capture – Nursing & Social Care 2013/14 and 2014/15

33

With the spend capture for Locum doctors valued at between £25m and £400m per annum, the capture to date suggests that

it is working well within temporary agency spend but there has been no traction to date on either supply through agencies of

fixed-term workers.

Within the Nursing & Social Care framework let in 2013, valued at £125 - £250 million per annum at the point of tender, the

framework has been markedly slow in its uptake:

In the FOI response, the Cabinet Office notes that “several Crown Commercial Services customers (and reported spend from

these customers) remain with call off contracts through now expired framework agreements. We fully anticipate that spend

through the most recent frameworks..will increase once these call-offs have expired. “With such low figures captured to date

– almost a year into the contract - it will be interesting to see if, when and to what extent spend moves from the legacy to the

current framework.

In 2013, GPS (now Crown Commercial Services) also reported that it had established an NHS customer board “to drive

improvements across the health sector” and that it was working closely with the Department of Health’s NHS procurement

policy team. Planned outputs include a spend analysis exercise being undertaken on behalf of 10 NHS Trusts to provide

benchmark data on usage and to identify savings opportunities.

In a slightly surprising move, considering such high profile announcements and the recent re-letting of NHS specific framework

for the supply of agency nurses by CCS, an NHS procurement body - NHS Commercial Solutions – announced that, alongside

four named regional collaborative procurement partners, it had “analysed and evaluated critical aspects of the contract.”

Specifically, it had considered:

• The financial sustainability of awarded suppliers

• Supplier capacity and capability

• Actual market pay rate comparisons

It concluded that, “having objectively investigated all information provided, and assessed the risk of using this framework, we

have concluded that we were unable to support the implementation of the GPS (now CCS) framework in our region(s) as we

believe it does not meet (our) needs.”38

38. NHS Commercial Solutions – news release, 21 November 2013: http://www.commercialsolutions-sec.nhs.uk/newspage.php?pid=1394

Lot 2 – General Lot 4 - CommunityLot 3 – Mental Health Lot 5 SpecialistYear

Aug 2013 / Mar 2014 £2,225,641 £694,890 £637,495 £458,422

2014 / 15 £231,370 £175,140 £126,450 £133,250


34

4.2Endeavours to manage bank and agency staff procurement through frameworks service partners

With the number of available frameworks (both sector specific and generic across the whole of the public sector) through

which the NHS can procure agency labour ever increasing, there is a significant potential of a dilution of effort (amongst

procurers and providers alike) – and perhaps, more critically, confusion within the marketplace.

Furthermore, this confusion will not help the cause of the recent announcement by the Department of Health that ‘temporary

labour’ is an area through which they believe a further £450 million of efficiencies can be achieved (as a key contributor to

the £2bn efficiencies required overall by the NHS in order to meet its 2015/16 budget).

Whilst the guided access to singular recruitment agencies through frameworks had been progressing within the NHS for almost

a decade and a half, it is only in recent years that framework solutions have become available through which to manage their

engagement. Frameworks for the supply of clinical personnel are now increasingly including options for neutral and master

vendor engagement as well as the option of continuing with direct agency supply.

That said, the adoption of the neutral vendor solutions within clinical supply has, to date, been minimal. Early suggestions as

to why point to siloed approach that has been taken to procuring managed solutions and the fact that providers are devoid of

whole team visibility when managing supply for just one category – a subject we return to later in the report.


Fig.18 – CCS framework capture of clinical spend via neutral vendors (Nursing & Social Care and Locum

Doctors 2014/15 – 2015/16)


July 2013 / Mar 2014 Nil £504,949

2014/15 Nil £225,179

Spend captured through Locum

Doctors framework (RM1570):

Lot 1 – Neutral Vendor

Spend through Nursing & Social

Care framework:

Lot 1 – Neutral vendor

Year

Year Spend captured through Locum Doctors framework (RM1570): Lot 1 – Neutral Vendor Spend through Nursing & Social Care framework: Lot 1 – Neutral vendor

July 2013 / March 2014 Nil £504,949

2014/15 Nil £225,179


35

Additionally, whilst the launch of NHS Professionals in 2002 was an endeavour to professionalise and consolidate supply of

bank staff, it was beset with challenges in terms of optimising a level of capture that both it and the DH desired. In 2010, London

Procurement Programme (LPP) seized the opportunity to launch the Managed Service Staff Bank framework of six providers –

including NHS Professionals – who could be appointed by Trusts to manage their bank staff processes.

Whilst the aforementioned data on neutral vending solutions point to negligible spend capture through such solutions to date,

these managed endeavours in terms of spend capture, this – and the LPP Staff Bank framework - are notable moves that are

worthy of consideration in terms of what, additionally, they have the potential to deliver on behalf of the NHS

The initial task in hand for these managed solutions is, ultimately, to gain visibility over agency or bank staff usage –

sometimes yielding surprising results around total costs and tenure of engagement. With these insights, it is possible

to engage in dialogue to gain an understanding of what results from true need as opposed to scenarios that exist as a

result of intentional or unintentional slippage in the rational use of agency or bank resource. Armed with understanding of

true need, protocols can be installed to regulate supply in accordance with the factors that enable the truly considered,

strategic use of agency labour – in isolation.

All this assumes the status quo, however. When announcements as significant as those discussed earlier in this report

arrive, however, legacy processes and historical spend patterns can be guaranteed to change. In essence, an event

on this scale had provided the catalyst to not just move to managed visibility and control models but, beyond them,

to solutions built on true understanding of need in a new service world – and to enable informed choice around the

appropriateness of use of all people resource.

Diagram

KNOWLEDGE

TECHNOLOGY

VISIBILITY

UNDERSTANDING

CONTROL

CHOICE

36

4.3Current state – towards agency visibility and control

There are currently three NHS front-line service orientated CCS frameworks offering managed service options for agency

engagement, covering the following categories:

With all frameworks being less than a year into their operation, it is far too early to determine their real potential – but adoption

rates are clearly slow or undesired.

With efficiencies forefront in everyone’s mind, however, it is not surprising that the course towards solutions that deliver

strategic, case-by-case procurement of individual agency workers has been diverted to solutions that deliver more basic,

tactical yet critical need over recent years – cost reduction. This will be achieved, initially, by further reducing agency fees

on supply and, in a number of instances, cost will be further contained by standardising pay rates to which these agency fees

apply. Additionally, a further raft of measures around tenure and engagement status will enter these contracts.

For reasons that we will look at later in this report, however, cost reduction and control must now become a utility component of

the solution rather than the sole driver. Public service provision has a large and diverse range of stakeholders – not least so as

it undergoes a phenomenal period of transition and change. For this transition and change to reach its successful conclusion,

contingent labour – including that supplied via agencies - will form an increasingly strategic and highly valued component

of the total workforce. To enable it to do so, future managed solutions will need to enable the choice as to how all forms of

contingent labour are deployed, engaged and rewarded, on a case-by-case worker basis.

Fig 19. Current clinical frameworks available through CCS

Framework Title

Tendered value of

framework versus

2013/14 NV captureFramework Duration

Managed service

optionsFramework #

RM 970

RM 959

RM 1570

Agency Nursing

& Social Care

AHP, Health

Science and

Emergency Services

Locum Doctors incl.

Locum GPs01/07/2013 to

30/06/2015 (+1 +1 year)

Neutral vendor

(agency)

01/08/2013 to

01/08/2015

(+ 1 + 1 year)

01/04/2014 to

31/03/2016 (+1+1 year) £300 - £600 millionNeutral and Master

vendor (agency)

£500 million - £1 billion

spend projection versus -

versus Nil captured

through neutral vendors

£100 million - £1.6 billion

spend projection versus

£0.5m captured through

neutral vendors

Master Vendor (agency)

labelled as Managed

Service Provision and

Neutral vendor

(temp and FTC)


37

4.4The commercial realities of visibility and control models

4.4.1The impacts of a fundamental review of service provision

Managed solutions based around a transactional fee model

assume a volume of requirement and a cost construct

upon which providers have based their commercial bids.

As such, cost control and the achievement of volumes are

critical, from the provider’s perspective, to the success

of the programme. If ever there were a time in the NHS’

history when the volume of future requirement cannot

be guaranteed and the flexibility to approach and secure

scarce talent will be an imperative, the next few years will

bear witness the criticality of accommodating these needs.

The realities of NHS reform outlined in the subsequent

sections are already substantively in play. Managed

programmes that are not built to accommodate fluidity of

need that the ensuing service transformation will bring

but are, instead, focused purely on obtaining visibility and

control of activity may actually result in being a very costly

experience for the NHS.

As evidenced earlier in this report, the NHS currently continually has to balance known change with unforeseen service

adjustment. If the need for efficiencies and the service transformation that the Care Bill continues to bring about were not

enough to accommodate, the flux that announcements such as the Francis Review bring to bear on the service must, equally,

be accommodated. If non-mandatory frameworks intended to support the agenda for change actually constrain the NHS from

accommodating the flexibility required to deliver reform, they will simply be ignored.


“ The awarded supplier(s) will be

responsible for the compliance of

the employment businesses used

with regards to all the relevant terms

and conditions of the agreement and

with all legislative and regulatory

requirements. The neutral vendor

supplier will include a transactional

fee in the hourly charge rate for the

temporary worker.

Outline of Neutral Vendor solution available through

CCS Nursing & Social Care and AHP frameworks

38

4.4.2The impacts of a rise in outsourcing

4.4.3The impacts of worker and agency choice

In 2011, a report from Oxford Economics, commissioned by the Business Services Association (BSA), estimated that £11.9bn of

frontline health related services had been outsourced in the UK – involving an estimated 267,000 jobs. 39 Adding to the debate

around where contribution to the required £20bn QIPP efficiencies could be derived, the BSA suggested that “outsourcing the

remaining 62% of the NHS support services sector could deliver savings of £1 billion per year.”40

In addition to extensive private sector involvement in facilities services and support functions, such as IT and finance, there is

increasing evidence of clinical provision being delivered through external providers. A study by the NHS Support Federation

in December 2013 discovered that more than £5bn worth of contracts to run or manage clinically-related NHS services were

advertised in the last nine months of 2013.41 Of the fifty seven contracts for clinical services awarded during that period, 70%

went to private sector providers.

In the first audit of its kind, NHS employers reported, in April 2014, that 65% of Trusts outsourced some of their services.

Amongst respondents who were able to determine a figure of their complement of outsourced staff, the aggregate figure was

35,918 – equating to 4.2% of their 862,365 directly employed NHS staff.42

Just as the reform of service provision within the NHS impacts workforce requirements (including agency worker volumes),

outsourcing delivers a critical blow to volumes – it removes them completely from the scope of NHS supply.

As general market conditions and subsequent demand for workers continues to pick up, the challenges associated with

capturing all agency sourced requirements through frameworks and managed programmes are set to intensify. For higher

volume requirements for generic support function skills that require only a nominal amount of qualification, assessment of

appropriation and on-going servicing, it can be argued that managed programmes can achieve great results.

For clinical roles, it is arguable that another set of interventions needs to come into play if the most appropriate person is to be

engaged onto the assignment. Firstly, verbalisation of requirements, notably around niche areas of experience and cultural fit,

will achieve more than any written job outline will ever convey. Secondly, the rules associated with volume recruitment need to

39. Oxford Economics – The size of the UK outsourcing market – across the private and public sectors – April 2011: http://www.bsa-org.com/uploads/publication/file/64/35_original.pdf40. BSA - Health Policy Paper - Saving the NHS £1 billion by outsourcing support services, April, 2011: http://www.bsa-org.com/uploads/publication/file/65/38_original.pdf41. HSJ – NHS contracts ‘going to private firms’ – 16 January 2014: http://www.hsj.co.uk/news/nhs-contracts-going-to-private-firms/5067114.article#.U4OB4yjoo2w42. NHS Employers – Findings: contract Workers and outsourced services - 28 January 2014: http://www.nhsemployers.org/your-workforce/retain-and-improve/staff-experience/health-work- and-wellbeing/keeping-staff-well/implementing-nice-guidance-for-the-nhs-workplace-a-national-audit/findings-contract-workers-and-outsourced-services)


2011 2012 2013 2014 2015 2016

Year

750,000

700,000

650,000

600,000

550,000

500,000

450,000

400,000

He

ad

cou

nt

Forecast high and low

scenarios of demand for

registered nurses

Forecast high and low

scenarios for supply

of registered nurses

39

4.4.4The uniqueness of hiring into the front-line of the NHS

be removed – most critically, the cut off that comes into play once numbers of submissions (regardless of their quality) have been

received. Speedily filling the CV pipeline with candidates who are either inappropriately qualified or, worse, have not been consulted

about being forwarded for a role brings the efficiency of the whole process into question. The critical issue around these process

flaws is that it ultimately deters both the intermediary and the candidate themselves from wanting to put their individual capability

forward. Once the most highly qualified candidates say that they do not want to be submitted via this process, as many now

are, the process succeeds in, at best, filling roles with substandard workers – at worst, leaving vacancies unfilled.

The results of all of the above are one and the same. Where feasible, many agencies and their candidates are taking their

availability elsewhere. Hirers, frustrated by the residual quality of candidate issues that result once those most qualified to supply

walk away, are contacting agencies directly outside the programme and/or candidates are seeking to be engaged directly,

outside of the whole process and its terms. When this happens, non-fulfilment and off-contract supply become inevitable.

What these challenges also start to highlight is whether a fragmented approach to managing critical categories of clinical skills

needs within the NHS is appropriate, or whether a more joined up and holistic view of clinical workforce strategy should be

encompassed at such a critical point in time.

Fig 20. The range of supply and demand set against each other for registered nurses in England

Source: Centre for Workforce Intelligence – Future nursing workforce projections

40

Potentially one of the largest challenges that NHS faces over the next few years is the shortfall of supply over increasing

demand – notably within the supply of nurses. According to predictions from the Centre for Workforce Intelligence (CfWI), in

its Future Nursing Workforce Projections published in June 2013, “there is potential for increased pressure on the availability

of nursing staff to work in the NHS caused by a reduction in the supply of registered nurses and the possible increase in NHS

demand up to 2016.”

“In order for the nursing workforce to continue to deliver patient-centred, quality care,” the CfWI continues, “we must ensure

that demand remains within the range of potential projections of the available and affordable supply.”

Conclusions:

Whist the NHS is only just starting to offer access to service providers to

manage engagement with agencies, cost models must be completely

flexible to accommodate on-going service needs and changes.

Volumes available for capture through programmes are likely to diminish

on an on-going basis as a result of:

• Service changes

• Outsourcing the provision of services to the Third and private sectors

• The choice of scarce, high calibre workers and agencies not to work

through cost and control oriented managed programmes


41

5.05.0 Future state – beyond visibility and control into informed choice

5.1Understanding and optimising the effects of legislative change

Beyond the ability of managed programmes to contain the costs of agency labour sits a raft of other capabilities that are rising

in importance. In the future state of public services provision, which we examine in section 6, these capabilities have the

potential to become more important than any cost driver, as they fundamentally inform choices around worker engagement

before any money is spent.

The UK is noted for its liberal employment landscape and, undoubtedly, UK plc has benefited from the workforce flexibility this

allows organisations to enjoy. For many, such flexibility may have been its saviour during the recent protracted downturn.

The resulting composition of the UK’s workforce sees over 42% of workers now working outside the legacy concept of full-time,

fixed employment.1 Working in an array of guises, from part-time to FTC, PAYE temporary to self-employed, each brings with it

an associated raft of legislation and precedent. Overarching these are generic pieces of employment law, such as the Pensions

Act, in which their application is highlighted for a number of different engagement instances.

From a contingent labour perspective, the UK has witnessed a swathe of recent legislation which has compounded the need

for all those involved in the provision and management of temporary, contract and interim workers to be fully cognisant and

diligent in the application of these governing principles. If the Agency Worker Regulations did not add complexity enough

around the rights of contingent workers during the tenure of their engagement, the Pensions Act and Real Time Information

(RTI) weighed in both with an administrative challenge and associated costs. New legislation governing the use of on-shore and

off-shore intermediaries (notably aimed at tackling issues around false self-employment and tax avoidance), which was added

to the Finance Bill in April 2014, will add additional due diligence requirements onto those at the head of the supply chain.

The transient nature of this workforce and the requirements to keep records on all aspects of their engagement for given

periods of time places additional record keeping requirements on all those involved in their supply. Automation of these

processes has become a pre-requisite. With these insights, it will also be possible to cost model options around future

engagement of workers – informing choices before hiring decisions are made.

1. ONS Labour Market Statistics: http://www.ons.gov.uk/ons/dcp171778_361188.pdf

42

5.2Delivering value through enhanced management information and market intelligence

In addition to automation ensuring compliance with and decision making around all of the aforementioned legislation,

transactional data capture should translate into a management information output. One of the key reasons why real-time, rather

than retrospective reporting is essential, however, is that NHS Trusts need to be able to make in-year adjustments to service

provision as much as they need timely information for forecasting and budgeting purposes. They also need to be assured of

compliance on a daily basis rather than doing an evaluating of past performance to see whether it was up to par.

From a service delivery perspective, fulfilment and internal stakeholder satisfaction rates, data around assurance of service

standards (including adherence to process and evidence of worker compliance) and evidence of adherence to agreed pay and

bill rates should now be available to all local authorities via a real-time dashboard.

From a compliance perspective, for direct hirers and those working in a managed service capacity, visibility of the real-time

engagement status, length of tenure and associated pay of all agency workers became a mandatory requirement as of 1st

October 2011. The phased introduction of the need for visibility of actions around the auto-enrolment of agency workers into

pension schemes commenced a year later. Once again and, furthermore, for each new piece of legislation requiring evidence

capture, the status of compliance should be available in real time, rather than considered after the event.

Outside contractual and legislative requirements, the value of the market intelligence that real-time dashboards provide can

be invaluable. Visibility of the financial implications of changes to service delivery schedules can be watched as they happen.

The implications of pay awards and changes to legislation on fulfilment rates and to total contingent workforce costs can be

observed as they play out. Data can be cut by engagement type, by service line, by tenure of workers, by pay bands – any

permutation desired to provide the insights required to optimise the use of contingent labour.


43

5.3Contributing to workforce strategy planning

The ultimate objective of a shift away from ‘visibility and control’ managed service models is that the solutions enter the realms

of those that are based on an intrinsic understanding of demand and supply dynamics – and enable informed choice.

And never has the time for the use of that information been more critical to the NHS as is required to accommodate not just

further efficiencies but higher service levels as well.

The objectives of future managed solutions will be to become wholly aligned to the HR or people strategy of the provider

organisation. They will be involved in both forecasting demand for permanent and contingent labour, in all its facets – not just

agency and bank sourced - and identifying and overcoming the hurdles associated with its supply. This will include plans to

address skills shortages as much as the requirement will be there to bespoke engagement packages with, potentially, each

and every provider – and, ultimately, each worker. Where frameworks do not allow for this essential flexibility, they will not be

embraced.

Perceptions around contingent labour being a commodity where usage must be controlled are shifting towards realisation

that it is actually a strategic pool of resource – the intelligent use of which has the potential to underpin the sustainability and

growth in public services provision.


Conclusions:

Beyond cost optimisation, future managed solutions will be

focused around:

• Understanding and optimising the effects of legislative change

• Delivering value through enhanced management information and

market intelligence

• Contributing to workforce strategy planning, across the extended

enterprise, for the use of all forms of contingent labour – not just

agency sourced and bank labour.

44

6.0Future contingent working within the public services arena

6.1Individual Services

In the government’s white paper, Open Public Services,

published in 2011, it sets out a clear vision for how it

believes public services should be run in the future. As

a starting point, it fundamentally believes that, wherever

possible, the individual should have a say in what, where,

when, how and by whom public services are delivered.

Where it is not feasible for an individual to achieve such

choice, the government believes in the potential of

‘neighbourhood’, local-for-local service provision. Where

the sheer scale of service requirement demands it, the

third component of open public services provision is the

commissioning of services from external service providers.

The outcome of this strategy is clear: 211 Clinical

Commissioning Groups responsible for 60% (£65 billion)

of the NHS budget being in 2013/14, and the NHS, itself,

forced to assume a much wider reaching responsibility,

including a legal duty to improve the local

health inequalities that lead to the acute needs that it has

historically focused on.

The remainder of this section looks at what these shifting

sands of future service provision mean from a contingent

workforce perspective.

“Power should be decentralised to the lowest appropriate level,” states the government in Open Public Services. “We want

control of public services to be as close to people as possible. Wherever possible we want to decentralise power to the

individuals who use a service.”

This is not the first time that this principle has been actioned. Direct payments were, in fact, introduced under the Community

Care (Direct Payments) Act 1996. A commitment to making personal budgets mainstream was set out in Putting People First,

issued at the end of 2007. This commitment was re-iterated and extended by the current government in its Coalition – our

programme for Government publication. Whilst personal budgets were only initially available for social care, the Secretary of

State for Health announced in October 2011 that, “subject to the evaluation of trials, by April 2014 everyone in receipt of NHS


“ We do not have an ideological

presumption that only one sector

should run services: high-quality

services can be provided by the public

sector, the voluntary and community

sector, or the private sector.

Open Public Services white paper 2011


45

6.2Neighbourhood Services

Continuing Healthcare will have a right to ask for a personal health budget, including a direct payment.”43

Whilst there is no clear picture of where or how this money is likely to be spent, if personal health budgets are to develop on

the scale envisaged by the government this could considerably increase the external market for delivery mechanisms and

support. In essence, this amounts to a significant fragmentation of supply and, with it, dispersed need for contingent labour.

Through the Localism Bill, government created a series of

bottom-up rights that give local people the chance to take

on powers that have previously only been exercised by

local authorities. It allows for the delivery of traditionally

in-house services to be run through various different

models. It gives relevant bodies – those ranging from

voluntary/community enterprises, through charitable

institutions, right through to ‘two or more employees

of that authority’ - the right to submit an expression of

interest to run a service capable of delivering public

services.

Whilst visibility on numbers of such enterprises is a little

hazy, due to the huge level of complexity of hybrid legal

and group structure, they are undoubtedly substantive.

Today, there are 180,000 registered charities in the

England and Wales (according to the Charity Commission)

and 62,000 Social Enterprises (according to Social

Enterprise UK), including Community Interest Companies

(CICs) and Mutuals.

With a substantive number of these providing services

that were historically delivered directly by and the

NHS, once again workforce requirement, including

the contingent component, has become disparate and

fragmented.

It is not always possible or

appropriate for power to be devolved

to individuals if the service is used by

the community collectively. When this

is the case, we want, where possible,

to give people direct control over

neighbourhood services, either by

transferring the ownership of those

services directly to communities, or

by giving neighbourhood groups

democratic control over them.

Open Public Services white paper

de Poel’s involvement in

Third sector public health

services provision:

de Poel Clarity manages the

contingent labour of clients

delivering health services to the

NHS and local authorities to the

value of over £100 million in 2013,

through just over 25 contracts

46

6.3Commissioned services

In a similar vein to the fact that the personalisation agenda was not started by the current government, but extended by it, the

commissioning of services from external parties also has a long legacy dating back to the 1980s.

Despite much of the NHS’s 20.6bn expenditure on goods and services in 2011/12 going to external providers, only a minority

of hospital services - about 5% - were, according to the NHS Support Foundation, were already delivered by the private sector

before the coalition government’s reforms but the NHS. The Department of Health suggested that it was still no more than

around 6% in the early part of 2014.44

When considering the volume of suppliers involved in even running 6% of NHS services – which, for reasons covered within

this report, will likely rise, the result will be an exceptionally long tail of smaller providers that make up the private sector

running of public services. All will have their own strategies for the deployment of contingent workers – all of whom will be

removed from NHS calculations and considerations as soon as externalised service delivery is in place.

Austerity policies “…did not create a ‘new opportunity’ to reconfigure the state, nor was

it an example of ‘shock doctrine’. The financial crisis merely allowed the acceleration of

reconfiguration, because the implementation of neoliberal policies in the public sector and

welfare state has been systematic and continuous for over three decades. The financial crisis,

austerity policies and subsequent recession created new opportunities to advance private

ownership, finance and service delivery; freedom of choice through competition and markets;

deregulation; the deconstruction of democracy to increase the role of business in public policy

making and to consolidate corporate welfare; and reduce the cost and power of labour”

Dexter Whitfield – Unmasking Austerity - 2013


47

6.4Integrated public sector solutions.

6.4.1Shared NHS solutions

6.4.2Shared NHS solutions

Above and beyond the scenarios listed above where external parties are becoming increasingly involved in the independent

running of public services, there a substantive number of instances where collaborative solutions have been come into being

both within NHS and across public sector functions.

NHS Shared Business services states that it is already working in partnership with 50% all NHS Trusts and organisations. On

support services such as finance, payroll and e-procurement, it aims to achieve savings of around £215 million by 2015.22

From a regional shared solutions perspective, there is much that has the potential to be considered from a primary-care

perspective – which is likely to be driven through the 211 Clinical Commissioning Groups – and, whilst not significantly yet, in

time there is a degree of certainty that we will see greater levels of regionalised acute service provisioning as well.

Beyond the formation of shared service solutions within the NHS context, a blended approach to care provision involving the

NHS and local government is in the process of playing out.

“The Spending Round was extremely challenging for local government, reducing council budgets at a time of significant

demand pressures,” notes Sir Merrick Cockell, Chairman of the Local Government Association.45 “In this context the

announcement of a £3.8 billion pooled budget for integration in the Spending Round is therefore a positive, practical move and

can contribute to delivering our goal of using the money in the health and social care system to best effect.”

22. The Kings Fund – The NHS Productivity Challenge - May 2014: http://www.kingsfund.org.uk/sites/files/kf/field/field_publication_file/the-nhs-productivity-challenge- kingsfund-may14.pdf 45. NHS England - LGA and NHS England publish vision of £3.8bn integrated care fund - 8 August 2013: http://www.england.nhs.uk/2013/08/09/hlth-soc-care/

“We were very clear before the Spending Round that integration is the game-changer,” Sir Merrick Cockell continues. Bill

McCarthy, National Director of Policy at NHS England agrees that it is, as the fund “create(s) a real opportunity to achieve

improved outcomes for people. Our aim is for a health and social care system that is truly seamless so that people receive the

right care at the right time in the right place.”

Absolutely central to this is the joined up commissioning of staff – including all forms of contingent labour – that will be required

to accompany it. In blending the workforce needs of local government with those of the NHS, it is hoped that this will lead to

more considered, strategic use of the essential contingent labour element upon which these services have been historically

underpinned. It may, in fact, become the first example of a large-scale initiative that exercises informed choice, on a case by

case basis, against each singular user’s (patient’s) needs.

In contrast to the externalisation of public service provision highlighted above, there is another form of public/private

partnership arrangement that is often considered for large-scale initiatives.

The private finance initiative (PFI) has historically been a way to finance and provide public sector infrastructure and capital

equipment projects, upon the NHS has been historically reliant. Under a PFI contract, a public sector authority pays a private

contractor an annual fee, the ‘unitary charge’ for the provision and maintenance of a building or other asset. The unitary charge

may also cover services such as cleaning, catering and security in relation to the asset. As earlier stated, some 38% of these

forms of services are classed as ‘outsourced.’

Of the 684 Private Finance Initiatives (PFI) that are operational across the public sector, 209 are within the NHS - the largest

number of any department.46

Substantive moves are now under way to look at new forms of public: private partnerships that deal less with the funding of

infrastructural improvements and more with the potential of service enhancements – notably, in strategic initiatives like these,

through the transformation of services.

From a people perspective, where workforces are transferred to partner providers, TUPE regulations often to not extend to

agency workers. As such, another major component of historical contingent labour requirement transfers away from the NHS

into private sector management.

48

6.56.5 Strategic Partnerships – a blended (internal / ex-ternal) approach to public services provision

46 (http://www.nao.org.uk/wp-content/uploads/2013/11/Savings-from-operational-PFI-contracts_final.pdf)


49

6.6Staff-led Mutuals

In October 2013, then Health Secretary Norman Lamb

announced an enquiry into how to bring the benefits of

John-Lewis-style mutuals into the health sector. He stated

that there was “a wealth of research showing (that) mutuals

can lead to greater job satisfaction, higher productivity and

reduced absenteeism.“ 47

In July 2014, an independent report entitled Improving

NHS Care by Engaging Staff & Devolving Decision Making,

authored by Kings Fund CEO, Professor Chris Ham

confirmed that the Panel had found “compelling evidence

that NHS organisations with high levels of staff engagement

– where staff are strongly committed to their work and

involved in decision-making – deliver better quality care.”

As such, the Panel concluded that there should be greater

freedom for organisations to become staff owned and

governed, on a strictly voluntary basis, following detailed

consultation with staff and staff-side trades unions, and

where leaders and staff both have an interest in doing so.”

Whether the principle of ‘staff ownership’ has the potential

to extend to the contingent workforce upon which services

are currently heavily reliant, or whether a move to mutual

will provide a catalyst for a change in overall workforce

composition, time will only tell.

47. http://www.theguardian.com/society/2013/oct/10/inquiry-nhs-mutuals)

I think we have got to put employee participation at the centre of the next stage of

the reform of public services.

Health Secretary, Norman Lamb, October 201347

de Poel Clarity’s support for public

services provision through private

sector involvement:

In 2013, de Poel Clarity managed

the contingent labour of clients

delivering services to the NHS

to the value of over £100 million

through just over 25 contracts

50

Conclusions:

Significant proportions of historical contingent labour need have

transferred from the NHS to the alternative service provider

solutions highlighted above – yet temporary worker numbers

within direct NHS service provision remain high.

As TUPE Regulations will not apply to agency labour in many

instances, a blank sheet of paper approach has applied when

scoping future need.

In de Poel Clarity’s extensive experience of supporting both Third

and private sector providers of public services, consideration

shifts from solely bank and agency supply channels to

consideration of a wider contingent range of contingent labour

options – elevating its positioning from an adjunct to a strategic

component of overall workforce.


51

7.0The use of contingent working across the extended enterprise – a future view

7.1Utilising contingent working in an ever expanding variety of forms

When all of the above is considered, it is clear that the statutory requirements of the NHS will, in future, be delivered by a truly

extended enterprise.

Within this extended enterprise, overall workforce strategy will sometimes be set entirely by an individual enterprise –

sometimes by the collaborative partners charged with delivering the solution. What is certain in all instances, however, is that

the use of contingent labour – in all its evolving facets – will bear little resemblance to historical usage. This section seeks to

set out the reasons why.

Even within legacy definitions of ‘temporary working’ it was acknowledged that some of this labour would be engaged directly

by the hiring organisation and some would be supplied via staff banks and agencies.

Beyond these traditional means of engagement now lies an extending range of options that the now blended public/private/

Third sector public services enterprise is experimenting with utilising.

With volume of directly sourced temps, contractors and interims on the rise, mechanisms for sophisticated sourcing, on-

boarding and on-going management are being built into broader resourcing programmes. In response, recruitment agencies

are strengthening their offering by both narrowing their focus and deepening areas of expertise. At the same time, they are

courting loyalty and seeking affiliation from candidates who, in turn, are becoming increasingly selective about who represents

their interests.

Whilst these two sourcing channels jostle for position to secure access to traditional forms of contingent workers, new models

of ‘temporary’ working have been emerging from left-field, as discussed earlier in this report.

Whilst not a phenomenon that can be solely attributable to the implementation of the Agency Worker Regulations in October

2011, the externally employed temporary worker – or Umbrella worker – has emerged in numbers that lack of transparency

prevents us from determining fully, but available evidence points to hundreds of thousands already in existence across all

Complementing full-time, part-time & fixed

term employees..

Directly engaged temps,contractors & interims, etc.

Agency supplied temps /contractors/, interims, etc.

Employed temporary workers

Virtual / On-line workers

Consultants

Outcomes-baseddeliverables workers

Outcomes-basedtasks

Roles

Reward for timeworked versusoutcomes

52

market sectors in the UK. The rise of third party sourced and directly employed temporary/fixed-term workers had awareness of

unrecoupable VAT costs as a catalyst. Once again, figures suggest numbers in excess of one hundred thousand such workers

in existence.

And emerging beyond those contingent workers who are paid to turn up for work is an increasing number who are paid to

deliver an outcome. Whilst not yet in any way prevalent within public services provision, an increasing number of people with

the skills that public services deploys – including accounting, IT, marketing and PR capability – are registering themselves to

work virtually, and on a payment for results basis, via on-line work platforms such as oDesk and Elance.

Whilst the headcount of large scale consultancy projects has not historically been counted as a category of contingent labour,

this too is set fair to change. The realisation that smaller consultancies, interims and contractors can perform much of the

outcome delivery of consultancy-led initiatives is leading many to fragment work in this manner. Equally, those with the skills

and capabilities to deliver these tasks are setting themselves up as micro-businesses, and readily work on an outcomes basis.

Fig.21 Contingent labour options across the extended enterprise (NB: when resetting, add bank: Directly

engaged bank workers, temps, contractors & interims, etc.)


53

7.2Incorporating contingent working within the overarching workforce planning / strategy of the extended enterprise.

7.3Accommodating an increasing need (hirer) and desire (worker) to be engaged more flexibly.

Freed from legacy constraints based on the way things have always been done, it is from this dynamically altering contingent

labour pool that public service providers of the future will source from and deliver their outcomes through. And as the

outcomes delivered through this expanded range of flexible options yields qualitative and quantitative returns, the likely

composition of fixed versus contingent labour will swing towards the latter.

To enable this to happen effectively, one final component of change needs to occur: the shift from contingent labour being

viewed as incidental to it being recognised as a truly strategic component of the total resource that organisations deploy.

If evidence were needed of a shift in strategic intent beyond the UK public services arena, data from Staffing Industry Analysts

(SIA) points to just such intent to make this adjustment. Surveyed in autumn of 2013 about their hiring intentions in the next

two years for SIA’s European Contingent Buyers Survey, 39% admitted that contingent labour planning was already embedded

within its overarching resourcing strategy. Staggeringly, a further 56% plan to make the case in the near term – and this action

had the greatest planned proportional increase of any initiative presented for consideration.

As the transformation of public services provision continues at pace, there is no doubt that access to high calibre contingent

labour provides service providers – past and future – with the significant degree of flexibility that any change programme

requires.

Beyond these clear needs of the hiring organisation, however, is a rising tide of sentiment amongst the working population

which centres around an increased interest in working on a contingent basis. The reasons for this are numerous.

Firstly, the protracted nature of the recent downturn forced many to consider contingent working options that they would never,

under ‘normal’ circumstances, have considered. Secondly, the rise in digital media channels blew open visibility of the range of

2011Increase

2011/2012

H1 2013 (to

end June)

Pro-rata

increase

2012/2013

2012

Means of

Engagement

specified

Flexible Working 128,881 190,013 47% 112,628 19%

Flexible Hours 43,892 105,784 141% 72,628 37%

Hours to Suit 10,952 20,491 87% 13,848 35%

Hours as Required 3,804 5,996 58% 3,732 24%

Variable Hours 953 2,361 148% 954 (17%)

Zero Hours contract 942 1,691 80% 1,017 20%

Total number of opportunities

o�ering flexible working patterns 189,424 326,336 72% 204,807 26%

contingent working options – even created some new ones - and the rewards associated with working in this way. One other

key driver was the awareness that was borne out of the necessity for many – potentially as many as three million – classed by

ONS as ‘underemployed’ 48 – to try to piece together a living wage through engaging in a number of fragments of work.

If you ask anyone to consider any of the aforementioned options for long enough, a proportion are likely to opt not to

revert back to previous working patterns through choice. It is this new choice to work flexibly, and subsequently live outside

routine, that is one of the most significant shifts that those engaged in people resourcing are going to have to learn how to

accommodate.

‘Flexible hours working’ is a term that disguises a number of different engagement scenarios – perhaps in similar ways to how

the term ‘casual’ was previously bandied around. What is certain is that desire to engage workers with this ultimate degree of

flexibility has been rising significantly from the hirers’ perspective. Evidence from job market data company Innovantage charts

the phenomenal rise in the number of posts advertised on-line in recent years that allude to flexible hours working:

Whilst the recently closed government consultation into the use of Zero Hours contracts will undoubtedly tighten up on

unacceptable conditions relating to such a form of contingent working, there is evidence to suggest that a significant proportion

of people working in this manner are happy to continue to do so.

In CIPD research published in November 2013, it claimed that almost half of zero-hours contract workers (47%) report they are

satisfied with having no minimum contracted hours, 60% agree or strongly agree they are satisfied with their job and, on

54

7.3.1Mutually beneficial ‘flexible hours’ working

Fig.22 Changes in the means on engagement specified in on-line job adverts – 2011/13

Source: Innovantage/Worklab – Unclouding the truth behind the UK’s flexible recruitment practices


48. National Audit Office – Savings from operational PFI contracts – 29 November 2013: http://www.nao.org.uk/wp-content/uploads/2013/11/Savings-from-operational-PFI-contracts_final.pdf

55

7.3.2The rise of multiple simultaneous careers

7.4Embracing the principle of payment for results / outcomes based working.

average, 65% state that they are satisfied with their work–life balance (compared with 58% of all employees).50

The CBI concurs: “Zero hours contracts offer a choice to those who want flexibility in the hours they work – such as students,

parents and carers – and provide a stepping-stone into the jobs market for those most vulnerable to long-term unemployment,”

states Neil Carberry, CBI Director of Employment and Skills.51

Beyond this ultimate form of flexible working lie the growing ranks of semi-skilled and skilled professionals who chose to work

outside the legacy concept of fixed, long term employment with one hirer. The UK’s self-employed population now stands just

shy of 4.55 million – c.15% of the UK workforce – having contributed 65% of the increase in all UK jobs in the last year.1

The desire for increased flexibility is clearly a two way thing.

Extrapolating this desire to work on a flexible basis out further, there is growing evidence that what may have commenced

as a need to piece together multiple income streams to survive has, for some, turned into an interest in pursuing multiple

simultaneous careers. The variety and learning that can be derived from exercising this choice is deemed more rewarding, for

many, than a career within a singular employer.

Awareness of this as a possibility has clearly appeared on the radar of hirers. In a recent study by Right Management, entitled

The Flux Report, 79% of HR professionals are stated to believe that they will witness a significant increase in workers engaged

in such multiple careers in forthcoming years. If the challenge of sourcing appropriate, mostly full-time skills on a timely and

cost efficient basis is tough now, resourcers need to be prepared for the inevitable likelihood that workers may only offer up

fragments of the time to the most deserving hirers in the future.

Outcomes based commissioning in public services is nothing new, albeit it is currently undergoing a reinvigorated push.

Notably, part of the Integrated Transformation Fund (£1bn of £3.8bn) being put into place to enable the joining up of local

authority and NHS care provision will be linked to achieving outcomes.

50. BIS - Zero Hours contract consultation closes with over 30,000 responses – 15 March 2014: https://www.gov.uk/government/news/zero-hours-contracts-consultation-closes-with-over- 30000-responses 51. CIPD – Zero Hours contracts: Myth & Reality – November 2013:

56

What is certain, however, is that the buck for outcomes achievement, in this and other instances of public services provision,

will stop with the service provider. There is growing evidence in other circles, however, of the extension of payment for results

extending through to the worker.

Referring back to the aforementioned research by Staffing Industry Analysts, the same survey evidenced that European

buyers were intent on delivering a 16% net reduction in their engagement of day rate contractors in favour, by a net balance of

+48%, of engaging people on Statement of Work contracts. Under these circumstances, workers are no longer paid simply to

turn up for work, but receive payment on delivered milestones of the stated assignment.

As onerous as it may sound in principle, those who work at the upper end of contracting – namely interims – have within

their DNA the principle of only accepting engagements where they are confident that they can deliver the assignment

objective. The key reason for this is that the pedigree of a career interim is the sum of his/her completed assignments – with

the performance on the last one being a key determinant to successfully securing the next. A shift to Statement of Work

engagement, in theory, merely extends this principle to a larger cohort of workers. In practice it will be a seismic shift for both

resourcing and service delivery teams – but will be a necessary requirement if the targeted improvements in public services

outcomes are to be truly delivered.


57

Conclusions:

As the future provision of public services will be delivered via an

extended enterprise of public, private and Third Sector providers,

awareness to a widening variety of forms of contingent labour is

increasing.

Amongst the broadening definition of contingent workers sits

an increasing number of people who are choose to work flexibly

(including the pursuit of multiple simultaneous careers) and who

embrace the principle of outcomes based working and reward.

The resourcing of contingent labour will become a strategic

component of overall workforce strategy and, as such, will become

more closely aligned to HR planning.

As legacy facets of managed service provision, such as visibility,

control and cost optimisation become expected – and viewed almost

as ‘utilities’ – the future challenge will be to deliver the appropriate

quality of hire against each and every need (regardless of how

fragmented ownership of the ‘whole team’ delivering the services is).

58


Notes

59

Notes

60


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The future of contingent labour in the NHS