NHS crisis: how Jeremy Hunt plans to cut hospital spending

Health Secretary Jeremy Hunt is calling for a clampdown on excessive spending and an over-reliance on agency doctors and nurses in order to meet NHS savings targets.

"Expensive staffing agencies are quite simply ripping off the NHS," he wrote in the Daily Telegraph.

Hospitals paid out £3.3bn in agency fees last year and are increasingly hiring expensive management consultants, which cost the NHS nearly £600m last year, the BBC reports.

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Health service managers are also facing calls to justify their large pay packets, with more than a fifth of all directors in the NHS earning more than £142,500 – equivalent to the Prime Minister's salary.

The government has promised to increase healthcare spending by £8bn a year by the end of the decade in order to plug the funding gap and maintain services. In return, health bosses have vowed to make £22bn in savings

Hunt said the government had delivered on its end of the deal. "Now the NHS must deliver its side of the bargain for patients by eliminating waste, helped by the controls on spending we're putting in place," he said.

The measures that will be phased in over the next two months include:

• A maximum hourly rate for agency doctors and nurses
• The use of unapproved agencies will be banned
• A cap on total agency spending for NHS trusts in financial difficulty
• A limit of £50,000 will be placed on all management-consultancy contracts
• The introduction of a centralised system for buying goods in order to cut procurement costs

The curbs on spending have been criticised by the Recruitment and Employment Confederation, which represents the agencies. It said they were being made scapegoats "for the NHS's own mismanagement of workforce planning".

“What happens, for instance, if there is a cold snap and a trust needs staff instantly to manage an influx of demand but they have already reached their newly imposed cap?" asked Tom Hadley, director of policy at the organisation.

The head of the Royal College of Nursing, Dr Peter Carter, welcomed the clampdown on spending but said it would "only work alongside longer term solutions, like converting agency staff to permanent staff, and continuing to increase training places to catch up with demand".