The NHS entered 2025/26 with a projected £6.6bn system deficit and an instruction to deliver the toughest efficiency programme in its history. Against that backdrop, government messaging has zeroed in on an agency-spend crackdown, presenting it as the main culprit and solution. This narrative is politically convenient, but financially dishonest. Even if the headline £1 billion agency saving is real, it addresses only a fraction of a £6.6 billion gap, and much of the cost has simply been shifted into bank and overtime, often at equal or higher rates. The result: fewer options to staff rotas safely, lower morale among permanent and temporary staff, and real risks to patient care as winter approaches.

 

The Financial Reality (Not the Slogan)

• Starting point: system plans for 2025/26 indicated a £6.6bn deficit across ICSs and trusts, prompting a ‘financial reset’.
• Escalating efficiency ask: providers were tasked with delivering around £9.3bn of efficiencies in 2024/25 (6.1% of allocations) the highest challenge on record, with further savings in 2025/26.
• Budget context: DHSC’s multi-year settlement implies around 2.8% real-terms growth per year through 2028/29, below historic averages and well below demand growth and cost inflation.

A £6.6bn gap cannot credibly be closed by focusing narrowly on agency spend.

The Agency Narrative — and Why It’s Flawed

Government communications have framed the NHS deficit as a failure of discipline on agency staffing, celebrating “nearly £1bn” savings and signalling an ambition to eliminate agency spend. The problems with this narrative are threefold:

1. Cost-shift, not saving: Government attempts to suppress agency demand have driven staff towards banks and overtime, but often at the same or higher cost, while eroding the flexibility services need to keep patients safe.
2. Scale mismatch: £1bn is significant but one-sixth of the starting deficit. It cannot carry the fiscal programme on its own.
3. Operational harm: Hard caps and blanket restrictions remove the flexibility that services use to keep rotas safe, especially in imaging, theatres, and urgent care. In several Trusts, MRI and CT lists have been cancelled outright because agency radiographers could not be booked. When gaps go unfilled, activity drops, length of stay rises, and costs increase elsewhere.
4. Perverse effects: Artificially suppressing agency, without a credible retention plan , has pushed nurses, doctors and other healthcare workers out of the NHS or into private providers, shrinking the total workforce available to both sectors.

Temporary staffing is a safety valve, not the cause of the fire. Yet thousands of shifts go unfilled each month as systems face crippling pressure to cut costs, directly undermining the quality of patient care. The question is not if this will lead to harm down the line, but when.

What’s Really Driving the Gap

• Pay & inflation: Pay uplifts and energy/inputs inflation increase costs faster than baseline funding.
• Elective recovery costs: Extra sessions, theatres, and diagnostics carry a cost that hasn’t been fully funded.
• Social care & flow: Delayed discharges keep beds full, eroding productivity and pushing trusts to open escalation areas.
• Capital backlog: Ageing estates and equipment failures increase cancellations and reduce throughput.
• Demand trends: Rising acuity and population ageing raise baseline activity beyond planned trajectories.

Blaming agency spend misdiagnoses a multi-factor problem. It shifts blame but leaves the root causes untouched.

The Patient-Safety Ledger

• Thousands of Unfilled shifts → cancellations & longer stays: Fewer staffed lists mean more cancellations and longer length of stay, which drives cost back into the system.
• Litigation costs rising: Negligence payouts exceeded £2.6 billion in 2024/25; avoidable harm is financially (and morally) unaffordable, starved staffing today becomes litigation tomorrow. (Cite: NHS Resolution)

The maths that doesn’t add up: £6.6 bn starting gap –£1 bn “agency saving” = £5.6 bn still unfunded, before winter demand, capital backlog, and social care pressures.

Taxes, Borrowing and the Wider Fiscal Frame.

The wider fiscal environment is tightening: the tax burden is at (or near) post-war highs and public borrowing has risen sharply in 2025, with independent institutes signalling likely tax rises to meet fiscal rules. The contradiction is stark: the public is paying more tax than at any point in modern history while NHS services are being cut back and workforce flexibility removed. That exposes the government’s narrative for what it is, shifting blame, not solving problems.

A Better Route: Discipline Without Damage

1. Productivity With People, Not Despite Them
   Stop equating ‘efficiency’ with exhaustion. Retention is a financial strategy: burnout drives agency and sickness costs. Small, funded changes (breaks, shift patterns, parking, trauma support) have outsize financial returns.
2. Require Quality Impact Assessments (QIAs) for cost-saving schemes
   No savings measure should proceed without a QIA that assesses safe staffing, service continuity, and patient risk, especially where changes suppress flexible staffing.
3. Protect Core Clinical Capacity
   Ringfence staffing for theatres, diagnostics and SDEC/frailty front-doors. Cancelled lists, delayed scans, and blocked flow cost more in the round.
4. Replace Blanket Bans with Targeted Controls
   Use precision controls on off-framework and premium rates, but permit managed framework agency use to cover safety-critical gaps. Pair with mandatory bank-first processes and weekly assurance on fill rates, spend, and outcomes.
5. Double-Down on Rostering Science
   Treat eRostering, job-planning, and annualised hours as cost-reduction tools. The immediate prize is in utilisation (matching skill-mix to demand) rather than crude headcount cuts.
6. Funded Insourcing Where It Saves Money
   Time-limited insourcing to clear high-harm backlogs (endoscopy, imaging, day-case surgery) reduces cancellations, LOS, and emergency admissions, net savings once knock-on costs are included.
7. Fix Discharge Flow With Pragmatic Contracts
   Use block contracts and outcomes-based payments with local care providers to create predictable step-down capacity. Bed days saved are cash avoided.

Political Responsibility

It is not credible to claim that deficits are primarily an agency problem. Forcing down agency demand has shifted costs into banks and overtime, often at equal or higher rates, while stripping flexibility from services. Savings here may help, but they are not a plan. Without realistic investment and a workforce-first strategy, “financial reset” becomes code for deeper cuts to access and quality.

Final Word – Altin Biba, MBA, AMBA

We need fiscal discipline. But discipline that breaks care isn’t discipline, it’s denial. Deficits can be balanced on paper; patients pay the price when workforce reality is ignored. If government wants real savings, protect the capacity that prevents harm and cost elsewhere, and stop treating the workforce as a line to squeeze. Be rigorous, not reckless: target what works, fund what pays back, and remember the first principle, no workforce, no healthcare.

References

1. King’s Fund. Tight budgets and tough choices: the NHS’s financial outlook 2025/26.
2. CIPFA. The NHS and the uncertainty paradox: initial 2025/26 plans and the £6.6bn gap.
3. NHS Providers. What do trusts need to deliver the 2025/26 financial reset?
4. DHSC/NHSE. Nearly £1 billion for NHS frontline after agency spend crackdown (news release).
5. NHS England. Reducing expenditure on NHS agency staff: rules and price caps (incl. 2024/25 changes).
6. Health Foundation. What does the 2025 Spending Review mean for the NHS?
7. Office for Budget Responsibility. Fiscal risks and sustainability – July 2025.
8. The Guardian / The Times. Public sector borrowing Aug 2025 and implications for Budget.
9. NHS Resolution Annual Report 2024/25 (to support the £2.6 bn litigation line)
10. OECD / NHS Digital workforce per-capita (optional footnote tying to per-capita capacity, if you want a sidebar)