The Health Secretary, Patricia Hewitt, who has been roundly criticised for suggesting that the health service has had its best year in spite of the announcement of job losses at a number of NHS trusts, has highlighted recommendations from a report claiming that 78 million pounds could be saved by improving staff productivity and reducing the money spent on agency staff.She told the Human Resources in the NHS conference in Birmingham that most NHS resocurces were invested in staff and so using them as effectively as possible was crucial for patient care, staff satisfaction and financial efficiency. She quoted figures for potential savings included in a report from the NHS Institute for Innovation and Improvement.

Her speech came as the House of Commons Health Select Committee announced that it would conduct an inquiry into the scale of financial problems in the NHS after announcements from a number of trusts that mean about 7,000 jobs are to be cut. The MPs will look at the effectiveness of the specialist ‘turn around teams’ that worked with those trusts facing the most severe difficulties.

Patricia Hewitt said the HR function had already delivered major achievements in recent years but there was now a real opportunity to drive forward the productivity agenda. “Effective management of temporary staffing costs is one of the highest impact HR changes. Nursing has made the greatest reduction in agency costs out of all staff categories as the overall agency spend is continuing to decline, down from 1.4 billion pounds in 2003-04, 5.1 per cent of the pay bill, to 1.3 billion in 2004 -05, 4.2 per cent of the pay bill,” she said.

Based on figures for the year 2004 to 2005, she added, if all Trusts reduced their agency spending to the national average, around 78 million pounds would be released for other improvements in the NHS. She cited the example of the North Bristol Trust where an in-house bank of staff had achieved a reduction from an average of 5,300 agency shifts a month in 2003 to fewer than 500 by the end of 2005. The trust saved at least 100 pounds for each shift that was covered by its own bank staff.

The Health Secretary also encouraged trusts to reduce sickness and absence levels as a way of reducing spending on agency staff. She said rates of absence through sickness in acute trusts varied from under three percent to over six per cent across the countr