Many of you may have read a piece about locums by Shaun Lintern for the Health Service Journal. Well I have responded to his article by sending him the following email; to which he has responded. Slowly but surely, we are making people aware. The enlightenment has just begun and there is a long road ahead.
It is with regret that we have to address the media at a time when we should all be concentrating on improving the care that our community receives from our treasured and highly essential National Health Service. We are multiple groups of agency and locum healthcare workers who have sought to join hearts and minds, as it has become abundantly clear that we are under constant attack from the powers that be. Now, we use the term “powers that be” as we are unclear as to which body is responsible for all the spurious, malicious and downright unacceptable claims.
All this kerfuffle has been caused by the ill-advised guidance issued by HMRC to public bodies, including the NHS. Let’s be absolutely clear about this next point- we, as locums/agency wholly and unreservedly support HMRC in its bid to collect unpaid taxes from tax avoidance schemes and from tax evasion too! Unfortunately, it is our belief, and many other stakeholders too, that HMRC has hurriedly issued this guidance to ill-equipped and under qualified public bodies, without the requisite consultation process and impact assessment tests- indeed these very public bodies believe this to be the case too. It has subsequently become apparent too, that certain elements in these public bodies have sought to use this to effect the labour market in ways that may benefit them (or so they think) without considering the fallout that this might bring, and the ultimate negative impact on the very reason we are all in this- the NHS service users. Management in the NHS has taken some very brush and ill-thought out decisions since the release of the guidance- one would be forgiven for thinking that these public bodies were in cahoots with HMRC as the timing of all these poor decisions is too coincidental to be believed. It is accepted all round that HMRC’s primary role is to collect taxes and administer other regulatory roles in relation to the treasury’s fiscal activities; however, it seems that their role has been highly politicised in such a way as to have a direct effect on the labour market and to lower wages across the board- not just for agency staff, but for substantive NHS employees too.
This is evidenced by the approach of the National Health Service Improvement (NHSI) and its CEO, Jim Mackey. Indeed there have been communiques to NHS Trust CEOs informing them that these measures would inevitably “push all agency workers back into substantive employment” and lower the spend of the NHS in general. Nothing wrong with reducing the costs of the NHS, but it has to be done in such a way as not to adversely affect patient care. In fact, NHS Trusts have been told to be steadfast in the face of growing staff disenfranchisement, both agency and substantive, whilst they weather the storm i.e. let waiting lists shoot up, close whole departments, and at worst hospitals. NHSI actually believe that this approach would somehow fix all the staffing problems of the NHS- this shows a clear lack of reasoned, educated and evidence-based thinking. To further reiterate the short-sightedness of this body, their CEO had issued guidance to all Trusts to the effect that all substantive staff were no longer allowed to take on extra shifts within the NHS at agency rates? They subsequently received feedback from Trusts and bodies like the Royal College of Nursing (RCN) telling them that this was simply unworkable- and of course they withdrew. One would think that such a body would have highly qualified and experienced people to stop them from making such brush, short-sighted and moronic decisions.
This idea that agency workers are milking the system is completely and utterly false! Obviously there will be one or two ridiculous examples banded about as in any industry; to brush everyone with the same brush is simply wrong and an inaccurate reflection of reality. Just as an example, a top of band 7 nurse will earn £20.95 per hour whereas the agency worker will earn a maximum of £27 per hour. Likewise, a consultant would earn £48.64 per hour, whilst the locum consultant would earn £70 per hour. NHSI, through its previous constructs, Monitor and the Trust Development Authority (TDA) put a cap on what agency workers could be paid- this was pegged at 55% (for the agency, not the worker) above the maximum Agenda for Change (AfC) rate paid to substantive staff. The reasoning for this was that this was adequate recompense for the lack of statutory provisions amongst agency staff i.e. agency staff do NOT get sick leave/pay, holiday pay, pension etc., and above all, the luxury of job security- they have to arrange and fund all these provisions themselves. Coupled with this, agency staff fill in the massive gaps left by the ever increasing sickness rate in the NHS- not caused by the agency staff by the way, but by the ridiculous amount of beauracracy and administrative work lumbered on clinical staff by the top heavy management structures in the NHS. In fact, there is a reasonable argument to say that agency staff are actually cheaper than substantive staff at the end of the day. The obvious question in most people’s minds would be: why would anyone want to work as agency if it is not purely for “ridiculous” pay rates? Simple really- this is a lifestyle choice not purely based on money. This gives the agency workers the convenience to have a proper home-work life balance and actually concentrate on the important aspect of the job- the patient!
Back to the latest HMRC guidance that is the bone of contention; it was designed to target off-payroll workers that were “disguised” as self-employed people. The trouble with this is that there is a theorising of contract law here in order to favour the tax authorities i.e. an absurd situation where one is given a contract for services that clearly shows NO intention to create legal relations to the effect of employee/employer, yet the courts construe it as such, just so you can be taxed at a premium rate. Even worse is the fact that you are not entitled to any employment rights or entitlements if you are classed as an employee for tax purposes. As the courts state, “employment tax laws and employment rights have no direct link”. To be fair to HMRC, the guidance requires all public bodies to assess each contract on a case by case basis with reasonable care, and they have provided an online tool, the Employment Status Service (ESS) to assist with this (deemed not fit for purpose by stakeholders and inadequate for employment status determination by the courts); however, the NHS, under specific direction from NHSI, has sought to class all agency workers/locums as being “employees” for tax purposes- contrary to HMRC’s guidance by the way. Even more abhorrent is the fact that they are lowering agency rates even further in order to pay the employer National Insurance Contributions (NICs). To be clear, if one is classed as an “employee” for tax purposes, they can be paid into their Personal Service Company (PSC), or via PAYE or umbrella company- this is per the guidance of HMRC. It is the responsibility of the public body to pay employer NICs whereas the “employee” pays employee NICs and income tax. However, the agency worker is still paying both employer and employee NICs in the form of a rate cut if under PAYE schemes! With umbrella schemes, it is pretty straight forward as everybody knows that the “employee pays both- ironically the umbrella company model is frowned upon by HMRC and has been the subject of recent press vilification! To put this into perspective, the agency worker now pays:
- 13.8% of gross as employer NIC
- 7-12% of gross as employee NIC
- Then whatever tax band on remaining income
There have also been claims that agency workers/locums are demanding up to 50% higher rates in order to work under this new regime-again false. It is actually Trusts that are offering this in order to tempt locums to work under this new regime- and locums are refusing this. They simply want to continue working as self-employed professionals as they rightly are- not as virtual employees with virtual employers- whist also paying double NICs. So what better strategy than to falsely claim that it is the locums that are pushing for this! Naturally though, there will be others that will justifiably try to do this as adequate recompense for been made to pay more tax than they are required to in law!
Traditionally, agency workers have been quite flexible in travelling to hospitals that are quite a distance from their homes, and they have been able to off-set these on their tax liabilities as business expenses. This has been stopped as they are now been “blanketed” as employees by the NHS, and as such, it would no longer be financially viable for them to still travel in order to cover all these vacant shifts. Somebody asked the question- why can MPs still claim these and we cannot? Are MPs self-employed and have they been assessed with the ESS?
Anyway, certain elements within these public bodies have false labelled all agency workers/locums as tax avoiders! This is a very serious and unsubstantiated claim- in any professional demography, whether it is healthcare, finance, the media, politicians etc., there will always be a few who fall foul of the rules. Indeed, a number of politicians behind this guidance have been using similar constructs to streamline their tax activities- or maybe just to get a better home-work balance like the rest of us? It is high time the public hear the other side of the story. Over the last year, agency workers/locums have seen their fees cut by half, and now they are getting hit again rather unjustly through this so-called disguised self-employment- absolutely ridiculous. Surely in a modern, democratic and free market society, everybody should be free to choose how they work, free from any government interference or undue pressure from any public body or otherwise- unless of course they are involved in illegal acts! This is clearly an ill-conceived attempt to destroy the self-employment industry by targeting the weakest people in the chain. Might we also add that it is a fallacy to suggest that the agency spend is the cause of the NHS’s financial woes? Anyway, this is an argument for another day. For now, we just had to set the record straight:
I. Agency workers/locums are NOT all tax dodgers as suggested. The majority pay their taxes like everybody else
II. Agency workers/locums are NOT milking the NHS as claimed. They were earning a reasonable amount that made up for the lack of employment rights and entitlements- until the Monitor and TDA caps of course
III. Agency workers/locums are NOT detached from patients as claimed. In fact, the majority are people with unparalleled experience, and have in fact brought a lot to the department they locum in
IV. Agency workers/locums have the interests of the NHS and patients at heart just like the substantive staff.
Agency Workers and Locums