The Temporary Workforce Paradox

Why “agility talent” is prized elsewhere, but treated as a productivity problem in the NHS.

In banking, IT and professional services, hiring temporary staff (contractors, consultants, interim specialists and contingent teams) is often framed as a smart way to buy scarce skills, accelerate change and stay flexible. In the NHS, “temporary staffing” is more often framed as a cost to be reduced - explicitly linked to productivity and financial recovery targets.

On the face of it, this feels like a contradiction. If temporary workers can be a cost-effective “skills and agility lever” in much of the economy, why does the NHS so frequently treat them as evidence of inefficiency?

The answer is not that NHS leaders are blind to the value of flexible talent. It is that the NHS operates under a different set of constraints: the nature of demand, the rules of public finance, the politics of pay, and the way “productivity” is currently being operationalised through national planning guidance. Those factors combine to make temporary staffing look less like a strategic asset and more like a visible, governable cost line - one that is easy to mandate reductions against, even when it is compensating for deeper workforce shortages.

This blog explores the underlying reasons for the paradox, contrasts the NHS mindset with other sectors, and suggests a more mature framing: not “temporary staff = bad”, but “temporary staff = a capability that must be actively designed, governed and valued”.

1) What other sectors mean when they say “temporary staff are an asset”

In many private-sector environments, contingent labour is not primarily used to “fill gaps on a rota tomorrow”. It is used to achieve time-bound outcomes: deliver a transformation programme, implement a platform, respond to new regulation, stand up a new product line, or cover a spike in workload without permanently increasing the cost base.

Three themes show up repeatedly:

a) Buying scarce skills at speed

Banking and financial services are under persistent skills pressure (data, cyber, AI, risk, regulatory change). Organisations often cannot “grow their own” at the pace required, so they blend permanent roles with contractors and specialist providers to close urgent gaps.

b) Flexibility as a strategic choice, not a last resort

Large organisations increasingly talk about an “extended workforce” where the boundary between employee and non-employee is actively managed. The aim is not just lower cost; it is right-skills, right-time, right-outcome - while keeping fixed cost under control.

c) Clear linkage to value and deliverables

In consulting, business services and IT delivery, contingent staff are often funded against a project business case. That matters: the cost is justified because it is tied to a measurable output (system live, process redesigned, controls implemented, new capability launched). Strategic workforce planning literature increasingly treats this as a deliberate organisational capability.

In short: other sectors don’t treat temporary labour as inherently “good”; they treat it as a tool, and they work hard to make sure it is deployed in ways that visibly create value.

2) What the NHS means when it says “temporary staffing is a cost problem”

In the NHS, temporary staffing (agency and bank) is overwhelmingly used to protect service continuity in the face of hard operational realities: vacancies, sickness absence, uneven supply, seasonal pressure, and volatile demand. Unlike many private-sector contexts, the NHS cannot simply pause demand or reduce scope when staffing is tight. The work arrives anyway - often unpredictably - and risk sits on the frontline.

So why does the narrative lean so heavily toward “cost to be managed down”?

Because national guidance increasingly makes it explicit.

a) Temporary spend is now formally positioned as a lever for productivity and financial recovery

NHS England’s 2025/26 planning guidance sets a challenging combination: improve productivity, reduce cost base, and reduce spend on temporary staffing (including explicit reduction expectations for agency and bank).

This is not subtle. It is directionally clear: reduce temporary workforce spend as part of delivering financial balance and productivity improvement.

b) The next planning cycle reinforces the direction of travel

Subsequent medium-term guidance for 2026/27 to 2028/29 continues this “control and reduction” posture, including mechanisms like trust-level limits on bank/agency expenditure aligned to national targets.

c) There is a long-standing regulatory architecture that makes agency spend highly governable

NHS agency spend has been subject to “rules and price caps” for years. This creates a governance frame: agency is, by design, treated as exceptional and constrained, rather than normalised as a strategic workforce segment.

So, in policy terms, the “temporary staffing problem” is not accidental: it has been institutionalised through financial controls, caps, and mandated reductions.

3) Why the NHS and other sectors see the same thing differently

The paradox dissolves once you recognise that “temporary staff” are playing different roles in different systems - and are judged through different lenses.

a) In the NHS, temporary staffing is often a symptom; in other sectors it is often a strategy

When a bank hires contractors to deliver a new controls framework, it can point to an output, a deadline, and a risk reduction benefit.

When an NHS trust uses bank and agency staff, it is often compensating for structural shortages and operational fragility: the service must run today, regardless of vacancy levels. That makes temporary staffing look like a visible marker of failure to recruit/retain - particularly when the unit costs are higher and the spend is recurring.

b) Public-sector productivity is politically charged, and temporary spend is an easy proxy

“Productivity” in healthcare is complex. Outputs are hard to define, quality matters, case-mix changes, and demand is rising. In that complexity, temporary staffing becomes a tempting managerial proxy: it is measurable, it is high profile, and it feels intuitively inefficient (“why are we paying a premium to do the same work?”).

The King’s Fund commentary on the 2025/26 guidance highlights the severity of the productivity ask and the financial tightness - conditions that push leaders toward blunt cost levers.

c) The NHS must manage fairness and pay legitimacy in a way many sectors don’t

A bank can pay a contractor more than a permanent employee with relatively little reputational harm. The NHS operates in a national pay environment, with strong fairness norms and intense scrutiny. Paying more for “the same shift” via agency is not just a cost issue; it becomes a legitimacy issue for the employment model.

That is one reason bank is often positioned as the “preferred” flexible route: it looks like the NHS using its own workforce more intelligently. Yet if bank is simultaneously mandated down in some guidance narratives, the system risks undermining its own best alternative to agency.

d) The NHS experiences the worst form of contingent labour economics: last-minute, safety-critical, price-inelastic demand

In many sectors, contingent workforce use is planned. In the NHS, it can be driven by short-notice sickness, escalating acuity, winter surges, and compliance requirements (safe staffing, skill mix). When demand is urgent and safety-critical, the buyer’s bargaining power drops - and “cost-effective agility” can turn into “expensive firefighting”.

4) Banking, IT and business services: what the NHS can learn (and what it can’t copy)

It would be naïve to say “the NHS should behave like a bank”. But there are transferable disciplines.

a) Treat flexible labour as a designed system, not an uncontrolled overflow

Private-sector “extended workforce” thinking focuses heavily on governance: who should be contingent, under what terms, with what performance expectations, and with what data visibility. Deloitte’s work on contingent workforces emphasises that managing this talent has moved beyond “data admin” and into strategic capability.

For the NHS, the analogous move is: stop treating temporary staffing as what happens when everything else fails, and start designing it as an integrated component of workforce strategy - especially bank.

b) Segment the temporary workforce by purpose (not by stigma)

Other sectors implicitly segment:

• Project specialists (finite deliverables; high value)

• Surge capacity (volume peaks)

• Business continuity cover (short-term absence)

• Hard-to-recruit expertise (scarce clinical/technical skills)

The NHS can do the same - then tailor controls accordingly. “Reduce all temporary spend” is a blunt instrument. “Reduce unplanned premium spend while protecting planned flexibility where it adds value” is a smarter objective.

c) Link spend to outcomes wherever possible

In IT and business services, temporary spend is often accepted because it is tied to outcomes. The NHS can emulate that in specific domains:

• elective recovery programmes,

• digital implementation,

• transformation and productivity initiatives,

• specialist insourcing models (within safety and price-cap rules).

This doesn’t eliminate cost pressure, but it changes the conversation from “temporary bad” to “temporary justified when it buys measurable outcomes”.

5) A more constructive NHS narrative: from “cost to crush” to “capability to professionalise”

If the NHS continues to treat temporary staffing purely as a cost target, it risks three unintended consequences:

1. False economies: reducing temporary spend without fixing underlying gaps can shift costs elsewhere (overtime, burnout, waiting list growth, cancellations, quality incidents).

2. Undermining bank: if bank is framed as just another cost to reduce, rather than the preferred flexible route, the system may push workers toward external agency markets.

3. Short-termism: cost reductions can outpace the time needed to rebuild recruitment pipelines, retention, rostering maturity, and workforce planning.

A more mature stance would have three planks:

a) “Bank-first” as a workforce value proposition, not just a procurement mechanism

Bank should be positioned as:

• a retention tool,

• a flexible career pathway,

• a skills deployment engine across place,

• and a safe, compliant route to meet demand peaks.

This aligns with the policy intent to reduce agency reliance, while recognising that flexibility itself is not the enemy.

b) Productivity framing that distinguishes waste from necessary flexibility

The real productivity issue is not that flexible staffing exists. It is that the NHS often pays a premium for unplanned flexibility because upstream systems are weak: workforce planning, rostering, job design, training pipelines, retention, and deployment models.

So the goal should be:

• drive down premium, last-minute, avoidable spend, while

• protecting planned, value-adding flexibility.

c) Data, governance and transparency - done in a way clinicians trust

Other sectors invest in visibility for contingent workforce: who is working, where, at what cost, with what performance signals. The NHS can do this too, but it must be clinically credible and operationally useful - supporting safe staffing and service continuity, not just finance reporting.

Conclusion: the NHS doesn’t have a temporary workforce problem; it has a temporary workforce design problem

In many industries, temporary workers are treated as an asset because organisations:

• plan their use,

• buy skills against outcomes,

• and manage the “extended workforce” as a strategic capability.

In the NHS, temporary staffing is more likely to be reactive, safety-critical, and heavily scrutinised - so it becomes symbolically linked to inefficiency, even when it is providing the resilience the system currently depends on. National guidance reinforces this by explicitly positioning temporary spend reductions as part of the route to productivity and financial balance.

A better narrative is possible: temporary staffing is not inherently good or bad. It is a workforce capability. If the NHS professionalises that capability - especially through stronger, more valued bank models - then “temporary” can shift from being a blunt cost target to being a managed source of agility that supports productivity rather than being blamed for its absence.

References

Deloitte (2024) 2024 Global Human Capital Trends: Thriving beyond boundaries: Human performance in a boundaryless world (report). image.marketing.deloitte.de

Deloitte (n.d.) Technology for the gig economy (insight article). Deloitte

Financial Services Skills Commission (2024) Future Skills Report 2024: Bridging the skills gap in a rapidly evolving sector (report). financialservicesskills.org

The King’s Fund (2025) NHS priorities for 2025/26: our expert insights (blog/analysis). The King's Fund

McKinsey & Company (2025) The critical role of strategic workforce planning in the age of AI (insight article). McKinsey & Company

NHS England (2016–present) Reducing expenditure on NHS agency staff: rules and price caps (policy page). NHS England

NHS England (2025) 2025/26 priorities and operational planning guidance (guidance). NHS England

NHS Providers (2025) On the day briefing: Medium term planning framework 2026–2029 (briefing). NHS Providers

NHS England (2025) Medium Term Planning Framework – delivering change together 2026/27 to 2028/29 (guidance). NHS England

NHS Employers (2025) Submission to the NHS Pay Review Body 2026/27 (submission/document). NHS Employers