Pay rates for agency staff have fallen significantly as a result of electronic auctions (e-auctions) run by the NHS's Purchasing and Supply Agency (PASA), and this is making it difficult for national framework agreement recruiters to attract staff, according to two of the country's biggest medical recruiters.

John Herron, divisional director at Reed Health and Doctor, said he was aware of cases where as a result of e-auctions, psychiatrists who had previously been earning £90-£95 were now on about £65 an hour.

"We cannot compete with them [non-framework] agencies on pay rates — they are much higher. There's nothing to say they cannot pay and charge what they like. It's very difficult," he told Recruiter.

Richard MacMillan, chief executive of Pulse, told Recruiter that e-auctions had led to pay decreases of up to 20% in the case of some nurses outside London.

MacMillan said: "We have to pay a framework rate, and as a result we are losing out to those agencies who are not on the framework agreement and can pay more," he said.

MacMillan added that failure to act on pay could ultimately lead to agencies walking away from the framework agreement. "I think it's something that all agencies — in our case the Pulse brand — in our position are considering," he said.

However, Herron said that going outside the framework agreement was not the agenda. The way forward for the industry was not for agencies to go outside the framework agreement but to have "a level playing field" between framework and non-framework recruiters, he said. "We need to push the quality bar up rather than down, so that the NHS can be guaranteed the quality of people it needs," said Herron.

A PASA spokesperson said: "The results of the e-auction negotiations did achieve compression of rates across participating agencies.

"These rates were negotiated utilising e-auction software and are in line with the NHS's Agenda for Change and comparable with NHS substantive and nurse bank pay rates."

However, the spokesperson added: "There are benefits to staff employed under the framework agreement. The terms and conditions of contract provide protection to agency workers and reduce risk to both the workers and patients. For example, holiday pay must be provided. Compliance with terms and conditions is audited by the NHS PASA Audit Team."