Recommendations & Conclusions
32 items
2
Conclusion
Thirty-Fifth Report - The pharmacy earl…
Crown Commercial Service (CCS) failed to sufficiently manage and consider conflicts of interest for the appointment of contractors. Lex Greensill was appointed as senior adviser to government on supply chain finance in November 2011 and continued to provide advice to government until March 2017. In July 2012 he set up …
Government response. 2.1 The government agrees with the Committee’s recommendation. Recommendation implemented 2.2 In 2020, the National Audit Office and the Boardman Review recommended that additional, practical guidance be made available for all in-scope organisations regarding the management of conflicts of interest …
HM Treasury
3
Recommendation
Thirty-Fifth Report - The pharmacy earl…
Despite previous experience of contractor failures, CCS and the Department did not act on lessons from previous cases. The Department, CCS and NHS Business Services Authority (NHSBSA) assessments of risks did not flag issues with having a single supplier on the Supplier Early Payment Solution framework or that taxpayers’ The …
Government response. 3.1 The government agrees with the Committee’s recommendation. Recommendation implemented 3.2 Suppliers bidding for CCS contracts are subject to robust financial checks as part of each framework procurement. CCS teams also then regularly monitor risk to suppliers and 22 consider …
HM Treasury
4
Conclusion
Thirty-Fifth Report - The pharmacy earl…
The Department failed to provide adequate oversight to its arm’s length bodies (ALBs) and NHS trusts. Guidance issued by Civil Service Human Resources in December 2020 to accounting officers warned that novel financing arrangements, including salary advance schemes, required caution, and needed departmental accounting officer and HM Treasury approvals. The …
Government response. 4.1 The government agrees with the Committee’s recommendation Recommendation implemented 4.2 The Public Contract Regulations apply to all public sector contracting authorities, including NHS Trusts and Foundation Trusts. The Cabinet Office formulates public procurement policy and disseminates policy advice to …
HM Treasury
5
Conclusion
Thirty-Fifth Report - The pharmacy earl…
The growth in salary advance schemes across the NHS raises questions about their status as unregulated consumer lending. In February 2021, the Financial Conduct Authority (FCA) published the Woolard Review which noted that the salary advance schemes market was predominantly found in the hospitality, retail and healthcare markets and was …
Government response. 5.1 The government disagrees with the Committee’s recommendation 5.2 Unsecured consumer credit is regulated under a legislative framework. Where consumer detriment is identified, the government is able to extend the perimeter of that framework to ensure that there is appropriate …
HM Treasury
1
Conclusion
Thirty-Fifth Report - The pharmacy earl…
Following the Comptroller and Auditor General’s report, we took evidence from the Department of Health and Social Care (the Department), Crown Commercial Service (CCS), NHS Business Services Authority (NHSBSA) and NHS Shared Business Services (NHS SBS) on supply chain finance and salary advance schemes in the NHS.2
Government response. Thirty-Fifth Report of Session 2021-22 Department of Health & Social Care, Crown Commercial Service, Cabinet Office, and HM Treasury The Pharmacy Earlier Payment and Salary Advance Schemes in the NHS Introduction from the Committee Greensill Capital was involved in the …
HM Treasury
6
Conclusion
Thirty-Fifth Report - The pharmacy earl…
The Department’s business case targeted annual savings of £100 million in pharmacy margins through early payment settlements with drug manufacturers, based on advice supplied by Lex Greensill in his capacity as government adviser. The Department has stated that it is unable to quantify the savings from the early payment scheme …
HM Treasury
7
Conclusion
Thirty-Fifth Report - The pharmacy earl…
We asked the Department that given the pharmacy scheme involved an unusual and novel use of public money and in relation to the entire episode with Greensill Capital whether HM Treasury’s initial scepticism about the use of supply chain finance in the NHS has been validated. The Department told us …
HM Treasury
8
Conclusion
Thirty-Fifth Report - The pharmacy earl…
The Department told us that the original business case had quite a large level of projected savings—£100 million as quoted by the National Audit Office. We asked how much of that £100 million quoted in the report was actually realised and the Department confirmed that it would have been much …
HM Treasury
9
Conclusion
Thirty-Fifth Report - The pharmacy earl…
We asked whether any cash analysis was done in 2012 as to whether the proposed scheme would save any money—it was assumed by the Department that it might. The Department confirmed that there is no accurate basis for estimating the amount of savings that would give a number that that …
HM Treasury
10
Conclusion
Thirty-Fifth Report - The pharmacy earl…
Following his appointment as a senior adviser in November 2011, Lex Greensill advised the government on supply chain finance until March 2017. He also founded Greensill Capital, which was a subcontractor to Taulia as part of its November 2017 bid to provide supply chain finance services to the public sector. …
Government response. 2: PAC conclusion: Crown Commercial Service (CCS) failed to sufficiently manage and consider conflicts of interest for the appointment of contractors. 2: PAC recommendation: The Department and CCS should formalise the process for considering conflicts of interest, to ensure that …
HM Treasury
11
Conclusion
Thirty-Fifth Report - The pharmacy earl…
Three companies bid to be the framework supplier. One was discarded on failure to meet minimum quality grounds, leaving Citibank and Taulia. CCS’s commercial finance accountant’s evaluation of Taulia’s Dun & Bradstreet score and a review of its accounts required it to nominate a financial guarantor. Taulia nominated Greensill Capital, …
Government response. 2: PAC conclusion: Crown Commercial Service (CCS) failed to sufficiently manage and consider conflicts of interest for the appointment of contractors. 2: PAC recommendation: The Department and CCS should formalise the process for considering conflicts of interest, to ensure that …
HM Treasury
12
Conclusion
Thirty-Fifth Report - The pharmacy earl…
We asked why there was no discussion about a potential conflict of interest arising from Lex Greensill providing advice on supply chain finance services and his company, Greensill Capital, then being appointed to supply these services. We asked whether CCS’s assessments on fitness could have been expanded when the bids …
Government response. 2: PAC conclusion: Crown Commercial Service (CCS) failed to sufficiently manage and consider conflicts of interest for the appointment of contractors. 2: PAC recommendation: The Department and CCS should formalise the process for considering conflicts of interest, to ensure that …
HM Treasury
13
Conclusion
Thirty-Fifth Report - The pharmacy earl…
CCS stated that in terms of procurement regulations, there was no reason to preclude Taulia based on Greensill Capital being a subcontractor named in their bid. CCS also told us that based on submissions received from the various bidding companies, its assessment was that there was no conflict in relation …
Government response. 2: PAC conclusion: Crown Commercial Service (CCS) failed to sufficiently manage and consider conflicts of interest for the appointment of contractors. 2: PAC recommendation: The Department and CCS should formalise the process for considering conflicts of interest, to ensure that …
HM Treasury
14
Conclusion
Thirty-Fifth Report - The pharmacy earl…
CCS knew, before legal correspondence came in from Taulia, that Greensill Capital was listed as a financial backer—the guarantor—to the Taulia bid. CCS agreed that if there 11 C&AG’s Report, para 12, Figure 1 12 C&AG’s Report, para 2.21 13 Qq 55–56 14 Qq 57–58 12 The pharmacy early payment …
Government response. 2: PAC conclusion: Crown Commercial Service (CCS) failed to sufficiently manage and consider conflicts of interest for the appointment of contractors. 2: PAC recommendation: The Department and CCS should formalise the process for considering conflicts of interest, to ensure that …
HM Treasury
15
Conclusion
Thirty-Fifth Report - The pharmacy earl…
Mr Bill Crothers was a former Government Commercial Officer and was a director for both Greensill Capital and its subsidiary Earnd (UK) Limited. We asked whether Mr Crothers was using his contacts within the NHS to promote the work of Greensill Capital. CCS told us that though Mr Crothers was …
Government response. 2: PAC conclusion: Crown Commercial Service (CCS) failed to sufficiently manage and consider conflicts of interest for the appointment of contractors. 2: PAC recommendation: The Department and CCS should formalise the process for considering conflicts of interest, to ensure that …
HM Treasury
16
Conclusion
Thirty-Fifth Report - The pharmacy earl…
The Government is currently considering the recommendations from Nigel Boardman’s recent review of standards in public life and we expect that the outcome of those considerations would be far reaching and wide enough to address all of these issues relating to conflicts of interest of senior government officials and advisers.17 …
Government response. 2: PAC conclusion: Crown Commercial Service (CCS) failed to sufficiently manage and consider conflicts of interest for the appointment of contractors. 2: PAC recommendation: The Department and CCS should formalise the process for considering conflicts of interest, to ensure that …
HM Treasury
17
Conclusion
Thirty-Fifth Report - The pharmacy earl…
NHSBSA amended PEPS within the existing arrangements from July 2020 at the request of the Department. This amendment allowed pharmacies to obtain funds at the beginning of the month, prior to dispensing, thereby introducing a higher risk to the lender in the event of a pharmacy failing. Under this existing …
HM Treasury
18
Conclusion
Thirty-Fifth Report - The pharmacy earl…
On 1 March 2021, NHSBSA learned that Greensill Capital might be unable to fully fund that month’s payments to pharmacies. On the instructions of the Department, NHSBSA took emergency action to make direct payments to all pharmacies within the scheme and processed total payments of £144 million directly from government …
HM Treasury
19
Conclusion
Thirty-Fifth Report - The pharmacy earl…
The combined effect of the introduction of an even earlier reimbursement process for pharmacies and the failure of Greensill Capital placed the Department in a position 15 Q 59 16 Qq 65–66 17 Supply Chain Finance in Government: Boardman Review 18 C&AG’s Report, para 18 19 C&AG’s Report, paras 2.29–2.30 …
HM Treasury
20
Conclusion
Thirty-Fifth Report - The pharmacy earl…
The failure of Greensill Capital resulted in some NHS trusts switching to a paid for salary advance scheme. When Greensill Capital failed in March 2021, the Earnd UK business (formerly FreeUp Finance Limited) ceased to operate. Wagestream, an existing market participant, which provides various wellbeing services (including Earned Wage Access, …
HM Treasury
21
Conclusion
Thirty-Fifth Report - The pharmacy earl…
We further questioned CCS if it was normal when dealing with what is, effectively, a financial product, to end up with only one supplier, with no resilience built in. CCS told us that it does not like putting single suppliers on a framework, but it was its engagement with the …
HM Treasury
22
Conclusion
Thirty-Fifth Report - The pharmacy earl…
Over the three-year period of the pharmacy scheme with Taulia and Greensill Capital as subcontractor, a cumulative transaction value of £3.32 billion of pharmacy loans passed through the supply chain finance. Taulia received in the region of £840,000 over the three-year period. We asked CCS whether it felt at any …
HM Treasury
23
Conclusion
Thirty-Fifth Report - The pharmacy earl…
CCS told us that it had put an information notice out to say that it was starting to look at the replacement for supply chain finance but the decision had yet to be formalised internally—though it had gone to the CCS board. CCS agreed that its guidance to the board …
Government response. 3.2 Suppliers bidding for CCS contracts are subject to robust financial checks as part of each framework procurement. CCS teams also then regularly monitor risk to suppliers and 22 consider their resilience during the life of the contract, making use …
HM Treasury
24
Conclusion
Thirty-Fifth Report - The pharmacy earl…
Greensill Capital actively marketed its salary advance scheme, Earnd, to NHS trusts at no cost to employers or employees. Representatives of Greensill Capital often attended NHS group meetings of trust leadership and senior management to pitch the service. Greensill Capital had explained to NHS trusts that providing a free alternative …
HM Treasury
25
Conclusion
Thirty-Fifth Report - The pharmacy earl…
Government advised departments not to implement salary advance schemes, but this advice was not cascaded to the Department’s arm’s-length bodies (ALBs). Guidance issued by Civil Service Human Resources in December 2020 to accounting officers reminded them that novel financing arrangements, including salary advance schemes, required caution, and needed departmental accounting …
Government response. 4a PAC recommendation: The Department, working with NHSE&I, should adopt a formal process for ensuring that government advice is disseminated to NHS trust leadership for consideration and implementation if relevant. 4.1 The government agrees with the Committee’s recommendation Recommendation implemented …
HM Treasury
26
Conclusion
Thirty-Fifth Report - The pharmacy earl…
The Department told the National Audit Office that its policy position on salary advance schemes is that their use is a matter for individual NHS trusts and for that reason it would not provide advice or guidance to NHS trusts on the schemes. The Department also told the National Audit …
Government response. 4a PAC recommendation: The Department, working with NHSE&I, should adopt a formal process for ensuring that government advice is disseminated to NHS trust leadership for consideration and implementation if relevant. 4.1 The government agrees with the Committee’s recommendation Recommendation implemented …
HM Treasury
27
Conclusion
Thirty-Fifth Report - The pharmacy earl…
On the basis that there was not a lot of cash to be earned from this scheme by Greensill Capital, we asked what it was that the company was hoping to get out of this line of busines at the time. The National Audit Office has reported that Greensill Capital …
HM Treasury
28
Conclusion
Thirty-Fifth Report - The pharmacy earl…
Employer Salary Advance Schemes (ESAS, or salary advance schemes) are not regulated by the Financial Conduct Authority (FCA). These salary advance schemes link an employer payroll process to an employee smartphone app to offer advances of accrued earnings from a finance provider before payday. They do not usually involve the …
Government response. 5.2 Unsecured consumer credit is regulated under a legislative framework. Where consumer detriment is identified, the government is able to extend the perimeter of that framework to ensure that there is appropriate consumer protection. For example, the government is currently …
HM Treasury
29
Conclusion
Thirty-Fifth Report - The pharmacy earl…
The National Audit Office reported that between 1.3% and 10% of staff at NHS trusts were looking at using these services, so, clearly, a substantial number of people. We asked NHS SBS what expectations it had of usage of payday advance schemes. Given NHS SBS was providing payroll services for …
HM Treasury
30
Conclusion
Thirty-Fifth Report - The pharmacy earl…
The Woolard review noted that the salary advance schemes market was predominantly found in the hospitality, retail and healthcare markets and was still in a stage of relative infancy. It stated that salary advances could result in some users experiencing a shortfall in income at the end of the month, …
Government response. 5: PAC conclusion: The growth in salary advance schemes across the NHS raises questions about their status as unregulated consumer lending 5: PAC recommendation: The Department along with HM Treasury, should work with the FCA to consider, as a matter …
HM Treasury
31
Conclusion
Thirty-Fifth Report - The pharmacy earl…
Greensill Capital’s approach coincided with NHS trusts’ own research into salary advance scheme providers in the context of staff financial wellbeing and employee benefits. NHS trust working papers also showed that employers considered the service could provide additional benefits, including reductions in agency bills, increased take up of additional shifts, …
HM Treasury
32
Conclusion
Thirty-Fifth Report - The pharmacy earl…
We asked if there were lessons particularly for the Department about promoting these products that have no FCA imprint. An employee on a low salary might decide to take some early advance and it is not actually a regulated product at all. There may be other less advantageous loan schemes, …
HM Treasury