Select committee inquiry
DHSC Annual Reports and Accounts 2020-21
Closed
What the inquiry looked at
“The NAO has published its report on DHSC’s accounts for the year 2020-21, with its official audit opinion “ qualified” on a series of grounds related to the Department’s spending : - there was insufficient evidence to support the year-end inventory and accruals balances - £1.3 billion of the Department’s COVID-19 spending was spent either without the necessary HM Treasury approvals or in breach of conditions set by HM Treasury - there was insufficient evidence to show that the Department’s spending, particularly on COVID-19 procurement, was not subject to a material level of fraud The Committee will question senior officials at DHSC on these findings. If you have evidence about DHSC’s spending and operation of its budget over the year 2020-21, please submit it here by Monday 28 February at 18:00.”
The committee's words, from the inquiry page on parliament.uk ↗.
What it found
In the committee's words, from the summary of Sixth Report - Department of Health and Social Care 2020–21 Annual Report and Accounts ↗
The Department’s 2020–21 Annual Report and Accounts, published on 31 January 2022, reported the exceptional challenges the Department faced in responding to the COVID-19 pandemic. As part of this response, the Department purchased over £12 billion of Personal Protective Equipment (PPE) in 2020–21. Due to the speed of which the procurement took place and the volumes of PPE ordered, equipment was purchased that did not always meet requirements and much higher prices than normal were paid.
The accounts reveal the £9 billion extent of this financial loss including £4 billion of PPE that will not be used in the NHS and needs to be disposed of. The Department has no clear disposal strategy for this excess PPE but told us that it plans to burn significant volumes and will aim to generate power from this.
As a result of its haphazard purchasing strategy, the Department also has problems with a large number of the PPE contracts it entered into. It is currently engaged in commercial negotiations, legal review or mediation in respect of 24% of the PPE contracts awarded.
This includes issues with contracts for products that were not fit for purpose, and one contract for 3.5 billion gloves where there are allegations of modern slavery against the manufacturer.
The accounts also reveal that the Department spent £1.3 billion without HM Treasury (HMT) approval and also needed to seek the Treasury’s retrospective approval in many other cases during its response to the pandemic. The Department had a track record of failing to comply with the requirements of Managing Public Money even before the further exceptional challenges of the pandemic response, this has now been exacerbated further as a result of the COVID-19 response.
The Department must learn from its experience of responding to the COVID-19 pandemic and quickly develop clear post-pandemic plans to transition back to business as usual. This should include implementing a robust procurement and inventory management processes and controls to ensure proper financial management and having a clear coordinated strategy for dealing with the significant volumes of excess PPE in the most cost effective and environmentally friendly way.
What the government said
The government responded on 2 September 2022. The deadline was 10 August 2022.
Summary written by Accountability Index from the government's response.
The government states that it agrees with the Committee's recommendations on PPE disposal, commercial capability, stockpile planning, financial controls, declarations of interests, redundancy payments, budgeting and the timing of the annual report and accounts.
- On PPE disposal, the department will write to the Committee "over the Summer" with full detail, and will continue quarterly updates on disposals until August 2023.
- On stockpile resilience, the department is undertaking a fundamental review of countermeasures including PPE, and "expects to be able to offer more information" on the results to the Committee in early 2023.
- On public spending rules, the department says its finance reset is "establishing robust financial controls", and it will provide a further update to the Committee by October 2022.
- On the timing of the annual report and accounts, the department will not be able to support pre-recess laying for 2022-23, and is "working to return" to it from 2023-24, an ambition "dependent upon the capacity of the national and local audit markets".
Read the government's response ↗ Read the report ↗ Report an error
How the inquiry ran
Each dot is a dated item listed on this page, from the inquiry's opening on 1 February 2022 to its close on 2 September 2022. The dashed mark is the deadline Parliament records for the government's response.
- Oral evidence 7 Mar 2022
- Report 10 Jun 2022
- Government response 2 Sep 2022
- Correspondence 3 letters
What it recommended 20 recommendations · 13 conclusions
2The procurement of PPE in response to the COVID-19 pandemic overwhelmed existing systems and has...
Recommended (the committee's words)
The procurement of PPE in response to the COVID-19 pandemic overwhelmed existing systems and has exposed weaknesses in the Department’s commercial contracting capability. At the start of the pandemic the Department faced significant challenges in sourcing and procuring PPE in the competitive global market due to the surge in demand around the world; and the temporary decline in global supply as factories temporarily shut to help reduce Covid-19 infections. PPE was purchased from new suppliers including from companies with no experience in these types of products, and where full physical product quality inspection could not always be done in advance. The Department’s subsequent review of the 364 PPE contracts it entered into identified concerns about 176 (48%) contracts. Of these 176 contracts, 24% are either currently under commercial negotiation (59 contracts); legal review (27 contracts); or in mediation (3 contracts). One of these contracts was for 3.5 billion gloves where there are allegations of modern slavery against the manufacturer. Recommendation: In its Treasury Minute response the Department should set out its ‘commercial reset’ plan and the timeline for scaling up its commercial capability across the Departmental Group to ensure sufficient support is in place to procure and manage existing and future contracts. The Department should also 6 Department of Health and Social Care 2020–21 Annual Report and Accounts keep us informed of cases where it is has been both successful and unsuccessful in reclaiming money spent on sub-standard PPE or recovering money paid to suppliers where no goods were received.
3There is no clear plan for how big the PPE stockpile needs to be and...
Recommended (the committee's words)
There is no clear plan for how big the PPE stockpile needs to be and how the Department will build greater resilience into the NHS supply chain so that it can respond at pace to future urgent needs. Having an appropriate PPE stockpile and a resilient NHS supply chain is crucial to the Department’s successful response to any future pandemic and infectious disease risks. The Department has historically relied on international supply chains and held a stockpile of PPE, medicines and clinical consumables to mitigate the reasonable worst-case scenario risk of an influenza pandemic only. The Department has not yet decided on what level of stockpile it will hold for future pandemics and whether it should buy PPE from British manufacturers to shorten the length of the supply chain and more effectively manage the quality and delivery speed of items. The Department estimates that if it held a stockpile sufficient to deal with a pandemic equivalent to COVID-19 then it believes it would be value for money only if there was a pandemic every 12 years. The Department has important work to do to identify an appropriate level of stockpile; balancing the need to hold sufficient PPE to mitigate the risk of potential supply chain delays and price spikes in the early stages of a pandemic, with the ongoing cost of storing PPE, and the risk of items going out of date without ever being used. Recommendation: The Department should develop a clear plan to increase the resilience of the NHS supply chain to be able to respond at speed if there is another pandemic or variant of concern and needs to explain in detail to the Committee how it intends to work out what items and how much PPE it needs to hold as a national stockpile going forward.
4The Department has regularly failed to follow public spending rules and across the Departmental Group...
Recommended (the committee's words)
The Department has regularly failed to follow public spending rules and across the Departmental Group there is a track record of failing to comply with the requirements of Managing Public Money. The Department is required to obtain approval from the Treasury before committing to expenditure where such authority is needed. The Treasury has confirmed that £1.3 billion of the Department’s spending in 2020–21 did not have HM Treasury consent and was therefore ‘irregular’. The Treasury has stated that ‘in the vast majority of cases’ this was because either the Department and/or the NHS had spent funds without approval or in express breach of conditions. While the Department consciously relaxed financial controls during its pandemic response, this is not the first-time such instances of non-compliance have been identified. In 2019–20 the value of unapproved special payments across the Departmental Group was estimated as £18 million. Recommendation: The Department should write to us by October 2022 setting out the systems and processes it has established as part of its ‘financial reset’ to ensure the regularity of expenditure and compliance with spending controls across the Departmental Group going forward.
5The Department’s COVID-19 pandemic procurement highlighted the importance of achieving transparency in respect of how...
Recommended (the committee's words)
The Department’s COVID-19 pandemic procurement highlighted the importance of achieving transparency in respect of how it identifies and manages declarations of interests. A considerable amount of taxpayers’ money was spent on products from new suppliers, including those with no previous experience of supplying certain Department of Health and Social Care 2020–21 Annual Report and Accounts 7 types of products, increasing the risk that the Department entered into contracts where conflicts of interest existed. The Department’s existing processes for collating and assessing potential related parties and related party transactions did not provide the necessary completeness assurance over the interests held by senior individuals. The Department had to subsequently rectify this and undertake further work, with a number of additional interests identified and disclosed in its Annual Report and Accounts as a result. Recommendation: The Department should maintain and improve accountability by embedding their revised processes so that these are undertaken on a timely basis each and every year and normalise the transparency of the results by inclusion of the full list of interests identified in every Annual Report and Accounts.
6There have been inappropriate unauthorised payoffs made to staff by health bodies, and the planned...
Recommended (the committee's words)
There have been inappropriate unauthorised payoffs made to staff by health bodies, and the planned large-scale NHS restructuring increases the risk of this happening again. Special severance payments when staff leave public service employment should be exceptional and they require Treasury approval because they are often ‘novel, contentious and repercussive’. Three Clinical Commissioning Groups (CCGs) approved and paid special severance payments without following the required authorisation process. The C&AG qualified his regularity audit opinion on the NHS England 2020–21 Annual Report and Accounts in respect of one of these—an unapproved special severance payment made by Berkshire West CCG to its former Accountable Officer. There are currently 106 CCG’s, which as part of the planned re-organisation of the NHS will become 42 Integrated Care Boards (ICBs) on 1 July 2022, increasing the likelihood of future payoffs and further non- compliance with the rules that apply over the value of exit packages. Recommendation: The Department should write to us alongside its Treasury Minute response setting out how it will monitor and control the approval of all redundancy payments made by entities within the Departmental Group to ensure such payments are properly authorised in advance and are not irregular.
7With 23 days to go until the financial year end the UK Health Security Agency...
Recommended (the committee's words)
With 23 days to go until the financial year end the UK Health Security Agency did not have an agreed budget for the new financial year. The Department established the UK Health Security Agency (UKHSA) on 1 April 2021 as a new executive agency to be the UK leader for health protection responsible for ensuring the nation can respond quickly and at greater scale to deal with pandemics and future threats. Public Health England’s (PHE’s) health protection functions transferred into UKHSA on its abolition on 1 October 2021. On the same date, UKHSA also took over the functions of NHS Test and Trace and the Joint Biosecurity Centre from the Department itself. The UKHSA budget for 2021–22 was approximately £15 billion. Despite UKHSA being up and running for a number of months, when we took evidence on 7 March 2022 the Department had still not agreed, and did not know when it would agree, a UKHSA budget for the 2022–23 financial year. Recommendation: The Department should not get into this position again and should write to the Committee to set out what steps it has put in place to ensure that all organisations it sponsors have a budget in place to allow sufficient time for financial planning for the year ahead. 8 Department of Health and Social Care 2020–21 Annual Report and Accounts
8There is no clear plan as to how the Department will bring forward the publication...
Recommended (the committee's words)
There is no clear plan as to how the Department will bring forward the publication date of its annual report and accounts. The Department prepared its 2020–21 Annual Report and Accounts in exceptional circumstances. The Department’s 2020–21 Annual Report and Accounts, and those of NHS England and the Consolidated NHS Provider Accounts, were published on 31 January 2022—the day of the statutory deadline for all Departments. However, HM Treasury expects Departments to publish their Annual Report and Accounts prior to the parliamentary summer recess in July—the ‘administrative’ deadline it sets is 30 June—and the Department should work towards achieving this target in future. At the time of our evidence session, one NHS trust—the University Hospitals of Leicester NHS Trust (UHL)—was yet to sign and publish its own Annual Report and Accounts for both 2019–20 and 2020–21. For the second year running the Department has had to set out in its Annual Report that this NHS trust had failed to comply with the Secretary of State’s directions to prepare ‘true and fair’ accounts. Recommendation: The Department should develop a detailed and realistic plan for bringing forward the preparation and publication of its annual report and to improve timeliness of its accountability for the use of taxpayers’ money. Department of Health and Social Care 2020–21 Annual Report and Accounts 9 1 The financial impact of COVID-19
1On the basis of a report by the Comptroller and Auditor General (C&AG), we took...
Concluded (the committee's words)
On the basis of a report by the Comptroller and Auditor General (C&AG), we took evidence from the Department of Health and Social Care (the Department) on its Annual Report and Accounts for 2020–21.1
9We asked the Department what plans it had for disposal of the £4 billion of...
Recommended (the committee's words)
We asked the Department what plans it had for disposal of the £4 billion of PPE that it has identified cannot be used in the NHS. The Department told us that it had approached 75 different countries to see if they could use any of the unusable PPE. This has led to ongoing discussions with 11 countries and the Department has made some minimal donations of PPE so far.15 In respect of disposal options, the Department confirmed that it had a pilot of re-purposing face visors as food trays, and aprons into bin bags.16 The 7 C&AG’s Report, para 8 8 Qq 19, 22, 23 9 Q 24 10 Q 52 11 C&AG’s Report, para 8 12 DHSC 2020–21 ARA, page 191 13 Q 69 14 Q 90 15 Qq 46, 49 16 Qq 40–42 Department of Health and Social Care 2020–21 Annual Report and Accounts 11 Department informed us that it intends to appoint two waste partners, with the aim of disposing of 15,000 pallets a month.17 The disposal will be via combination of recycling, and burning the items which will also generate power. In the meantime, the Department is still spending £3.5m a week in storing PPE.18 PPE Procurement and contracting capability
10Prior to the COVID-19 pandemic, the Department held a stockpile of PPE to respond to...
Recommended (the committee's words)
Prior to the COVID-19 pandemic, the Department held a stockpile of PPE to respond to what it considered was a reasonable worst-case scenario of an outbreak of pandemic influenza.19 It was identified in the early stages of its COVID-19 pandemic response that the stockpile it held was inadequate to respond to the urgent needs of the NHS and Social Care sector.20 The stockpiles only provided an estimated two weeks’ worth, or less, of most types of PPE needed by the NHS and social care during the pandemic and did not include gowns which were needed.21 Prior to the pandemic, there was no nationally centralised model for procuring and distributing PPE to the health and social care sectors. A separate ‘parallel’ supply chain was set up by the Department, which included establishing a ‘High Priority Lane’ (also referred to as a ‘VIP’ lane) that included referrals of potential suppliers from MPs, ministers and senior officials. In January 2022, the High Court published its ruling that the use of the High Priority Lane was unlawful.22
11Most of the PPE was bought at speed early in the pandemic.
Concluded (the committee's words)
Most of the PPE was bought at speed early in the pandemic. This was at a time when there was a surge in demand in other countries, and at the same time as a temporary decline in global supply as factories temporarily shut to help reduce COVID-19 infections. This resulted in an extremely overheated global market; a ‘sellers’ market’, with customers competing against each other, pushing up prices, and buying huge volumes of PPE often from suppliers that were new to the PPE market. In order to meet the urgent demand, the Department adapted its normal procurement and inventory management controls. This has contributed to a significant loss of value to the taxpayer and left the Department open to the risk of fraud.23
12We asked the Department about its commercial capability.
Recommended (the committee's words)
We asked the Department about its commercial capability. It confirmed that this was on its “worry list” prior to the arrival of the COVID-19 pandemic and continues to be a challenge.24 The Department stated that it has an ongoing programme of contract training with some 972 learners across health (DHSC, ALBs and NHS) registered for the Foundation Training, of which 450 achieved accreditation. At 31 March 2021, the Department had over 700 new contracts with a value of over £12 billion still active.25
13We asked the Department for an update on the current position of contracts it had...
Concluded (the committee's words)
We asked the Department for an update on the current position of contracts it had entered into in response to the COVID-19 pandemic. The Department has now identified 17 Q 43 18 Q 79 19 Q 88; DHSC 2020–21 ARA, page 123 20 C&AG’s Report, The supply of personal protective equipment (PPE) during the COVID-19 pandemic, Session 2019–21, HC 961, 25 November 2020 21 C&AG’s Report, The supply of personal protective equipment (PPE) during the COVID-19 pandemic, Session 2019–21, HC 961, 25 November 2020 22 DHSC 2020–21 ARA, page 16, paras 66–67, page 132, paras 683–684 23 C&AG’s Report, paras 6, 7 24 Q 67 25 Q 65; DHSC 2020–21 ARA, page 115 12 Department of Health and Social Care 2020–21 Annual Report and Accounts issues of concern on 176 of the 364 (48%) PPE contracts it entered into. The 176 contracts total £3.9 billion. 59 of these contracts have moved to commercial discussions with 27 under legal review and 3 in mediation.26
14The Department has also identified a contract for 3.5 billion gloves where there are allegations...
Concluded (the committee's words)
The Department has also identified a contract for 3.5 billion gloves where there are allegations of modern slavery. When we questioned the Department about this matter, it was unable to confirm the value of the contract. However, it believed that should evidence become available that supports the modern slavery allegations, the supplier is contractually obligated to take the gloves back and return the funds paid back to the Department.27 Establishing a future stockpile
15The Department told us that the stockpile it held at the beginning of the pandemic...
Concluded (the committee's words)
The Department told us that the stockpile it held at the beginning of the pandemic was exceptionally useful and that there would have been PPE shortages without it. This stockpile was established in 2009, after the swine flu outbreak.28 We questioned the Department on its plans for holding a PPE stockpile in the future and learning from its experience in responding to the COVID-19 pandemic. The Department acknowledged that this is going to be a key decision as it would be possible to spend a very large sum of money on a stockpile that is never used or turns out to contain the wrong items for the next disease.29 The Department confirmed that it has not yet decided on what level of stockpile it should hold in the future.30
16We asked the Department why it had started disposing of PPE before it had made...
Concluded (the committee's words)
We asked the Department why it had started disposing of PPE before it had made a decision on the size of the stockpile to hold for future emergencies. It told us that it will not need or be able to use all of the PPE it currently holds. As an example, it currently holds at least 15 years’ worth of eye protectors which will degrade over time. It is therefore looking at disposal options in parallel with defining the size of stockpile it intends to hold. The Department said that it expects to decide upon a stockpile larger than that previously held but smaller than the stockpile that would have been required for the COVID-19 pandemic. The Department estimates there would need to be a pandemic every twelve years to justify the costs of storing and managing a stockpile of the size needed for the COVID-19 response.31
17The Department said that in addition to holding a much larger stockpile, another alternate strategy...
Concluded (the committee's words)
The Department said that in addition to holding a much larger stockpile, another alternate strategy it could have previously adopted was to buy British and therefore creating a resilient, flexible PPE manufacturing industry in this country, rather than buying from abroad. It advised us that its future plans for a more resilient supply chain did include using British manufacturers to reduce dependence on international supply chains.32 The Department acknowledged it is essential that work is undertaken to establish a cost- effective approach for buying and holding appropriate levels of PPE.33 This will need to strike the right balance between ensuring the Department has sufficient quantities of PPE 26 Qq 54, 55, 59 27 Qq 32, 37 28 Q 88 29 Q 88 30 Q 47 31 Qq 48–52 32 Q 16 33 Q 48–49 Department of Health and Social Care 2020–21 Annual Report and Accounts 13 to protect the workforce in any future pandemic or from any variant of concern; and avoids paying for PPE at the top of the market, against holding PPE that incurs ongoing storage costs and expires if not used before it degrades. 14 Department of Health and Social Care 2020–21 Annual Report and Accounts 2 Accountability and future plans Proper use of public money
18When granting additional funding to assist with the Department’s COVID-19 pandemic response activity, HM Treasury...
Recommended (the committee's words)
When granting additional funding to assist with the Department’s COVID-19 pandemic response activity, HM Treasury set conditions to ensure appropriate use of the money, that the Department was required to follow. These were in areas such as: advance payments to secure personal protective equipment; advance funding for community pharmacies; enhanced discharge payments to Clinical Commissioning Groups; and payments to dentists. However, the Department and NHS England spent £1.3 billion of public funds either without HM Treasury consent or which breached the conditions previously set by Treasury.34
19The Department told us that in order to get money to where it thought it...
Recommended (the committee's words)
The Department told us that in order to get money to where it thought it was needed during the COVID-19 pandemic it deliberately loosened controls and thereby took on a lot of additional risk spending money without prior approval.35 It acknowledged that its controls and processes were inadequate for the post-pandemic environment and need to be reset. We questioned the Department on what changes it had made to its processes so that this does not happen again. The Department told us that it had launched a financial reset programme to get it and the NHS back to normal financial management. It said this programme would review systems and processes; capabilities and capacity; governance and accountability arrangements. It said “very strict processes” had been reintroduced to ensure approval was received before public money had been committed.36 However, its pre-pandemic processes failed to prevent unauthorised spending. In 2019–20 the value of unapproved special payments across the Departmental Group was estimated as £18 million.37
20The Department’s Head of Internal Audit concluded that “the existing arrangements in place do not...
Recommended (the committee's words)
The Department’s Head of Internal Audit concluded that “the existing arrangements in place do not best support the current operating environment” and that “necessary adjustments are required to the framework of risk control and governance arrangements for them to be considered effective in what is a new operating environment”. The Head of Internal Audit also reported that “lines of accountability, interfaces, interdependencies and escalation routes are not clear or fully integrated across the Department and wider health group”.38 The Department told us it was going to address all of these concerns as part of its reset programme.39 Transparency of interests
21There has been considerable public and political interest in the Department’s COVID-19 pandemic procurement including...
Concluded (the committee's words)
There has been considerable public and political interest in the Department’s COVID-19 pandemic procurement including how significant amounts of taxpayers’ money had been spent- especially where products had been sourced from new suppliers including from companies with no previous experience in these types of products. Such procurement- undertaken at pace- increased the risk that the Department entered into 34 C&AG’s Report, paras 16, 17 35 Q126 36 Qq 11–13 37 Report by the Comptroller and Auditor General, Department of Health and Social Care Annual Report and Accounts 2019–20, 26 January 2021, para 1.35 38 DHSC 2020–21 ARA, page 106 39 Q 12 Department of Health and Social Care 2020–21 Annual Report and Accounts 15 contracts where conflicts of interest existed which heightened the importance of the Department’s transparency in respect of how it identified and managed declarations of interests.
22We asked the Department how with such a large number of potential and potentially significant...
Recommended (the committee's words)
We asked the Department how with such a large number of potential and potentially significant conflicts of interest, within staff, non-executive directors or Ministers at the Department, they make sure that conflicts are identified and dealt with properly. The Department told us that this is particularly challenging for them, because health and care makes up about 10% of the economy, as a result for any relative you have there is a one in 10 chance of them either being an employee of the NHS or working for a contractor that works for the NHS.40
23The Department set out in its Governance Statement that during the audit of the Department’s...
Recommended (the committee's words)
The Department set out in its Governance Statement that during the audit of the Department’s accounts, it became apparent the Department’s process for collating and assessing potential related parties and related party transactions did not provide the necessary completeness assurance over the interests held by senior individuals. Consequently, the Department undertook further work to strengthen its processes, including obtaining direct written confirmation of related parties from Ministers, non- executive directors and senior staff and undertaking completeness searches on the results of those confirmations.41 This led to the disclosure of 13 and a half pages of interests, held by Ministers, senior members of staff, non-executive directors or their immediate families within the Annual Report and Accounts.42 We told the Department that the extensive disclosures made were a welcome improvement in its transparency and the Department agreed.43 Re-organisation of the NHS
24The Health and Care Bill introduces statutory Integrated Care Systems (ICSs), made up of an...
Recommended (the committee's words)
The Health and Care Bill introduces statutory Integrated Care Systems (ICSs), made up of an Integrated Care Board (ICB), responsible for the commissioning of healthcare services and an Integrated Care Partnership (ICP), an alliance of organisations and representatives to improve care, health and wellbeing, jointly convened by local authorities and the NHS.44 Under these new arrangements the existing 106 Clinical Commissioning Groups (CCG’s) responsible for commissioning healthcare services for the people of England are planned to become 42 Integrated Care Boards (ICBs) on 1 July 2022. In addition, several changes are planned to take place at a national level. NHS Improvement will be merged into NHS England, the expanded NHS England will also take in the functions of the NHS Trust Development Authority and Monitor and the existing bodies will be abolished. The future abolition of Health Education England; NHS Digital; and NHS X has also been announced with these functions also transferring to NHS England at a future date.45 40 Q 102 41 DHSC 2020–21 ARA, page 134 42 Q101 43 Q105 44 Health and Care Bill, HL Bill 132 (as amended on Report), HM Government 45 Department of Health and Social Care, Major reforms to NHS workforce planning and tech agenda, 22 November 2021 16 Department of Health and Social Care 2020–21 Annual Report and Accounts
25We asked the Department what plans it had put in place to prepare for this...
Concluded (the committee's words)
We asked the Department what plans it had put in place to prepare for this large-scale structural change in the NHS. The Department said the NHS had “extensive plans” and it was looking for radical change in how these organisations and their people work together to put flexibility into the system and its use of health and social care funding.46
26Three Clinical Commissioning Groups (CCGs) paid special severance payments without obtaining the required approvals.47 The...
Recommended (the committee's words)
Three Clinical Commissioning Groups (CCGs) paid special severance payments without obtaining the required approvals.47 The C&AG qualified his regularity audit opinion on the NHS England 2020–21 Annual Report and Accounts in respect of one of these, a special severance payment made by Berkshire West CCG to its former Accountable Officer.48 These types of payments should be exceptional and require HM Treasury approval beforehand because they are often novel and contentious. The Department told us it was regrettable that three CCGs had approved and paid severance payments without obtaining the correct authorisation. It said that the NHS is putting in place improved processes, controls and guidance and is considering putting in place proactive control measures to stop this happening again.49
27We questioned the Department on what forward thinking it is doing to prevent unauthorised payments...
Recommended (the committee's words)
We questioned the Department on what forward thinking it is doing to prevent unauthorised payments being made to individuals leaving the NHS as a result of the planned re-organisation. The Department acknowledged there is a chance that the re-organisation of the NHS will result in special severance payments being made. The Department said that it is working with the NHS to ensure guidance is satisfactory; communicated to all organisations; and that training takes place to make sure it is understood.50 In written evidence after the session the Department told us that NHS England will seek positive assurance from CCGs that payments made during the transition have the necessary approvals.51 The UK Health Security Agency
28The Department established the UK Health Security Agency (UKHSA) on 1 April 2021 as a...
Recommended (the committee's words)
The Department established the UK Health Security Agency (UKHSA) on 1 April 2021 as a new executive agency to be the UK leader for health protection responsible for ensuring the nation can respond quickly and at greater scale to deal with pandemics and future threats. Public Health England’s (PHE’s) health protection functions transferred into UKHSA on its abolition on 1 October 2021. On the same date, UKHSA also took over the functions of NHS Test and Trace and the Joint Biosecurity Centre from the Department itself.52 The Department confirmed that the vast majority of the UKHSA’s £15.8 billion budget for the 2021–22 financial year was for testing and tracing.53
29On 21 February 2022 the Prime Minister outlined the Government’s strategy for living with COVID-19...
Concluded (the committee's words)
On 21 February 2022 the Prime Minister outlined the Government’s strategy for living with COVID-19 including the scaling back of testing, tracing and isolation.54 The Government’s intention is to put an end to the free supply of lateral flow testing kits. We asked the Department on its assessment of the number of lateral flow tests that people 46 Q 170 47 DHSC 2020–21 ARA, page 133 48 Report by the Comptroller and Auditor General, NHS England Annual Report and Accounts 2020–21, 31 January 2022 49 Q 143 50 Q 146 51 Letter from Department of Health and Social Care to Public Accounts Committee, dated 22 March 2022 52 DHSC 2020–21 ARA, pages 5, 75 53 Q 116; Letter from Department of Health and Social Care to Public Accounts Committee, dated 22 March 2022 54 Hansard: Living with Covid-19 Volume 709: debated on Monday 21 February 2022 Department of Health and Social Care 2020–21 Annual Report and Accounts 17 were carrying out on 7 March 2022, when we took evidence, and its assessment of how many they would continue to do when they have to pay for tests.55 In written evidence after the session the Department told us that 3.4 million lateral flow tests, including 0.3 million positive tests, were reported in the week 3–9 March 2022. The Department will continue to provide testing for some high-risk groups and expects some individuals and employers to buy tests privately to manage their own risk. It stated, therefore the number of tests taken is likely to be significantly higher than the number of tests paid for by the Government.56 The Department told us a detailed testing strategy would be published but did not know when this would happen, however, it will make an announcement shortly about eligibility for free tests.57
30Given the uncertainty and plan to reduce test and trace activity we asked the Department...
Concluded (the committee's words)
Given the uncertainty and plan to reduce test and trace activity we asked the Department whether UKHSA would have enough funding to operate going forward. The Department replied that this was under discussion.58 We asked the Department when we took evidence on 7 March 2022 when the UKHSA 2022–23 financial year budget would be known. The only answer the Department could provide was “soon”, and the Department would not say anything more precise, and did not feel able to even say whether “soon” might mean before the end of this financial or this calendar year.59 In written evidence after the session the Department told us it is highly likely, given the volatility of UKHSA’s pandemic related spending, that the final budget will not be agreed until the winter.60 Timely publication of Report and Accounts
31To provide proper timely accountability on how public funds have been spent, the administrative deadline...
Recommended (the committee's words)
To provide proper timely accountability on how public funds have been spent, the administrative deadline set by Treasury for Departments to publish their Annual Report and Accounts is 30 June, where possible, and no later than the parliamentary summer recess in July. An extension must be agreed for publication beyond this date. The Department published its 2020–21 Annual Report and Accounts on 31 January 2022, the day of the statutory deadline for all Departments. The Department told us it is working hard to bring the publication of its 2021–22 Annual Report and Accounts forward, with an aim to publish these in November 2022. It plans to continue to work to bring forward publication in subsequent, with the ultimate aim of moving back to a publication date prior to the summer parliamentary recess.61
32At the time of our evidence session, one NHS Trust, University Hospitals of Leicester NHS...
Concluded (the committee's words)
At the time of our evidence session, one NHS Trust, University Hospitals of Leicester NHS Trust (UHL), had yet to publish its 2019–20 or 2020–21 Annual Report and Accounts. The C&AG reported last year that as a result of the issues identified by its auditor, UHL’s management were not prepared to sign the 2019–20 financial statements as ‘true and fair’ and the auditor was of the view that the financial statements were not ‘true and fair’.62 UHL’s management had planned to prepare a new set of 2019–20 financial statements to be audited by March 2021, however when we took evidence from the Department on 7 55 Q 1 56 Letter from Department of Health and Social Care to Public Accounts Committee, dated 22 March 2022 57 Q 6; Letter from Department of Health and Social Care to Public Accounts Committee, dated 22 March 2022 58 Q 118 59 Qq 120–121 60 Letter from Department of Health and Social Care to Public Accounts Committee, dated 22 March 2022 61 Q 107 62 C&AG’s Report, paras 29 and 30 18 Department of Health and Social Care 2020–21 Annual Report and Accounts March 2022, UHL was yet to sign and publish its financial statements for both 2019–20 and 2020–21. For a second year in a row, it failed to comply with the Secretary of State’s directions to prepare ‘true and fair’ accounts.63
33We asked the Department what it was doing to assure itself that the situation at...
Concluded (the committee's words)
We asked the Department what it was doing to assure itself that the situation at UHL would be resolved and whether it was an isolated occurrence or indicative of similar issues that may surface elsewhere in the NHS in the future. The Department acknowledged the fact that annual report and accounts had not been published for 2019–20 or 2020–21 was a serious issue. It told us the Trust entered special measures in August 2020 and NHS Improvement is working intensively with UHL, with national and regional leads working together with the Trust, to resolve the governance and control weaknesses. The Department said it was not aware of any other Trusts with similar problems, and that any issues would be identified by NHS Improvement through its oversight framework.64 63 Qq 111, 113 64 Q 111 Department of Health and Social Care 2020–21 Annual Report and Accounts 19
Evidence
Oral evidence sessions 1
- 7 Mar 2022DHSC Annual Reports and Accounts 2020-214 witnesses, listed belowparliament.uk ↗
Who gave evidence 4 witnesses
- Andy BrittainDHSC Director General, Finance, Department of Health and Social Care (DHSC)
- Jonathan MarronDirector General for Primary Care and Prevention, Department for Health and Social Care
- Shona DunnSecond Permanent Secretary, Home Office
- Sir Chris WormaldPermanent Secretary, Department of Health and Social Care
Correspondence 3 letters
- 24 May 2022Correspondence from Sir Chris Wormald, Permanent Secretary, Department of Health and Social Care, re DHSC Annual Reports and Accounts 2020-2021, dated 16 May 2022
- 21 Apr 2022Correspondence from Sir Chris Wormald, Permanent Secretary, Department of Health and Social Care, re DHSC Annual Reports & Accounts 2020-21, dated 19 April 2022
- 28 Mar 2022Correspondence from Sir Chris Wormald, Permanent Secretary, Department of Health and Social Care, re PAC Hearing – DHSC Annual Report & Accounts 2020-21, dated 22 March 2022