Source · Select Committees · Public Accounts Committee
Recommendation 3
3
Accepted
Urgently grip and address financial management problems across the Departmental Group with a clear improvement plan.
Conclusion
We are concerned that the Department has still not put in place adequate oversight to ensure strong financial management and reporting across its group which are fundamental to the effective delivery of its policy and operational work. The Department is responsible for ensuring there is an adequate and robust system of financial control across its group and the organisations that form part of this. Yet its accounts have been qualified for the last four years owing to a variety of reasons relating to basic financial controls, the accuracy of financial statements and whether money has been spent in the way that Parliament intended. As an executive agency UKHSA is formally part of the Department, and the Department says that it has provided it with additional support and oversight, but UKHSA’s accounts have nonetheless been disclaimed for a second consecutive year. The Department also pushed additional responsibility on to this new and struggling organisation when it transferred responsibility for the Covid Vaccine Unit to UKHSA in October 2022. We are not convinced by the Department’s assertion that it has little control over the issues relating to the audit of local NHS bodies that have repeatedly resulted in its accounts being delayed, nor that it does not have the levers needed to address them. We have previously recognised that over the last few years the Department has had to produce its accounts in exceptional circumstances, but these issues cannot be allowed to continue post-pandemic. Recommendation 3: The Department urgently needs to grip and address the problems with financial management across its Departmental Group and set out a clear plan to improve financial management and oversight of its group bodies.
Government Response Summary
The government agrees and states the recommendation is implemented, detailing that it is working closely with UKHSA and NAO, providing strong financial oversight including regular governance and assurance meetings. It also reports £75 million recovered from PPE fraud and anticipates further matters settled before Autumn 2025.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. Recommendation implemented The department has a robust framework for financial management and oversight of its group ALBs but recognises the need for continuous improvement in this area, in particular in relation to UKHSA and NHS England. As set out in our response to recommendation 1 above, the department is working closely with UKHSA and the NAO to address the disclaimed opinions on UKHSA’s 2022-23 and 2023-24 accounts. As part of this, the department is providing strong support to and oversight of UKHSA financial management under the leadership of the DHSC Director General Finance, including quarterly senior governance meetings and monthly assurance meetings, and greater transparency in financial and other reporting. In 2022-23, the departmental group accounts received a qualified regularity opinion as some of it’s spend did not comply with HM Treasury’s ‘ring-fence’ conditions associated with the additional elective recovery funding provided. This qualification was one-off in nature and an elective recovery oversight board has since been established to mitigate against recurrence. Oversight boards have been established for other key programmes, and the monthly finance sponsorship and accountability board with NHS England provides a regular forum for the senior finance leadership in both organisations to review financial risks, discuss financial issues, and monitor progress on the management of in-year challenges, supporting collaborative working with the NHS. billion buying PPE from the start of the pandemic until the end of the financial year 2023. The costs of storing excess PPE are shown in the table below: C ost of Storage – by Financial Year in £ FY 2020-21 FY 2021-22 FY 2022-23 FY 2023-24 Total All Storage 481,448,973 410,583,857 256,829,048 123,699,709 5.5 Storage costs for excess PPE will cease by January 2025. Remaining storage costs will relate to the pandemic preparedness stock and sample PPE retained as part of dissolution activities. The cost of storing these products is not yet known. billion) of expenditure on PPE was fraudulent. To date, the government has recovered £75 million (including £5 million for ventilators) and assesses a further £163 million was prevented from being lost in the first place. Where criminal conduct is suspected, the matter has been reviewed by the DHSC Anti-Fraud Unit (AFU) and referred to law enforcement partners where appropriate. DHSC will be working closely with the recently announced COVID Counter Fraud Commissioner to maximise recoveries where possible. 5.8 Net costs will not become apparent until all work on dissolution and fraud is complete and monies recovered is understood. As this may involve legal proceedings it is difficult to estimate precisely when this may be, however we anticipate that matters will not be settled before Autumn 2025.