MPs issue reorganisation warning

In a report on the Department of Health and Social Care’s 2020/21 annual report and accounts, the Commons Public Accounts Committee (PAC) insisted public spending rules were not followed regularly. It added that the departmental group had a track record of failing to comply with Managing public money.

The report said that £1.3bn of the Department’s expenditure in 2020/21 that required Treasury approval did not have that consent, and was therefore irregular. The Treasury told the PAC that this was because the Department and/or the NHS had spent funds in breach of conditions or without approval.

The PAC acknowledged that the Department had relaxed financial controls during the pandemic response, but this was not the first time instances of non-compliance had been found. In 2019/20, it was estimated that unapproved special payments totalled £18m.

Inappropriate, unauthorised payments had been made to staff in 2020/21 and there was a risk this could happen again as clinical commissioning groups are replaced by integrated care boards (ICBs) on 1 July. Special severance payments should be made by exception and require Treasury approval ‘because they are often novel, contentious and repercussive’, the committee insisted.

In 2020/21, three CCGs approved and paid special severance payments without following the required authorisation process. The comptroller and auditor general qualified his regularity audit opinion on the 2020/21 annual report and accounts due to one of these payments.

The report continued: ‘There are currently 106 CCGs, which as part of the planned reorganisation of the NHS will become 42 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.’

The committee called on the Department to explain how it will monitor and control the approval of all redundancy payments to ensure they are properly authorised in advance. It added that, by October, the Department should set out how it intends to ensure the regularity of expenditure and compliance with spending controls as part of its financial reset.

The 2020/21 annual report and accounts were published in January this year and the MPs said the Treasury expected the 2021/22 accounts before the Parliamentary recess in July, though the administrative deadline is 30 June. The Department should work towards meeting these deadlines and bring forward a realistic plan to achieve this, MPs said.

The PAC also had concerns over the Department’s handling of personal protective equipment (PPE). It highlighted the fact that the Department had £4bn of PPE in storage, bought in the first year of the pandemic, that will never be used in the NHS as it does not meet health service standards. It also secured £673m of PPE that is defective and cannot be used, sold or donated – this includes masks identified as counterfeit and gowns that are not water repellent. The PPE will now be recycled or burned to generate energy.

The committee asked the Department to provide details of the disposal, including the costs and environmental impact.

Haphazard strategy

It also criticised the Department’s ‘haphazard purchasing strategy’ for PPE. The Department is currently involved in commercial negotiations, legal review or mediation on 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.

PAC chair Meg Hillier (pictured) said: ‘The story of PPE purchasing is perhaps the most shameful episode the UK government response to the pandemic. At the start of the pandemic, health service and social care staff were left to risk their own and their families’ lives due to the lack of basic PPE.

‘In a desperate bid to catch up the government splurged huge amounts of money, paying obscenely inflated prices and payments to middlemen in a chaotic rush during which they chucked out even the most cursory due diligence. This has left us with massive public contracts now under investigation by the National Crime Agency or in dispute because of allegations of modern slavery in the supply chain.

‘Add to that a series of inappropriate, unauthorised severance payoffs made by clinical commissioning groups in the first year of the pandemic and the impression given falls even further from what we expect.

The Department had failed to manage the crisis, she said. ‘There are, frankly, too few signs that it is putting its house in order or knows how to.’

However, the Department told the BBC that the committee's claims were 'misleading'.

'We make no apology for procuring too much PPE rather than too little, and only 3% of the PPE we procured was unusable in any context,' it added.