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Committee slams health department for lax financial management

Author: ICAEW Insights

Published: 15 Jun 2022

The Department for Health has £4bn of PPE in storage that will never be used, Public Accounts Committee report finds.

The House of Commons’ Public Accounts Committee (PAC) has found that the Department for Health and Social Care (DHSC) has £4bn of personal protective equipment (PPE) in storage that will not be used and wrote off £8.7bn of the £12bn PPE purchased in 2021/22.

In its report, PAC criticised the health department for its long-standing weak financial management and urged a “reset” to ensure the department is fit for purpose to tackle future pandemics.

It urged the department to learn from its experience of responding to the COVID-19 pandemic and implement “robust procurement and inventory management processes and controls to ensure proper financial management”.

Pre-pandemic, the committee said, the DHSC’s processes failed to prevent unauthorised spending. Unapproved special payments across the Departmental Group were estimated as £18m during 2019–20. The DHSC is required to obtain Treasury approval for these types of payments.

The report said: “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 Treasury has said that £1.3bn of the Department’s spending in 2020–21 did not have HM Treasury consent and was therefore “irregular”.

Oliver Simms, Manager, Public Sector Audit and Assurance, ICAEW says: “The problems have been there for a long time and then when the pandemic hit, it exposed underlying weaknesses in financial management and financial controls.”

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”, PAC said.

PAC has asked the DHSC to write to it 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”.

Simms says: “The government is restructuring the NHS by replacing clinical commissioning groups with integrated care boards. These new boards will not succeed unless lessons are learned from the pandemic and financial management is improved.”

The committee has also asked for an update on the progress of PPE disposal in the usual PAC quarterly update.

Perhaps most pressing for PAC is that the UK Health Security Agency (UKHSA) still hasn’t agreed a budget for the new financial year. The budget for 2021–22 for the UKHSA, established in April 2021, had still not been agreed when PAC took evidence on 7 March 2022; the department “did not know when it would agree a UKHSA budget for the 2022–23 financial year”. It also pointed out that the University Hospitals of Leicester NHS Trust has not published audited accounts since 2018/19.

PAC said the department “should not get into this position again” and should develop a “detailed and realistic plan” for publishing its annual report and accounts on a timely basis. DHSC published its 2020/21 annual report and accounts on 31 January 2022, nine months after the year end and six months after HM Treasury’s administrative deadline.

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