By stewartb

Organisations such as the National Audit Office (NAO) and the House of Commons cross-party Committee for Public Accounts are now regularly providing evidence of financial mismanagement and waste by the Tory Government.  As the evidence mounts up, is anyone keeping a tally?  

Despite the huge sums involved, critical findings get relatively little attention from the corporate media, the BBC or candidly, opposition politicians.  Isn’t it odd that even a public service broadcaster shows so little interest given we know how easy it is to cover such news stories – scan report for a phrase to use in a ‘crisis/scandal/shocking’ headline; lift a few sentences to reinforce the negative frame; have opposition politicians give quotable comments – job done for the day – tweak and repeat next week.

Of course in Scotland we have a particular perspective, one ’informed’ by months of relentless attention from the media and opposition politicians on the undoubted ‘mess’ of the procurement of two ferries for CalMac. This is notwithstanding the amount of money involved in the cost overrun here is one or more orders of magnitude lower than the financial consequences of matters being exposed in Westminster. (And let’s not forget that the Scottish Government’s over-spend spend is securing ‘good’ jobs on the Clyde; and ferries that will be delivered and serve their intended purpose; and saving a shipyard with substantial future potential!)

Insights into the DHSC

The Public Accounts Committee has just published (10 June) the results of its assessment of the annual report and accounts of the Department of Health and Social Care. (https://committees.parliament.uk/publications/22517/documents/165936/default/)

This is a very big spending department: ‘The Departmental Group’s accounts show that total operating expenditure increased to £191.9 billion in 2020–21, a 30% increase on 2019–20. This included a £20.5 billion (31%) increase in operating expenditure on the purchase of goods and services primarily related to its response to the COVID-19 pandemic.’ (my emphasis)

However, regarding the formal audit of the DHSC’s accounts we learn: ‘The Comptroller and Auditor General (C&AG) qualified his audit opinion on the accounts for several reasons. There was insufficient evidence to support: the Core Department inventory balance of £3.6 billion at year-end; £6.1 billion of inventory consumed during the year; £8.7 billion of inventory impairments; and the £1.2 billion onerous contract provision recognised by the Department for inventory purchased but not received at the year-end.’

‘There was also insufficient evidence to support the Group accruals balance of £17.2 billion. In addition, £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, and 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.’

What headlines would those two paragraphs alone ‘justify’ if this was from an audit of a Scottish Government department?

‘Aprons into bin bags’

On the DHSC’s purchases of PPE, the Public Accounts Committee’s report tells us:

• of the £12 billion spent on PPE, £4 billion of PPE is in storage that will not be used in the NHS and now faces the challenges and costs of its disposal – this £4 billion spend was on PPE which turned out not to meet NHS standards

• the DHSC has written £8.7 billion off the value of the £12 billion it spent on PPE in 2020–21

• the DHSC also bought 817 million items of PPE costing £673 million which are defective and cannot be used, donated or sold to anyone. This includes masks identified as being counterfeit; and gowns that are not water-repellent

• the Department now needs to pay for the disposal of millions of items of PPE however: ‘The costs and environmental impact of disposing of the excess and unusable PPE is unclear.’
  • ‘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.’

• the Committee notes: ‘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.’  Is that it?

Anyone spotting ‘good’ material for headlines for public interest news stories?

Bending the rules?

The Committee’s report highlights other, process concerns:

• ’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.’
  • ‘A considerable amount of taxpayers’ money was spent on products from new suppliers, including those with no previous experience of supplying certain 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.’

No clear plan

The Committee’s report refers to concerns over future-proofing:

• ‘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.’
  • ‘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.’

And finally – happy doing nothing?

Adopting the practice of some journalists, I scanned the transcript of an oral evidence session with DHSC officials held by the Public Accounts Committee. I was looking for something/anything more of ‘interest’. I came across this exchange on the matter of the private health sector potentially benefiting financially for doing nothing!  I reproduce the relevant exchange in full for interest and (almost) ’amusement’. Note, let’s call it, the ‘unclear construction’ in some of the responses!

Committee Chair: ‘ …. (an MP on the Committee) just highlighted, the NHS is paying, until the end of this month, £75 million to £90 million a month to private hospitals to be on standby in case they are needed to support the NHS during covid. You cannot double count that; you cannot use that for elective surgery at the same time.’

Sir Chris Wormald (Permanent Secretary, DHSC): ‘You have discussed this with the NHS before, and it is much better placed than I am to answer.’

Chair: ‘Have they got that provision?’

Sir Chris Wormald: ‘I think they can reuse. I will go and check the exact position.’

Chair: ‘I am just saying it is a very expensive thing if we are spending that money and not getting anything for it.‘

Sir Chris Wormald: ‘I will get the NHS to send you an update on that specific.’

Shona Dunn (Second Permanent Secretary, DHSC): ‘The surge capacity, which is the standby activity, has not been activated. I think the costs are for activity that is being undertaken.’

Chair: ‘There was a standing cost even if nothing was going to happen.’

Shona Dunn: ‘There was, yes.’

Chair: ‘It is very substantial. My worry is that the money has been there to hold them on standby. If they are being paid to stand by, can they also carry out elective surgery for the NHS? No, presumably not, otherwise the taxpayer is paying them twice.’

Sir Chris Wormald: ‘I will get the NHS to send you something with some numbers in it, which is probably better than my answer.’

Chair: ‘I like numbers. Thank you.’

I found no resolution of this matter in the Committee’s report!