DHSC branded ‘terribly naïve’ over Greensill dealings

MPs say department lacked curiosity about rationale for pharmacy-payment scheme and had no concerns about NHS salary-advance offer
Dame Meg Hillier. Screengrab: Parliament TV

By Jim Dunton

04 Feb 2022

Members of parliament’s Public Accounts Committee have issued a stinging criticism of the Department of Health and Social Care over its dealings with collapsed supply-chain finance firm Greensill Capital.

Committee chair Dame Meg Hillier said DHSC had been “at best terribly naïve and at worst negligent” in relation to the business, which counted former prime minister David Cameron among its lobbyists before it crashed last year.

At the time of its collapse in March 2021, Greensill Capital was providing DHSC with an early-payment scheme for pharmacies and had also been marketing a salary-advance scheme to some NHS trusts via its Earnd subsidiary.

A National Audit Office report last year found no evidence that either scheme had saved taxpayers any money – despite claims the Pharmacy Earlier Payment Scheme alone would deliver efficiencies of £100m a year.

Today’s PAC report says neither the pharmacy payments scheme nor the salary-advance service delivered what was promised and there was “no clear rationale” for why either was introduced.

MPs said that when Greensill collapsed, no other finance provider was willing to take on the pharmacy scheme and government had to step in to pay pharmacies. In relation to the salary-advance scheme for NHS staff, PAC members said government advice had been “to avoid these sorts of schemes”. But they said that advice had never been passed on to NHS trusts, and some had subscribed to it – leaving the taxpayer to pick up the cost of switching to paid-for services.

The committee said DHSC had shown a “considerable lack of curiosity” about the benefits of the pharmacy scheme. In relation to the salary-advance scheme, PAC members said it was “extraordinary” that there was “no apparent concern that one company could offer a free salary advance scheme to NHS trusts which could also have the effect of boosting its reputation by association with the NHS brand and scale in order to win business elsewhere”.

They said there was no evidence of a proper review of potential conflicts of interests arising from Greensill Capital boss Lex Greensill’s various government advisory roles between 2011 and 2017, and the commercial activities of Greensill Capital.

MPs added that government departments and the Crown Commercial Service appeared “incapable of learning from or acting on previous experience of contractor failures”.

Committee chair Hillier said that although Greensill Capital’s problems came to a head during the first year of the coronavirus pandemic, DHSC could not use that as an excuse for its own shortcomings.

“The utter failure of controls at DHSC  – at best terribly naïve and at worst negligent – in dealing with Greensill Capital far predate the pandemic,” she said.

“The promises made by Greensill and the easy acceptance of these by the Department of Health and Social Care are reminiscent of the emperor’s new clothes. That DHSC is now paying pharmacies more quickly itself begs the question why it ever engaged with supply-chain finance in the first place.”

A DHSC spokesperson said the department would consider the committee’s report carefully.

“We are supporting community pharmacies up and down the country and took steps to minimise the impact of Greensill Capital’s collapse. The Pharmacy Earlier Payment Scheme was voluntary and pharmacies could choose to join,” they said.

“Our approach has always been that local NHS employers are best placed to decide how to make use of flexible payment options as part of their overall pay and reward offer for staff.”

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