UKHSA and DHSC accused of 'getting financial-management basics unacceptably wrong'

MPs flag weaknesses in agency's controls and health department's oversight
DHSC's Victoria Street headquarters Photo: Google Maps

By Jim Dunton

10 May 2024

Members of parliament's Public Accounts Committee have accused the UK Health Security Agency and the Department of Health and Social Care of "getting the basics unacceptably wrong" in relation to their financial management and accountability for public spending.

It is the second year running that watchdog MPs on the panel have raised the alarm about UKHSA and DHSC. Both the agency and the department dispute the committee's assessment.

PAC's latest report contends that weaknesses in UKHSA’s financial controls make it impossible to establish whether taxpayers’ money has been spent for the purposes intended by parliament.

Committee members said UKHSA's financial accounting remained "fundamentally weak" and "unable to be properly audited" despite an urgent recommendation last year for robust financial controls and processes to be put in place with a clear plan for the agency's accounts.

MPs cited problems related to "spillover effects" from the previous year's accounts, and "government mistakenly failing to tell auditors in time about changes made to forecasts for Covid-vaccine demand", which they said underpinned significant sums in UKHSA’s accounts.

Committee members said they were also concerned that DHSC had still not put in place "adequate oversight" to ensure strong financial management and reporting across its group.

MPs said the department's accounts had been qualified by the National Audit Office for the past four years because of issues related to basic financial controls, accuracy of financial statements and whether money had been spent in line with expectations.

They said DHSC had "pushed additional responsibility" onto UKHSA when it transferred responsibility for the Covid Vaccine Unit to it in October 2022, adding further pressure to the "new and struggling organisation".

Committee members acknowledged that DHSC had been forced to produce its accounts in exceptional circumstances because of Covid-19, but said those issues "cannot be allowed to continue post-pandemic".

Elsewhere, the report criticised the lack of an effective plan to minimise clinical-negligence claims against the NHS. MPs said £2.6bn was paid out to claimants in 2022-23 and called on government to reduce the clinical harm that was the source of the problem.

The report noted that cash payments for negligence related to maternity and neonatal services were worth £1.1bn in 2022-23, a figure equivalent to one-third of the National Health Service's total budget for those services.

MPs said they were also disappointed that government still lacks a plan for stockpiling inventory, including PPE, for future pandemics – despite previous recommendations. They said the situation meant items that could form part of the nation’s strategic stockpile for future crises were at risk of being thrown away.

PAC chair Dame Meg Hillier said proper safeguarding and robust accounting for how taxpayers' money is spent was not an "optional extra".

"The fact that UKHSA’s accounts have been unable to be properly audited for two years in a row – a very rare occurrence for a public body – is deeply concerning," she said.

"But our report also raises wider issues speaking to DHSC’s grip on spending, and illustrate ongoing and tragic failures experienced by people using the health service.

"The government is spending billions on clinical negligence claims. An effective plan to reduce these costs would be an effective plan to reduce clinical harms, but such a plan does not yet exist."

DHSC disputed several of the report's accusations and said that significant progress in strengthening financial insight on UKHSA had been made.

"We do not recognise a number of claims within this report, and it is wrong to conclude that UKHSA’s financial controls are weak," a spokesperson said.

"Negligence claim volumes are decreasing in the NHS, and we are committed to boosting patient safety within the NHS, especially in maternity settings, and we have made improvements in this area.

"Furthermore, we took swift action to procure PPE at the height of the pandemic and continue to prioritise pandemic preparedness with UKHSA, to ensure the UK is best-placed to tackle future health emergencies."

A UKHSA spokesperson said: “We have made great progress in our financial management and controls and have a good plan in place to strengthen this further.”

The agency said the identification of a new Covid variant had meant changes were required to its vaccine-forecast demand model. It said the knock-on effect was that CVU closing balances could not be audited on time, meaning UKHSA's 2022-23 accounts were disclaimed.

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