The UK Health Security Agency (UKHSA) was set up with financial controls ‘so poor’ that it cannot establish whether its transactions were in line with its purpose as laid out by parliament.
This meant that the UKHSA’s £3.3bn worth of inventory transferred from NHS Test and Trace could not be verified by proper financial records.
A damning MP report also determined there is still no clear plan for a national emergency stockpile for future pandemics, nor any adequate control over existing personal protective equipment (PPE) stock, suggesting that this could leave healthcare workers at risk in the case of a future pandemic.
MPs sitting on the Public Accounts Committee (PAC) have today (5 July) said the failures were ‘staggering’ and its lack of pandemic planning was ‘utterly inexcusable’.
In its new report, the PAC found that the UKHSA’s poor financial processes meant the organisation could not prepare any auditable accounts for the 2021/22 financial year – the year in which it was set up – and that improving them would require the Department of Health and Social Care’s oversight.
It said that the UKHSA did not even perform bank reconciliations, one of the most basic financial controls for an organisation.
Other major failings include appointing a chief executive with no previous technical experience in elements of running a complex organisation, and the organisation running without a budget from the DHSC.
The DHSC has also come under fire for lacking any clear stockpile of PPE, vaccines and medicines for a future pandemic. The report said that DHSC:
- has written off £14.9 billion of inventory over the past two years, including £9.9bn of PPE, £2.6bn of Covid-19 medicines and £1.9bn of Covid-19 vaccines;
- overpaid for items at the height of the pandemic;
- over ordered significant quantities of PPE that cannot or will not be used;
- purchased excess levels of Covid-19 medicines and vaccines ‘which in hindsight are unlikely to be used’, with 2021/22 estimates suggesting that £1.7bn of Covid-19 vaccines and £1.8bn of Covid-19 medicines have a limited shelf life and are now not expected to be used;
- has ‘vast quantities’ of unusable and unneeded PPE in storage waiting for disposal by recycling or burning for energy;
- has very high storage and disposal costs for PPE, estimated to run to £319m over the next few years;
- holds ‘large quantities’ of PPE in ‘inaccessible piles of storage containers which the department estimates would cost £70m to move and open to perform the necessary stock counts’.
Dame Meg Hillier MP, Chair of the Committee, said: ‘The UKHSA was set up with great fanfare in 2021, and rightly so given the significance of its role in leading protection against threats to our nation’s health.
‘It is completely staggering, then, that an organisation envisaged as a foundation stone of our collective security was established with a leadership hamstrung by a lack of formal governance, and financial controls so poor that billions of pounds in NHS Test & Trace inventory can no longer be properly accounted for.’
She added: ‘Three years after the start of the pandemic, the Government still has no proper controls over the PPE stocks it already has. This could leave front-line workers exposed in the future to shortages similar to those faced in 2020. For the Government not to make serious preparations for any future pandemic would be utterly inexcusable.’
The MPs recommended the UKHSA urgently rectify its financial processes to deliver its unqualified accounts.
The PAC has advised the DHSC to:
- Rectify the UKHSA’s governance arrangements
- Set out to the Treasury how it will put in place adequate inventory control over its PPE
- To develop a cost-effective plan for a national emergency stockpile.
A government spokesperson said that the government would consider the committee’s recommendations and formally respond in due course.
They added: ‘In the face of an unprecedented pandemic, we had to compete in an overheated global market to procure items to protect the public, frontline health and care workers and our NHS.
‘We were the first country in the world to deploy an approved Covid vaccine, with 144 million doses administered, and we have delivered over 25 billion items of PPE to the frontline. Buying vital Covid vaccines and medicines saved countless lives and kept NHS and care staff safe.’
Dame Jenny Harries, chief executive of the UK Health Security Agency, said: ‘We have always taken our accounts and financial controls very seriously. The UKHSA was created in unprecedented circumstances when tackling Covid was our first priority, and we inherited significant pre-existing accounts challenges.
‘We have already instituted strong governance arrangements in a hugely complex organisation at the earliest opportunity. This progress means our organisation is now substantially different in terms of stability, governance and financial controls.
‘We are working with DHSC to ensure the robustness of our accounts is recognised both now and for the future. Despite these inherited financial challenges, the UKHSA continues to fulfil its priority remit – to protect lives.’