UK health agency failed to account for £3.3bn of Covid inventory, say MPs

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The agency created at the height of the Covid-19 pandemic to protect the UK from future viral threats has been strongly criticised by a cross-party group of MPs for its lack of governance and weak financial controls.

NHS Test and Trace inventory, such as test kits and other medical equipment, worth £3.3bn and transferred to the UK Health Security Agency could not be properly accounted for, according to a report published on Wednesday by the House of Commons public accounts committee. 

The findings come as the government faces recriminations over its response to the pandemic, with a public inquiry under way into the effectiveness of its preparedness and response strategy.

Dame Meg Hillier MP, committee chair, said it was “completely staggering” 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 and Trace inventory can no longer be properly accounted for”.

The report noted a lack of adequate governance from the outset and referred to the appointment as the agency’s chief executive of Dr Jenny Harries, who at the time had limited technical experience of running a complex organisation.

The committee called on the UKHSA urgently to apply robust financial controls, develop a plan to deliver complete accounts and create a stockpile of equipment and medicine in the event of another health crisis.

“For the government not to make serious preparations for any future pandemic would be utterly inexcusable,” Hillier said.

The UKHSA was established in April 2021 to replace Public Health England, the agency blamed by ministers for its muddled response in the first year of the pandemic.

The new organisation, which was originally called the National Institute for Health Protection, was intended to focus on health security and use scientific and health evidence to respond to future disease threats.

The department came under criticism from the National Audit Office, the independent public spending watchdog, earlier this year for failing to complete an “effective programme of year-end stock counts” and for a “lack of adequate governance, oversight and control”.

The public accounts committee also pointed to an absence of effective control over the agency’s cash management processes, including a failure to perform bank reconciliations, a process used to verify bookkeeping, or to conduct stock takes on emergency stockpiles. 

The committee also found that three years after the pandemic started the agency still lacked adequate controls over its stocks of personal protective equipment (PPE), and continued to incur high costs for storage and disposal of unusable items.

In the past two years the agency has written off £14.9bn of spending, the report found, including £9.9bn worth of PPE and £2.6bn of Covid-19 medicines, in part because the government overpaid for items and over-ordered.

Harries said the UKHSA was “created in unprecedented circumstances when tackling Covid was our first priority, and we inherited significant pre-existing accounts challenges without full governance autonomy”.

“We have already instituted strong governance arrangements in a hugely complex organisation at the earliest opportunity within the controls available to us,” the agency’s chief executive added. “Despite these inherited financial challenges, the UKHSA continues to fulfil its priority remit — to protect lives.”

“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,” a government spokesperson said. “We will consider the committee’s recommendations and formally respond in due course.”