While the NHS has to badger and campaign to secure even a £20bn down payment on the costs of reconstruction after more than a decade of decline and falling real terms funding, evidence keeps emerging of the cavalier way in which ministers have squandered huge sums, especially during the Covid pandemic.
The Department of Health’s own Annual Report and Accounts for 2020-21 include a report of the Comptroller and Auditor General to the House of Commons which sets out a tale of incompetence and neglect in the handling of £12.1 billion worth of contracts for PPE that led to an estimated loss in value of £8.7 billion – 72% of the total spend. This includes:
“£0.67 billion of PPE which cannot be used, for instance because it is defective;
“£2.6 billion of PPE which is not suitable for use within the health and social care sector but which the Department considers might be suitable for other uses (although these potential other uses are as yet uncertain);
“£0.75 billion of PPE which is in excess of the amount that will ultimately be needed; and
“£4.7 billion of adjustment to the year-end valuation of PPE due to the market price of equivalent PPE at the year-end being lower than the original purchase price.”
One reason the government wound up paying such inflated prices was that ministers had ignored warnings back in 2016 from Exercise Cygnus that there were not adequate stocks of PPE to deal with a pandemic, did nothing, and wound up paying through the nose at the last minute.
The report goes on:
“The Department was not able to manage adequately some of the elevated risks, resulting in significant losses for the taxpayer. Nearly two years later, it has not fully restored effective control over some of the inventory purchased:
“… The Department’s inventory management systems were unable to cope with the significant, rapid increase in procurement and the Department did not maintain adequate records of the location or condition of £3.6 billion of inventory balances recorded in the accounts at the 31 March 2021. …
“The level of fraud risk has increased as a result of COVID-19 – related procurement. A significant increase in new suppliers, a lack of timely checks on the quality of goods received and poor inventory management all contributed to this heightened risk. In these circumstances and given the lack of physical checks on the inventory held by the Department, I have not been able to obtain assurance that there has not been a material level of losses due to fraud.”
To make matters worse much of the excess PPE that has been bought is now being expensively stored: “The Department’s records show that as at 31 March 2021, it held 7.5 billion items in 16,000 containers at UK ports plus a further 1.6 billion of items in storage in China; however, because it did not complete its year end stock counts it is unable to confirm this.”
The use of so many containers mean that the PPE is not accessible … and “will deteriorate if kept in poor storage conditions,” but also mean the Department is shelling out £500,000 per day – £180 million per year – to rent the containers.
£180m would be enough to pay 55,000 nurses.
However even these amounts are dwarfed by the profligacy of the ‘Bounce Back Loan Scheme,’ which was devised by the same Rishi Sunak who is now refusing any serious increase in NHS spending or investment, and handed out a million loans totalling £47 billion of taxpayers’ money – almost equivalent to the defence budget – without even the most minimal checks.
In December the National Audit Office reported the DHSC’s estimate that £4.9bn (11%) of these loans were fraudulent, although the figures “excluded some types of fraud:” strangely this was reported as good news after earlier warnings in October that up to 60% of loans – up to £27bn – might not be recovered.
The NAO also argued there was a possibility that some fraudulent loans could be recovered. However the DHSC has also estimated 37% of the Bounce Back loans (£17bn) would not be repaid: and as if accepting this, they have set a pathetic target for the National Investigation Service to recover just £6 million over three years.
The banks handing out the money now face no risk, and so have no financial motivation as lenders to pursue fraudsters. The loans were 100% guaranteed by the government, and they were urged to act with minimal checks or delays. Measures to prevent duplicate applications were not put in place until after 61% of loans had gone out.
So disastrous has been the administration of this scheme – which pushed cash into the hands of companies that had ceased trading, over 1,000 companies that were not even trading prior to the pandemic, and forked out to criminal gangs, and spivs – that Treasury minister Lord Agnew was driven to an angry resignation, walking out of the Lords last month in a vain attempt to draw attention to it in the midst of the ‘partygate’ furore.
Agnew pointed out the “woeful” failures in administering the Bounce Back Loans, but also warned:
“Fraud in government is rampant. Public estimates sit at just under £30bn a year. There is a complete lack of focus on the cost to society, or indeed the taxpayer.”
He pinned blame not least on the Treasury, whose officials “appear to have no knowledge or little interest in the consequences of fraud to our economy or our society.”
So it seems certain that upwards of £10bn has been wasted in this way by the same Treasury that is so reluctant to invest in repairing, reopening and rebuilding hospitals and expanding the NHS workforce to meet the needs of a growing population. The Bounce Back Loans and the waste and dodgy deals on PPE almost certainly add up to the £20bn investment demanded by the SOSNHS campaign – before we even start on the huge amounts squandered on test and trace.
But the Department of Health and Social Care is also responsible for wasting valuable funding that should be invested in NHS staff and facilities.
Even when it’s already clear that billions were wasted on paying private hospitals for potential use of their beds in 2020 and 2021, Sajid Javid instructed NHS England to sign a similarly wasteful and pointless contract with private hospitals for the first three months of this year, meaning the private sector will receive at least £225m up to March 31, simply for putting elective capacity on ‘standby’: if they treat any NHS patients, they will make even more.
NHS England CEO Amanda Pritchard has now been the ‘fall guy’ rebuked for her handling of the matter by the Commons Public Accounts Committee chair Meg Hillier, and asked to state clearly whether or not the deal represents value for money and the best and only viable option.
Meanwhile Private Eye has highlighted figures from Circle, now Britain’s largest hospital chain, and owned by US corporation Centene, showing that despite losing most of its private customer base, the company increased its profitability in 2020, pocketing £113m, thanks to payments of more than £340m from the NHS.
If money can be raised to waste, it can – and should – be raised to invest in expanding and reopening NHS hospitals rather than handed out in dubious deals to private providers.
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