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A major auditing failure has been found at a new body set up by the Department of Health and Social Care to fight the pandemic, a report by MPs has revealed.
The UK Health Security Agency (UKHSA) had no auditable accounts, no proper governance, and spent billions of pounds without parliamentary approval.
Its new chief executive, Professor Dame Jenny Harries – a prominent public figure alongside Professor Chris Whitty during the pandemic when she the former Deputy Chief Medical Officer for England – had a distinguished medical career but, according to the report, no technical experience of how to manage a complex organisation.
As an accounting officer for the agency, she was responsible for “the effective and efficient use of public funds” but presided over “financial controls so poor that it cannot be established whether its transactions were applied to the purposes laid out for it by Parliament”.
Even very basic accounting, such as reconciling monthly bank statements, was not carried out.
Labour’s Dame Meg Hillier, chair of the Public Accounts Committee, called it “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 disclosure comes after it was revealed that hundreds of local councils have not been independently audited for years because of a shortage of auditors leading to a number going bankrupt.
The UKHSA was set up in October 2021 to replace the Test and Trace organisation run by Baroness Dido Harding which itself did not have proper financial discipline over its £37 billion two-year budget. Some £3.3 billion of stock was handed over to the agency from Test and Trace but there is no financial record of how it was used by the UKHSA.
The MPs’ report comes at a time when the Department of Health and Social Care has had to write off £9.9 billion of PPE, £2.6 billion of COVID-19 medicines, and £1.8 billion of COVID-19 vaccines as likely to be unusable.
The report is also critical of the lack of preparation for a fresh pandemic by the Department of Health and Social Care. No emergency stockpiles of vaccines, masks or medicines have been authorised. Ministers have already admitted to the COVID Inquiry that they were unprepared for the Coronavirus crisis.
The UKHSA is not the only health body to be criticised for poor accounting in the report. The NHS Property Service could not account for 182 rental agreements worth £7.9 million; while NHS England has had its accounts qualified for two years running.
The report reveals that one big health trust – University of Leicester Hospitals NHS Trust – has not produced proper accounts for two years. Its “auditor was not able to obtain sufficient, appropriate evidence upon which to form an opinion for 2019–20, and issued an adverse audit opinion for 2020–21, due to system and control weaknesses resulting in material misstatements,” it states.
The Department of Health and Social Care told MPs that the NHS had not informed it of any other hospital trust that is in trouble.
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MPs were also told that department will not be able to produce its annual accounts for last year until Christmas at the earliest – some nine months late. MPs told the department to rectify the problems identified in the report for 2021-22 and to tackle the problem at the UKHSA as a matter of urgency.
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 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. This progress means our organisation is now substantially different in terms of stability, governance and financial controls.
“We are working with Department of Health and Social Care 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.”