£8.7 billion is roughly the amount needed to build 14 new hospitals, as ITV News Political Editor Robert Peston reports
Buried on page 199 of the Department of Health and Social Care’s annual report published yesterday is the shocking disclosure that it has incurred £8.7 billion of losses - £8.7 billion! - on £12.1 billion of Personal Protective Equipment (PPE) bought in 2020/21.
Think about how that money could have been deployed in hospitals. Surely there needs to be a statement from Sajid Javid to Parliament about this.
Here is the excerpt from the DHSC annual report: “The Department estimates that there has been a loss in value of £8.7 billion of the £12.1 billion of PPE purchased in 2020-21."
The impairment relates to
£0.67 billion - "PPE which cannot be used, for instance because it is defective."
£2.6 billion - "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 - "PPE which is in excess of the amount that will ultimately be needed."
£4.7 billion - "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."
In other words the DHSC paid above the odds for more PPE than was needed, tons of which are not fit for purpose. A jaw dropper, even in jaw-dropping times.
On page 200 of the DHSC annual report, is another worrying admission, namely that the department has not "re-established effective [financial] controls in all areas" having "adapted" its procurement and inventory management systems at the start of the pandemic.
It says these changes "contributed to a significant loss of value to the taxpayer " and left the Department "open to the risk of fraud".
It gets worse for the Department of Health and Social Care.
The public sector’s auditor in-chief, Gareth Davies, refused to give a clean bill of health to the department’s 2020/21 accounts.
He “qualified” the accounts (in the jargon) because “£1.3 billion of the department’s Covid-19 spending was spent either without the necessary HM Treasury approvals or in breach of conditions set by HM Treasury.
Davies has also qualified his regularity opinion due to insufficient evidence to show that the Department’s spending, particularly on Covid-19 procurement, was not subject to a material level of fraud”.
'It's a staggering amount of money' - Watch Robert Peston's assessment of the government losses:
He is basically saying the department failed the test of competence.
The findings that the department may have been subject to “material” fraud and breached Treasury stipulations are damning.
These failures happened while Matt Hancock was health secretary. He would have been under pressure to take responsibility and resign if still there. Presumably there will have to be an internal DHSC inquiry into all this.
Officials and ministers may have been at serious fault.
And for the avoidance of doubts, those £8.7bn of PPE losses I revealed above were reported by the National Audit Office.
I should of course point out that DHSC was under extreme pressure at the start of the crisis. In part that pressure was greater because of years of austerity, plus a failure to prepare for crisis and build resilience into the system.
That said some of its chaotic procurement of PPE may be understandable and perhaps forgivable, because of the extreme need to make good the lack of PPE to protect health and care workers.
Responding, a Department of Health and Social Care spokesperson said: “The supply of these vital items helped keep our NHS open at a moment of national crisis to deliver a world-class service to the public. We are seeking to recover costs from suppliers wherever possible.”
Labour Shadow Health Secretary Wes Streeting said: "This is a shocking and inexcusable level of waste that could have been put to far better use in hospitals and care homes that are under-staffed and over-stretched.
"Taxpayers' money has been poured down the drain at a time when a record 6 million people are on NHS waiting lists."